Bank of the Ozarks Inc. v. Walker
2014 Ark. 223
| Ark. | 2014Background
- Appellees filed a putative class action against Bank of the Ozarks alleging overdraft-reordering practices and related contract, unjust-enrichment, conversion, and ADTPA claims.
- Complaint attached a “Consumer Deposit Account Agreement” (Deposit Agreement) which contained an arbitration clause; appellees alleged it was a representative copy and not adequately disclosed.
- The Bank moved to dismiss or alternatively to stay and compel arbitration under the FAA, attaching signature cards and two different account-agreement versions (distinct from the Deposit Agreement in the complaint).
- Appellees opposed arbitration, arguing waiver, lack of agreement (not all account forms contain arbitration), unconscionability, and that AAA’s moratorium made arbitration unenforceable; they also emphasized lack of executed/dated agreement and inconsistent forms.
- The circuit court denied the Bank’s motion, finding the arbitration provision unconscionable; the court of appeals reversed. This Court granted review.
Issues
| Issue | Plaintiff's Argument (Walker et al.) | Defendant's Argument (Bank) | Held |
|---|---|---|---|
| Whether a valid agreement to arbitrate exists | No valid mutual assent or notice; attached Deposit Agreement was unsigned/representative | Arbitration clause in Deposit Agreement (and other account forms) requires arbitration | Remanded: circuit court must first determine if a valid arbitration agreement exists before addressing scope or defenses |
| If valid, whether the dispute falls within arbitration scope | If no valid agreement, arbitration not compelled | Dispute about overdraft practices is covered by broad arbitration clause | If trial court finds agreement exists, it must next decide scope on remand |
| Whether unconscionability (or other defenses) can invalidate arbitration | Arbitration clause is unconscionable and AAA moratorium undermines enforceability | FAA applies and state contract defenses are available but Bank urges enforcement | Court did not decide on unconscionability: deferred until existence/scope are resolved by trial court |
| Burden of proof to show arbitration agreement exists | Appellees: Bank must prove notice and assent; absence of signed forms supports denial | Bank: arbitration provision enforceable; court of appeals previously compelled arbitration | Majority: remand for trial court to determine existence/scope; dissent argued Bank failed to meet its burden and denial should be affirmed |
Key Cases Cited
- Alltel Corp. v. Sumner, 360 Ark. 573, 203 S.W.3d 77 (Ark. 2005) (rules for assent to arbitration follow general contract-law principles; need objective evidence of notice/assent)
- DIRECTV, Inc. v. Murray, 2012 Ark. 366, 423 S.W.3d 555 (Ark. 2012) (FAA applies but state contract law governs validity of arbitration agreements)
- Gruma Corp. v. Morrison, 2010 Ark. 151, 362 S.W.3d 898 (Ark. 2010) (standard of review for orders on motions to compel arbitration)
- BDO Seidman, LLP v. SSW Holding Co., 2012 Ark. 1, 386 S.W.3d 361 (Ark. 2012) (arbitration agreements may be invalidated on generally applicable contract-law grounds)
- Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (state-law contract defenses like unconscionability can invalidate arbitration agreements)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (parties can be compelled only to arbitrate matters they have agreed to submit)