Sevier Cnty. Schs. Fed. Credit Union v. Branch Banking & Trust Co., 990 F.3d 470

In 1989 plaintiffs opened Money Market Investment Accounts (MMIAs) with First National Bank of Gatlinburg (FNB) that guaranteed the annual interest rate would “never fall below 6.5%.”
FNB merged into BankFirst (1997) and BankFirst merged into Branch Banking & Trust Co. (BB&T) (2001); BB&T converted the accounts and, according to BB&T, sent a 2001 Bank Services Agreement (BSA) saying continued account use would constitute acceptance and reserving amendment rights.
BB&T amended the BSA in 2004 (adding a class-action waiver) and again in 2017 (making arbitration mandatory, individual-only, and incorporating JAMS rules); plaintiffs continued to keep their accounts.
BB&T honored the 6.5% rate until January 2018, then announced a rate cut to roughly 1.05% (effective March 2018); plaintiffs sued in March 2019 for breach of the original guarantee.
The district court compelled arbitration; the Sixth Circuit majority reversed, holding the arbitration provisions (as added post hoc to the original MMIA) were invalid insofar as they materially changed the original agreement without mutual assent and in violation of the implied covenant of good faith.
The panel produced a dissent arguing plaintiffs had manifested assent by continuing to maintain accounts and that the arbitration clause was neither adhesive nor unconscionable.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Validity: was there mutual assent to arbitrate?	No — continued account use did not show assent to a materially new arbitration clause added years later.	Yes — BB&T gave notice that continued account use = acceptance and plaintiffs kept accounts.	Held: No mutual assent; arbitration provision not binding.
Consideration for arbitration clause	N/A — plaintiffs did not contest mutuality.	BB&T: mutual promises provide sufficient consideration.	Held: Consideration exists (mutual promises suffice).
Scope of original change‑of‑terms clause: could bank add arbitration later?	No — original MMIA did not address dispute forum; unilateral addition of arbitration exceeded reasonable scope and required affirmative consent.	Yes — change‑of‑terms language allowed the bank to amend terms by notice and continued use manifested acceptance.	Held: Bank exceeded reasonable scope; unilateral imposition of arbitration materially changed rights and is invalid without assent.
Adhesion / unconscionability of the BSA	BSA is adhesive and adding arbitration without opt‑out or meaningful choice is unfair; violates good faith.	Not adhesive or unconscionable: clause was prominent, disclosed procedures, industry‑common, and customers had alternatives.	Held (majority): BSA is a contract of adhesion and adding arbitration under these circumstances (no opt‑out; long prior performance) violated good faith — supports refusing to compel arbitration.

Southland Corp. v. Keating, 465 U.S. 1 (national policy favors arbitration)
Badie v. Bank of America, 67 Cal. App. 4th 779 (Cal. Ct. App. 1998) (banks may not unilaterally add arbitration clauses by notice where original contract did not contemplate forum changes)
In re Checking Account Overdraft Litig., 685 F.3d 1269 (11th Cir. 2012) (analysis of BB&T BSA language and unconscionability issues)
Seawright v. American General Financial Services, Inc., 507 F.3d 967 (continuation of employment can manifest assent to arbitration)
Lee v. Red Lobster Inns of America, Inc., [citation="92 F. App'x 158"] (6th Cir. 2004) (mere receipt of unsolicited unilateral changes does not bind offeree without assent)
Wofford v. M.J. Edwards & Sons Funeral Home, Inc., 490 S.W.3d 800 (Tenn. Ct. App. 2015) (factors for assessing adhesion and unconscionability)
Buraczynski v. Eyring, 919 S.W.2d 314 (Tenn. 1996) (definition and treatment of contracts of adhesion)
Wallace v. Nat'l Bank of Commerce, 938 S.W.2d 684 (Tenn. 1996) (implied covenant of good faith and fair dealing)
Cooper v. MRM Investment Co., 367 F.3d 493 (6th Cir. 2004) (arbitration-agreement validity governed by state contract law)