This multi-district litigation, which involves bank customers suing for overcharges with overdraft fees, is spawning several arbitration decisions. The arbitration agreement in this case contained a delegation clause permitting the arbitrator to resolve any issue regarding the “validity, enforceability, or scope” of the arbitration agreement. In the most recent arbitration opinion related to this MDL, the Eleventh Circuit found that the defendant Keybank had waived its delegation clause argument. The bank had failed to raise this issue until after the bank had asked the district court to decide the plaintiff’s unconscionability defenses to the arbitration agreement — and the bank had lost. The Eleventh Circuit recognized it would be prejudicial to force the plaintiff to re-argue the unconscionability defenses again before the arbitrator. In re Checking Account Overdraft Litigation, No. 13-14244 (11th Cir. June 18, 2014) (click here for a copy of the decision).
Interestingly, a day before this Eleventh Circuit opinion, a California appellate court suggested that a delegation clause should be within the “reasonable expectations” of an average employee because such clauses are more prevalent today in arbitration agreements. (Click here to see my prior blog post about this California appellate case.) How can such clauses be within the reasonable expectations of an average employee when the lawyers in this Eleventh Circuit case waived the delegation argument?