BSI Group LLC v. Solid Financial Technologies Inc.
23-3344, 23-3434
| 8th Cir. | Dec 5, 2024Background
- Plaintiffs BSI Group LLC and International Business Solutions Group, LLC, financial service companies, contracted with EZBanc for financial services.
- EZBanc worked with Defendants Solid Financial Technologies, Inc. and Evolve Bank & Trust to provide these services.
- Plaintiffs alleged that Defendants mishandled funds by withdrawing nearly $9 million and failing to process about $300,000 in third-party payments.
- Plaintiffs’ contracts with EZBanc did not have an explicit arbitration clause but referenced "General Terms and Conditions."
- Defendants moved to compel arbitration based on an arbitration clause in the Evolve Agreement, contending it was incorporated by reference or otherwise agreed to by Plaintiffs.
- The district court denied the motions, concluding any incorporation was too vague and that key factual disputes remained about whether Plaintiffs had actual or constructive notice of the arbitration agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Evolve Agreement's arbitration clause incorporated by reference into Plaintiffs’ contracts? | Contract’s reference to "General Terms and Conditions" was too vague; no clear incorporation. | The reference encompassed the Evolve Agreement; it was made available in various ways. | Reference was not clear and unequivocal; no sufficient incorporation by reference under Arkansas law. |
| Did Plaintiffs otherwise agree to arbitrate under the Evolve Agreement by conduct? | They never received or agreed to the Evolve Agreement; no informed consent to arbitrate. | Plaintiffs used accounts, visited Evolve’s offices, and received the agreement via various channels. | There is a material factual dispute about effective communication and mutual assent; remand for trial required. |
| Should the court compel arbitration at this stage? | No enforceable arbitration agreement was proved; factual disputes persist. | Arbitration should be compelled; the records show Plaintiffs agreed or otherwise assented. | Denial of motion to compel reversed and remanded for trial to resolve factual disputes on assent to arbitrate. |
| Does Arkansas’s incorporation-by-reference law conflict with the Federal Arbitration Act? | Arkansas law applies as usual; no express anti-arbitration policy involved. | Federal policy favoring arbitration should override state requirements. | Arkansas law governs; no FAA preemption since rules are generally applicable contract principles. |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (arbitration is a matter of contract; courts decide if an agreement to arbitrate exists)
- Alltel Corp. v. Sumner, 203 S.W.3d 77 (Ark. 2005) (incorporation by reference requires clear and effective communication of terms)
- Ingersoll-Rand Co. v. El Dorado Chem. Co., 283 S.W.3d 191 (Ark. 2008) (incorporation by reference must be clear and unequivocal)
- Foster v. Walmart, Inc., 15 F.4th 860 (8th Cir. 2021) (summary trial required when material factual disputes exist over arbitration agreement formation)
- Childs v. Adams, 909 S.W.2d 641 (Ark. 1995) (assent to contract may be shown by conduct if terms are effectively communicated)