In Re Checking Account Overdraft Lit. Mdl No. 2036
674 F.3d 1252
| 11th Cir. | 2012Background
- Given, a Maryland resident, files a putative class action against M&T Bank for overdraft fees on checking accounts.
- The contract governs her account includes a broad arbitration clause requiring arbitration for disputes related to the account.
- A delegation provision states that any issue regarding whether a dispute is subject to arbitration will be decided by the arbitrator.
- The district court denied arbitration, finding the agreement unconscionable under Maryland law; consolidated with related cases.
- On appeal, the Eleventh Circuit holds that the gateway question of arbitral scope is delegated to the arbitrator, and remands for proceedings consistent with this opinion.
- The FAA and Maryland law govern the arbitration agreement; the court discusses Concepcion’s impact but does not reach unconscionability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides gateway question on scope? | Given argues the district court should decide scope because no delegation. | M&T Bank argues an arbitrator should decide gateway questions under the delegation provision. | Delegation provision requires arbitrator to decide scope of arbitration. |
| Is the delegation provision clear and unmistakable evidence of intent to arbitrate gateway question? | Given asserts the delegation is ambiguous due to a sentence about dollar amounts. | M&T Bank contends the delegation covers any issue and is clear and unmistakable. | The delegation is clear and unmistakable; arbitrator must decide gateway question. |
| Is the arbitration agreement unconscionable under Maryland law as an alternative basis? | Given contends the overall agreement is unconscionable. | M&T Bank contends unconscionability cannot undermine a delegated gateway clause absent challenge to delegation. | Court remands on unconscionability issue and leaves scope question to arbitrator if not unconscionable. |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772 (2010) (delegation provisions can assign gateway questions to arbitrators)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (2010) (arbitration terms interpreted under state law; FAA applies)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required for delegation)
- CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012) (courts enforce FAA terms according to their terms)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (invalidates unconscionability defense to enforce arbitration)
- Anders v. Hometown Mortg. Servs., Inc., 346 F.3d 1024 (11th Cir. 2003) (ambiguous delegation cannot defeat clear delegation under FAA)
- Grigsby & Assocs., Inc. v. M Sec. Inv., 664 F.3d 1350 (11th Cir. 2011) (non-challenge to delegation does not preclude enforcement)
- Calomiris v. Woods, 353 Md. 425, 727 A.2d 358 (Md. 1999) (Maryland unconscionability standards)