In Re Checking Account Overdraft Litigation
2011 U.S. Dist. LEXIS 118462
S.D. Fla.2011Background
- Five related overdraft fee class actions against BB&T, M&T, Regions, and SunTrust, each governed by account.deposit agreements with arbitration clauses seeking to compel arbitration of overdraft claims.
- The May 2010 Omnibus Order denied arbitration upfront; Eleventh Circuit remanded for Concepcion-based reconsideration.
- The Supreme Court’s Concepcion decision narrowed unconscionability scrutiny by limiting class-action waiver considerations in arbitration agreements governed by the FAA’s Savings Clause.
- The Court found waiver issues waived and proceeded to evaluate unconscionability of arbitration terms under state laws (GA, NC, SC, MD).
- Counts focus on fee-shifting provisions and unilateral ability of banks to debits funds from plaintiffs’ accounts to satisfy costs, fees, or arbitral awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitrability determinations by court or arbitrator | Waiver of threshold issue by banks; waiver of right to arbitrate the question. | Delegation clauses assign arbitrability to the arbitrator; no waiver. | Waived; court decides threshold question. |
| Concepcion’s impact on unconscionability of class waivers | Concepcion preserves unconscionability scrutiny for terms other than class waivers; class waivers not controlling. | Concepcion precludes considering class-action waivers at all in unconscionability. | Concepcion narrows but does not erase case-by-case unconscionability analysis; proceed on non-class terms. |
| SunTrust Buffington agreement: substantive unconscionability of dispute-res olution terms | Terms unreasonably allocate risk; immediate withdrawal of funds undermines FAA protections. | Terms are standard arbitration provisions with fee-shifting. | Unconscionable under Georgia law; not enforceable. |
| Regions Regions/Hough agreement: fee-shifting and severability arguments | One-way fee-shifting violates fair dispute-resolution structure; severability waived. | Severability should permit enforcement of arbitration minus objectionable provisions. | Arbitration provision unconscionable; waiver of severability not permitted; motion denied. |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (FAA preempts state Discover Bank rule; class waivers permissible under FAA context (consumer contracts))
- Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011) (State public policy arguments preempted; Concepcion guidance applied to class waivers)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (Arbitration clause severable from contract; challenges to contract do not invalidate arbitration provisions)
- Discover Bank v. Superior Court, 36 Cal. 4th 148 (Cal. 2005) (California Discover Bank rule rejected; class arbitration not required by FAA policy)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (Arbitration of labor/foreign commercial disputes; fundamental framework for FAA)