Shirley Douglas v. Trustmark National Bank
757 F.3d 460
| 5th Cir. | 2014Background
- Douglas opened a checking account in Aug 2002 with Union Planters and signed an arbitration agreement containing a delegation provision.
- The account was closed within a year; Union Planters later merged with Regions in 2005.
- In 2007, Douglas settled a car-accident claim for $500,000 and retained counsel to obtain bankruptcy-court approval; her former attorney allegedly embezzled funds.
- Douglas sued Regions and Trustmark for negligence and conversion, alleging they knew of embezzlement and failed to report or prevent further diversions.
- Regions moved to compel arbitration based on the delegation provision; the district court denied, and the Fifth Circuit affirmed, concluding the dispute was not within the scope of the arbitration agreement.
- Douglas conceded Regions was Union Planters’ successor and that an arbitration agreement existed; the core issue was whether the delegation provision compelled gateway arbitration for these claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Regions is bound to arbitrate as a successor under the original agreement | Douglas argues Regions isn’t bound as successor under Mississippi law | Regions contends successor-in-interest status binds Regions to the agreement | Regions bound; arbitration gateway questions to be decided by arbitrator. |
| Whether the delegation provision requires gateway arbitrability questions to be decided by an arbitrator | Douglas contends gateway questions are for court, not arbitrator | Regions argues delegation clause vested arbitrator with authority | Yes, delegation clause requires arbitrator decide gateway arbitrability. |
| Whether the claims against Regions fall within the scope of the arbitration agreement | Douglas asserts tort claims are outside scope of the agreement | Regions argues scope includes disputes related to the agreement | The claims are wholly groundless with respect to the arbitration agreement’s scope; not within scope. |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (Supreme Court 2010) (delegation to arbitrate gateway questions; two-step framework)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (Supreme Court 1995) (clear and unmistakable evidence of agreement to arbitrate arbitrability)
- Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir. 2006) (two-step test for arbitrability with delegation provision)
- Agere Sys., Inc. v. Samsung Elecs. Co. Ltd., 560 F.3d 337 (5th Cir. 2009) (recognizes delegation-based arbitratability analysis in this circuit)
- AT&T Techs., Inc. v. Comm’cns Workers of Am., 475 U.S. 643 (Supreme Court 1986) (court defers to arbitrator on arbitrability when delegation is clear)