Are Added Arbitration Agreements Becoming Tougher to Enforce?

A case presently on the U.S. Supreme Courtroom’s listing of pending petitions could impression the power of monetary establishments and different firms to depend upon arbitration agreements added to subsequent variations of account agreements and shopper contracts. Whereas the case doesn’t contain claims for TCPA or FCRA violations, amended account agreements together with newly added arbitration provisions are sometimes the idea for motions to compel filed by firms dealing with these claims. The enforceability of such revisions is the central problem within the petition filed by BB&T in Department Banking and Belief Firm v. Sevier County Faculties Federal Credit score Union, et al., Pet. No. 21-365.

BB&T is asking the Supreme Courtroom to evaluation a ruling from the Sixth Circuit refusing to require plaintiffs in a putative class motion to arbitrate their claims. Sevier County Faculties Federal Credit score Union v. Department Banking & Belief Firm, 990 F.3d 470 (sixth Cir. 2021).

At problem in Sevier have been the category members’ Cash Market Funding Accounts (MMIAs) opened a long time in the past with a BB&T predecessor financial institution. A key characteristic to these accounts was the predecessor financial institution’s written assure that the accounts’ annual price of curiosity would by no means fall under 6.5%. Additionally of be aware was that the account contract was solely two pages in size and didn’t embrace an arbitration provision or any language limiting an accountholder’s skill to implement the settlement in court docket.

BB&T acquired the predecessor financial institution by way of merger in 2001 and despatched its Financial institution Providers Settlement (“BSA”) to accountholders in 2001 with amended BSAs being despatched in 2004 and 2017. Every model of the BSA contained arbitration provisions, with the 2017 model increasing the arbitration provision. Each the 2017 model and the earlier model additionally contained class motion waivers and all the agreements included language stating that continued use of the account after receiving discover of the modifications constituted acceptance of the modifications.

In 2018, BB&T notified the plaintiffs that the rate of interest for the MMIAs would drop from 6.5% to 1.05% which, not surprisingly, led to the plaintiffs right here submitting swimsuit in opposition to BB&T in March, 2019.

BB&T moved to dismiss and compel arbitration. The district court docket granted these motions, Sevier filed an attraction to the Sixth Circuit which reversed discovering that the plaintiffs didn’t mutually assent to the materially modified agreements, and in September of this yr, BB&T filed a petition for a writ of certiorari with the Supreme Courtroom of the USA. Sevier filed its Temporary in Opposition on November 12 and now the trade will wait to see if the Supreme Courtroom will agree to hear the matter.

Causes to Watch: Past the potential for one more Supreme Courtroom choice relating to the enforcement of shopper arbitration agreements, this case is noteworthy due to the impression the Sixth Circuit ruling may have on the power to implement arbitration agreements added to up to date account agreements and shopper contracts. Whereas distinguishable, the Sixth Circuit’s ruling is one more reminder that contested arbitration agreements are seemingly to proceed receiving further scrutiny within the present setting. Make sure to examine TCPA Protection Pressure and FCRA Land for updates and extra steering as soon as the Supreme Courtroom pronounces its choice granting or denying the petition.

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