Kilgore v. KeyBank, National Ass'n
673 F.3d 947
| 9th Cir. | 2012Background
- Kilgore and Fuller filed a California UCL action against KeyBank related to private student loans funding SSH training.
- Notes contained an arbitration clause with opt-out; the clause prohibited class arbitration and warned of rights foregone.
- A choice-of-law clause named Ohio law; a forum clause pointed to Cuyahoga County, Ohio, but forum was not challenged on appeal.
- District court denied arbitration, applying California law and finding Broughton-Cruz public-injunctive-relief bar precluded arbitrability.
- Post-Concepcion, the Ninth Circuit held FAA preempts the Broughton-Cruz rule and enforces arbitration per clause; appeal 09-16703 reversed and remanded to compel arbitration; appeal 10-15934 dismissed as moot.
- Opinion concludes the arbitration clause is not procedurally unconscionable and should be enforced, staying litigation to arbitrate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FAA preempts Broughton-Cruz rule | Kilgore says Broughton-Cruz blocks arbitration for public injunction claims. | KeyBank argues FAA preempts state rule and requires arbitration. | FAA preempts Broughton-Cruz; arbitration enforced. |
| Arbitration clause unconscionability post-Concepcion | Arbitration clause unfair due to lack of opt-out guidance. | Clause is conspicuous with clear opt-out procedures. | Not procedurally unconscionable; enforceable. |
| Impact of Concepcion on post-Davis authority | Concepcion undermines California public-injury rule; preemption argued. | Concepcion supports preemption of state rule. | Concepcion controls; Broughton-Cruz displaced. |
| Mootness of Appeal No. 10-15934 | N/A | N/A | Appeal 10-15934 moot; dismissed. |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitration scope and external statutes governs arbitrability)
- Southland Corp. v. Keating, 465 U.S. 1 (U.S. 1984) (FAA preemption; arbitration as national policy)
- Concepcion, 131 S. Ct. 1740 (U.S. 2011) (savings clause allows generally applicable defenses; FAA preempts class-action ban)
- Broughton v. Cigna Healthplans of California, 90 Cal.Rptr.2d 334 (Cal. 1999) (public injunctive relief cannot be arbitrated under CA law)
- Cruz v. PacifiCare Health Systems, 66 P.3d 1157 (Cal. 2003) (public injunctive relief under UCL nonarbitrable)
- Davis v. O'Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007) (California public-injunction arbitration rule not necessarily precluded post-Concepcion)
- Marmet Health Care Center, Inc. v. Brown, 132 S. Ct. 1201 (U.S. 2012) (public policy vs. FAA preemption; reaffirmation of FAA supremacy)