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Saturday, February 15, 2014

11th Circuit Holds New No-Arbitration Agreement Supersedes Earlier Arbitration Agreement


Dasher v. RBC Bank (USA), __ F.3d __, 2014 WL 504704 (11th Cir. Feb. 10, 2014), is a class action part of the larger Checking Account Overdraft Multidistrict Litigation.  As the 11th Circuit explains, the original account agreement "contained an arbitration clause with terms broad enough to cover this overdraft fee dispute.” When the bank was acquired by another bank, it sent out to new account agreements with no arbitration clause.  In the 11th Circuit, the bank cited a labor arbitration case stating there is “a presumption of arbitrability in the sense that an order to arbitrate . . . should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650, 106 S. Ct. 1415, 1419 (1986) (internal quotation marks omitted).  The 11th Circuit rejected this argument by citing a labor arbitration case holding that this presumption of arbitrability applies when an “arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, __, 130 S. Ct. 2847, 2858 (2010). The FAA’s presumption is inapplicable in this situation, as courts are to apply “the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand.” Granite Rock, 561 U.S. at __, 130 S. Ct. at 2858 (emphasis added).

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