Matthew Kilgore v. Keybank, National Association
718 F.3d 1052
| 9th Cir. | 2013Background
- SSH operated a flight-training school in Oakland; KeyBank funded most SSH tuition; Great Lakes serviced the loans.
- Students signed promissory notes containing an arbitration clause prohibiting class arbitration and limiting consolidation; opt-out within 60 days.
- Kilgore and Fuller, SSH students, each borrowed over $50,000 and the school failed before graduation.
- Plaintiffs filed a California UCL action seeking to bar reporting defaults and enforcing notes; defendants removed and moved to compel arbitration.
- District court denied arbitration; later district court dismissed claims on the merits; appeal followed along with remand to compel arbitration.
- Plaintiffs argued the Holder Rule and public injunctive relief exempted claims from arbitration; Defendants argued FAA enforcement, including class waiver.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitration whether FAA requires compelled arbitration | Kilgore argues the FAA exemptions apply to public injunctive relief claims. | KeyBank argues the arbitration clause is valid and enforceable and should compel arbitration. | Arbitration must be compelled; court erred in not enforcing |
| Public injunctive relief exemption under Broughton-Cruz | Kilgore seeks public injunctive relief under UCL, not merely private relief. | KeyBank contends Broughton-Cruz does not exempt this case from arbitration. | Public injunctive relief not exempt; not within narrow exception |
Key Cases Cited
- Davis v. O'Melveny & Myers, 485 F.3d 1066 (9th Cir. 2007) (public injunction exemption framework for FAA analysis)
- Concepcion, 563 U.S. 333 (Supreme Court 2011) (FAA preempts state rule that class-action waivers are unconscionable)
- Broughton v. Cigna Healthplan of Cal., 90 Cal.Rptr.2d 334 (Cal. 1999) (public injunctive relief not subject to arbitration; private relief possible)
- Cruz v. PacifiCare Health Systems, Inc., 66 P.3d 1153 (Cal. 2003) (extends Broughton to UCL; injunctive relief public benefit not arbitrable)
- Armendariz v. Foundation Health Psychcare Svcs., 24 Cal.4th 83 (Cal. 2000) (California unconscionability framework for arbitration clauses)