Moss v. First Premier Bank
2016 U.S. App. LEXIS 15917
| 2d Cir. | 2016Background
- Deborah Moss signed online loan applications containing arbitration clauses specifying "binding individual ... arbitration by and under the Code of Procedure of the National Arbitration Forum (NAF)," requiring claims to be filed at NAF and referencing NAF fee waivers.
- Moss sued two banks (First Premier Bank and Bay Cities Bank) in federal court alleging RICO and state-law claims related to payday-loan practices.
- The banks (not signatories) moved to compel arbitration; the district court initially compelled arbitration based on equitable estoppel principles and stayed the case.
- Moss attempted to initiate arbitration, but NAF declined to accept consumer arbitrations because of a prior consent decree with the Minnesota Attorney General; NAF therefore would not hear her dispute.
- Moss moved to vacate the order compelling arbitration; the district court concluded the contract evidenced an exclusive designation of NAF and, under In re Salomon, declined to appoint a substitute arbitrator under FAA § 5. The district court vacated the prior order compelling arbitration; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreement designates NAF as the exclusive forum | Moss: language shows arbitration only before NAF, so she cannot be forced to arbitrate elsewhere | Banks: parties agreed to arbitrate; court should appoint substitute arbitrator under FAA § 5 if NAF unavailable | Court: Agreement manifests exclusive designation of NAF; parties agreed only to NAF |
| Whether a court may appoint a substitute arbitrator under FAA § 5 when the designated forum declines or cannot accept the case | Moss: § 5 should not be used to force arbitration in another forum when parties designated NAF exclusively | Banks: NAF's unavailability is a “lapse” under § 5, obligating court to appoint another arbitrator | Court: Under In re Salomon, § 5 cannot be used to circumvent an exclusive designation; no § 5 appointment required |
| Whether the reason for NAF’s unavailability (consent decree vs. discretionary refusal) matters | Moss: not relevant; exclusivity controls | Banks: distinction matters — consent decree removing NAF is a § 5 lapse | Court: Reason is immaterial; exclusivity is dispositive under Salomon |
| Precedent/ circuit split effect on outcome | Moss: Salomon controls in this circuit | Banks: other circuits allow § 5 appointment, creating conflict | Court: Acknowledges split but follows controlling Salomon precedent in Second Circuit |
Key Cases Cited
- In re Salomon Inc. Shareholders’ Derivative Litig., 68 F.3d 554 (2d Cir. 1995) (holding courts may not appoint substitute arbitrators under § 5 when parties contractually designate an exclusive arbitral forum that refuses to hear the case)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (arbitration is a matter of contract; courts enforce agreements according to their terms)
- PaineWebber Inc. v. Bybyk, 81 F.3d 1193 (2d Cir. 1996) (courts look to contract language to discern parties’ intent on arbitration terms)