Montgomery v. Applied Bank
2012 U.S. Dist. LEXIS 11282
| S.D.W. Va | 2012Background
- Montgomery filed suit in WV Circuit Court alleging 555 calls by Applied Bank to her cell from Feb 6 to Jun 29, 2011 after she revoked contact; claims under TCPA, WVCCPA, and WV Code 61-3C-14a (criminal harassing calls).
- Defendant removed the action to federal court on Oct 4, 2011.
- Defendant moved to dismiss or stay and compel arbitration, arguing a valid arbitration agreement covers all claims.
- The arbitration clause defines Administrator as NAF, AAA, or JAMS; February 2010 amendment redefined Administrator to AAA or substitute forum if AAA unavailable.
- AAA issued a 2009 moratorium on consumer debt-collection arbitrations; defendant contends this does not alter the present dispute.
- Court will assess validity, scope, and enforceability of the arbitration clause under West Virginia law and federal arbitration standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity and enforceability of the arbitration clause | Agreement invalid or unenforceable due to forum availability and unconscionability | Arbitration agreement valid and enforceable; forum available or substitute can be appointed | Arbitration clause valid and enforceable under WV law |
| Availability of an arbitration forum | Two forums unavailable; AAA moratorium makes forum one-sided | AAA moratorium not applicable to this dispute; substitute forum can be appointed | Unavailable forums do not defeat enforceability; substitute forum may be appointed under FAA |
| Unconscionability of the arbitration clause | Clause procedurally and substantively unconscionable under Brown v. Genesis Healthcare | Clause not procedurally or substantively unconscionable; contract not one-sided | Clause not unconscionable; valid and enforceable |
| Scope of the arbitration agreement | Plaintiff's claims include criminal conduct not within contract scope | Broad clause covers disputes arising from account and related conduct; disputes arbitrable | Plaintiffs’ claims fall within the scope of the arbitration agreement |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration-clause validity determined by contract formation, not the contract as a whole)
- Glass v. Kidder Peabody & Co., 114 F.3d 446 (4th Cir. 1997) (limited review to determine arbitrability)
- Winston Salem Mailers Union 133, CWA v. Media Gen. Operations, Inc., 55 F. App’x 128 (4th Cir. 2003) (scope determinations favor arbitration when interpretation could cover the dispute)
- Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000) (use federal law to determine the scope of arbitration clause)
- Cara’s Notions, Inc. v. Hallmark Cards, Inc., 140 F.3d 566 (4th Cir. 1998) (arb. clause interpreted with federal policy favoring arbitration)
- United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574 (U.S. 1960) (arbitration issues proper for court review to ensure agreement exists and dispute is arbitrable)