In re Checking Account Overdraft Litig.

915 F.Supp.2d 1334

In re CHECKING ACCOUNT OVERDRAFT LITIGATION.

Nos. 1:09–MD–02036–JLK, 1:10–CV–22190–JLK, 5:10–cv–329.

MDL No. 2036.

United States District Court,

S.D. Florida,

Miami Division.

Jan. 11, 2013.

Robert Cecil Gilbert, Miami, FL, for Dasher.

Richard Croutharmel, Richard Croutharmel, Attorney at Law, Inez De Ondarza Simmons Raleigh, NC, for Avery.

Mark J. Levin, Ballard Spahr Andrews, LLP, Philadelphia, PA, Carrie Ann Wozniak, Virginia B. Townes, Akerman Senterfitt, Orlando, FL, Christopher Stephen Carver, Akerman Senterfitt, Miami, FL, for RBC Bank.

ORDER DENYING MOTION TO COMPEL ARBITRATION

JAMES LAWRENCE KING, District Judge.

THIS CAUSE comes before the Court on Defendant RBC Bank (USA)'s Renewed Motion to Compel Arbitration (DE # 1929). Oral Argument was held on December 13, 2012.

I. Background.¹

This Court previously denied a motion to compel arbitration filed by RBC Bank (USA) (“RBC”). (DE # 763). During the pendency of RBC's appeal of that Order, the parties agreed to vacate the Order and remand the case for this Court to consider the decision in AT & T Mobility LLC v. Concepcion, –––U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). Following remand, RBC filed its Renewed Motion to Compel Arbitration (DE # 1929) and Plaintiffs filed their Response in Opposition (DE # 2020) along with a Motion to Defer Ruling, seeking leave to conduct limited, arbitration-specific discovery (DE # 2021). This Court granted Plaintiffs permission to conduct discovery. (DE # 2191). After the conclusion of discovery, the parties submitted supplemental briefing on the pending motion (DE # 3008, 3009, 3016, 3017).²

In their supplemental briefing, Plaintiffs assert that there is no longer an arbitration clause in their account agreement. (DE # 3008, pp. 1–5). Specifically, Plaintiffs contend that as a result of the acquisition of RBC Bank by PNC Financial Services Group, Inc. (“PNC”) and the bank's issuance in March 2012 of a comprehensive new deposit agreement—which does not require, or even mention, arbitration—the former RBC deposit agreement became ineffective. Id. RBC disputes this argument, contending that the arbitration requirement from the former RBC deposit agreement still governs, notwithstanding the fact that it was superseded in March 2012. (DE # 3017, pp. 2–8). RBC asserts that under applicable law, the subsequent PNC agreement, which does not contain an arbitration provision, did not supersede, repeal, or eliminate the broad arbitration provision in the prior RBC agreement between the parties because (1) the RBC agreement contemplated that the arbitration provision would survive as to transactions conducted thereunder in the event that RBC was acquired by another bank or the RBC agreement was terminated; (2) all of Plaintiffs' arbitrable claims were asserted against RBC (not PNC) and arose out of the RBC agreement (not the PNC agreement); and (3) there is no explicit language in the PNC agreement retroactively waiving arbitration rights that had accrued and vested under the RBC agreement.

The Court agrees with Plaintiffs' argument and, therefore, denies the Renewed Motion to Compel Arbitration for the reasons set forth herein.

II. Discussion.

The Federal Arbitration Act (“FAA”) embodies a strong policy in favor of enforcing valid arbitration agreements. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). Under the FAA and North Carolina law, a court may only compel arbitration if it finds (i) a valid written agreement to arbitrate exists, and (ii) that the dispute falls within the scope of the agreement. D.P. Solutions, Inc. v. Xplore–Tech Servs. Private Ltd., 710 S.E.2d 297, 299–300 (N.C.Ct.App.2011); Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1214 (11th Cir.2011) (“parties will not be required to arbitrate when they have not agreed to do so”). “The question of whether a dispute is subject to arbitration is an issue for judicial determination.” D.P. Solutions, 710 S.E.2d at 299–300;Revels v. Miss Am. Org., 165 N.C.App. 181, 599 S.E.2d 54, 59 (2004).

“[A]rbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration.” Evangelistic Outreach Ctr. v. Gen. Steel Corp., 181 N.C.App. 723, 640 S.E.2d 840, 843 (2007); Levin v. Alms & Assocs., Inc., 634 F.3d 260, 266 (4th Cir.2011). To determine whether parties have an agreement to arbitrate, courts must review the operative agreement. D.P. Solutions, 710 S.E.2d at 300;Rodgers Builders, Inc. v. McQueen, 76 N.C.App. 16, 331 S.E.2d 726, 731 (1985).

