In Gamble v. New England Auto Finance, Inc., No. 17-15343 (11th Cir. May 31, 2018) (click here for a copy of the decision), the Eleventh Circuit affirmed the denial of a finance company’s motion to compel arbitration. After the consumer in this case had paid off her auto loan, she continued to receive unsolicited text messages from the finance company. She filed a class action lawsuit alleging that the sending of these text messages violated a federal statute, the Telephone Consumer Protection Act (TCPA).
The lower court found, and the Eleventh Circuit affirmed, that these statutory claims did not arise out of her loan agreement, which contained an arbitration provision regarding all disputes related to her loan. The courts reasoned that the plaintiff’s claims are not related to or arise out of her loan document; instead, her ability to sue arises from a statutory right created by Congress. Her right to sue was independent of the loan agreement.
In reaching its conclusion, the Eleventh Circuit focused on the text or scope of the arbitration clause at issue. This textual analysis regarding the scope of the arbitration clause, if similarly applied to the text of the FAA, would undermine decades of Supreme Court precedent. Section 2 of the FAA provides for the enforceability of provisions in a contract “to settle by arbitration a controversy thereafter arising out of such contract.” The Supreme Court’s Mitsubishi trilogy from the 1980s ignored this contract limitation in the statute in order to hold that the FAA covers statutory claims. In its landmark Mitsubishi case, the Supreme Court omitted the key, limiting language cited above when quoting from the FAA. Compare 9 U.S.C. § 2 (“A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy THEREAFTER ARISING OUT OF SUCH CONTRACT. . . .”) with Mitsubishi, 473 U.S. at 625 (“The Act’s centerpiece provision makes a written agreement to arbitrate ‘in any maritime transaction or a contract evidencing a transaction involving commerce . . . valid, irrevocable, and enforceable’”) (ellipsis in original). The Supreme Court expanded the FAA’s scope during the 1980s to cover statutory claims by conveniently ignoring key, limiting language in the statute. Although the Supreme Court pretends to be applying the original view of the 1925 statute (Justice Gorsuch in his recent Epic Systems case pretends he is applying the intent of the 1925 Congress), the Supreme Court has been applying a statute of its own making. On multiple levels, there is a disconnect between the text of the FAA and how the Supreme Court has been applying and interpreting the FAA since the 1980s. The Eleventh Circuit’s reasoning in the Gamble opinion, if similarly applied to the FAA, would correctly restore the FAA to its original intent as a statute of more limited application. Statutory claims or tort claims that can be asserted without reference to a contract were not supposed to be covered by the FAA.