Third Time No Charm for Bank in Arbitration Bid

In its third trip to the Eleventh Circuit attempting to enforce an arbitration agreement in a would-be class action involving bank debit card overdraft practices, the bank’s motion to compel arbitration was again denied, this time because of what the court concluded was a failure to agree on arbitration. Dasher v. RBC Bank (USA), 2018 WL 832855 (11th Cir. Feb. 13, 2018).

The saga began with an attempt by the bank, at the outset of the litigation, to enforce an arbitration provision in a 2008 customer account agreement. The district court denied that motion, but the denial was vacated on appeal and remanded for reconsideration in light of AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).

After that remand, and an acquisition of the original bank, RBC, by PNC Bank, PNC renewed the motion to compel arbitration. But the account holder successfully argued that a 2012 superseding agreement was binding, and it lacked an arbitration provision. PNC promptly issued an amendment to the agreement effective February 1, 2013, which included arguably retroactive language applying to the account holder’s pending claim. The account holder, Dasher, did not opt out of that agreement. On appeal to the Eleventh Circuit, the second order denying arbitration was affirmed on the basis of the applicability of the 2012 agreement, the one without the arbitration provision.

After remand, PNC moved to compel on the basis of the February 2013 agreement. Dasher argued that PNC had waived the right to arbitrate by failing to raise it earlier. The district court denied the motion to compel arbitration, once again on the basis of waiver. On appeal, the Eleventh Circuit did not reach the waiver issue, but relied on a contradiction between Dasher’s resistance in court to arbitration and the bank’s claim that he had acceded to arbitration by failing to opt out of the proposed amendment. The court relied heavily on the fact that Dasher was represented by counsel, but counsel was not notified of the proposed new 2013 agreement. The court did not find any unethical conduct by PNC’s counsel. To the contrary, the court intoned “[q]uite simply, we do not intend to write an ethics opinion.” The court also rejected PNC’s argument that filing of an amended complaint was sufficient to trigger a new right to arbitrate. The court found that the amended complaint actually included a narrower definition of the proposed classes.

Posted by Tom Byrne.

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