In Re: Checking Account Overdraft Litigation MDL No 2036 Lawrence D. Hough v. Regions Financial Corporation
672 F.3d 1224
11th Cir.
2012

Background

  • Regions appeals denial of renewed motion to compel arbitration of Houghs' complaint under deposit agreement arbitration clause.
  • The district court denied the motion as substantively unconscionable due to a class-action waiver.
  • On remand after Concepcion, Regions renewed the motion; district court again denied, citing Georgia law unconscionability based on Regions' reimbursement of arbitration costs.
  • The deposit agreement allows Regions to recover arbitration costs if Regions is the prevailing party, potentially charging the depositor's account.
  • Regions argued the reimbursement provision is severable and not unconscionable; Houghs argued it creates a disproportionate risk for them.
  • The issue returns to whether the reimbursement provision is conscionable under Georgia law and whether the delegation of arbitrability is valid.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Regions waived arbitrator resolution of conscionability Houghs: Regions waived delegation by asking court to decide. Regions: delegation should be resolved by arbitrator; court should decide. Regions waived the conscionability delegation.
Whether the reimbursement provision is substantively unconscionable Houghs: costs to reimburse Regions create imbalance. Regions: provision is conscionable and not mutuality-required. Reimbursement provision not substantively unconscionable under Georgia law.
Whether the arbitration clause is procedurally unconscionable Houghs: clause presented on take-it-or-leave-it basis; not conspicuous. Regions: clause conspicuous and adhesion contracts are not per se unconscionable. Clause not procedurally unconscionable.
Whether the arbitration clause is severable Houghs: severability issue unresolved Regions: severability should be considered if unconscionability found. Court did not need to address severability given con​​scionability determination.

Key Cases Cited

  • Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) (scope of arbitrator's authority over arbitrability questions)
  • Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (delegation to arbitrator for questions of arbitrability)
  • Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir. 2011) (princess barred from arguing arbitrability when district court decides)
  • Rent-A-Center, W., Inc. v. Jackson, 561 U.S. _ (2010) (delegation of threshold arbitrability to arbitrator; must compel arbitration)
  • Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (Arbitration provisions must be on equal footing with other contracts)
  • Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (mere inequality in bargaining power does not bar arbitration)
  • Crawford v. Results Oriented, Inc., 273 Ga. 884 (2001) (adhesion contract not per se unconscionable under Georgia law)
  • Crawford v. Great Am. Cash Advance, Inc., 284 Ga. App. 690 (2007) (set-off rights not render arbitration unconscionable)
  • Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359 (11th Cir. 2005) (considerations of bargaining disparity in Georgia arbitration)
  • NEC Techs., Inc. v. Nelson, 267 Ga. 390 (1996) (one-sidedness of contract not defined by unconscionability standard)
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