“Parties to an arbitration must specify clearly the scope and terms of their agreement to arbitrate.” Emmanuel AME Church v. Reynolds Constr. Co., Inc., 718 S.E.2d 201, 203 (N.C.Ct.App.2011); Sloan Fin. Group, Inc. v. Beckett, 159 N.C.App. 470, 583 S.E.2d 325, 330 (2003). Moreover, under North Carolina law, “[t]he party seeking arbitration bears the burden of proving the parties mutually agreed to the arbitration provision.” Emmanuel, 718 S.E.2d at 203;Harbour Point Homeowners' Ass'n, Inc. v. DJF Enters., Inc., 201 N.C.App. 720, 688 S.E.2d 47, 50 (2010); see also Seaboard Coast Line R.R. Co. v. Trailer Train Co., 690 F.2d 1343, 1348 (11th Cir.1982); Int'l Underwriters AG v. Triple I: Int'l Inv., 533 F.3d 1342, 1348 (11th Cir.2008) (same).

Under the FAA, there is a presumption favoring arbitrability which can only be negated expressly or by clear implication. Integrated Security Servs. v. Skidata, 609 F.Supp.2d 1323, 1326 (S.D.Fla.2009) (citing Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery Workers Union, AFL–CIO, 430 U.S. 243, 255, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977)). Under the FAA, the party opposing enforcement of the arbitration agreement bears the burden of proving that the claims are not subject to arbitration. Green Tree, 531 U.S. at 91–92, 121 S.Ct. 513. Given the strong federal policy in favor of arbitration, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem. Hosp. v. Mercury Constr. Co., 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

A. Is There An Agreement To Arbitrate?

RBC does not dispute that in March of 2012 it sent all existing RBC customers, including Plaintiffs, PNC's Account Agreement for Personal Checking, Savings and Money Market Accounts (hereinafter “PNC Agreement”). The PNC Agreement does not require arbitration.

According to the language of the PNC Agreement, “by using the account, by requesting or later adding products and/or services connected to the account, you agree to be bound by the terms and conditions of this Agreement.” See PNC Agreement, p. 1. RBC does not dispute Plaintiffs' showing that they continued to use their accounts. Therefore, according to Plaintiffs, the new terms and conditions, which do not require arbitration, are effective and govern the issue before the Court.

As part of its argument that the arbitration clause in the prior RBC deposit agreement should control, the bank points to the paragraph of the RBC agreement titled “Effect of Termination.” This paragraph provides:

Transactions initiated prior to the effective date of termination of the Agreement will not be affected by the termination.Transactions initiated prior to termination will continue to be subject to the terms and conditions of the Agreement. Your indemnification and other payment obligations to us, including your obligation to pay fees and other charges, will survive termination of the Agreement, as will any other provisions in the Agreement that are by their terms or inherent nature intended to survive a termination.

See RBC Agreement, p. 8 (DE # 1929–1). According to RBC, this provision requires a finding that the arbitration clause in the RBC Agreement is still effective even though RBC has been acquired by PNC and that Plaintiffs are required to arbitrate.

In support of this premise, RBC relies upon cases including, inter alia, Nolde Brothers, Inc. v. Local No. 358, Bakery & Confectionery Workers Union, AFL–CIO, 430 U.S. 243, 255, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977), and Integrated Security Services, Inc. v. Skidata, Inc., 609 F.Supp.2d 1323, 1326 (S.D.Fla.2009) (King, J.). The Court finds these cases distinguishable. In Nolde Brothers, there was a collective bargaining agreement between the bakery and its union workers that provided that any grievance arising between the parties was subject to arbitration. 430 U.S. at 245, 97 S.Ct. 1067. After the agreement was terminated, a dispute over severance pay arose. Id. at 247, 97 S.Ct. 1067. The Supreme Court held that the dispute over severance pay was arbitrable. Id. at 251–55, 97 S.Ct. 1067.

Similarly, in Integrated Security, this Court addressed whether the termination of an agreement had any bearing on the right to arbitrate a dispute. 609 F.Supp.2d at 1326 n. 5. This Court, relying on Nolde Brothers, found that termination of a contract has no bearing on the right to arbitrate under the agreement. Id.

In this case, however, the Court concludes that there has not been a termination of the agreement between RBC and Plaintiffs. Rather, the bank chose to impose a comprehensive new deposit agreement that governs their entire relationship. See generally PNC Agreement (the cover page reflects “For: RBC Bank© Converted Customer Accounts” and “the transfer of your deposit accounts to PNC Bank, National Association will take place immediately over the weekend of March 2, 2012”); p. 11, ¶ 3 (“you agree to be bound by the terms and conditions of this Agreement”); p. 11, ¶ 4 (“All PNC Bank checking, savings and money market accounts are subject to this Account Agreement”). The RBC Agreement had previously made clear that “the most current version of the Agreement supersedes all prior versions and will at all times govern your Account(s), and that your continued use of any Account after the...