Are Added Arbitration Agreements Becoming Tougher to Enforce?
A case currently on the U.S. Supreme Court’s list of pending petitions may impact the ability of financial institutions and other companies to rely upon arbitration agreements added to subsequent versions of account agreements and consumer contracts. While the case does not involve claims for TCPA or FCRA violations, amended account agreements including newly added arbitration provisions are often the basis for motions to compel filed by companies facing those claims. The enforceability of such revisions is the central issue in the petition filed by BB&T in Branch Banking and Trust Company v. Sevier County Schools Federal Credit Union, et al., Pet. No. 21-365.
BB&T is asking the Supreme Court to review a ruling from the Sixth Circuit refusing to require plaintiffs in a putative class action to arbitrate their claims. Sevier County Schools Federal Credit Union v. Branch Banking & Trust Company, 990 F.3d 470 (6th Cir. 2021).
At issue in Sevier were the class members’ Money Market Investment Accounts (MMIAs) opened decades ago with a BB&T predecessor bank. A key feature to these accounts was the predecessor bank’s written guarantee that the accounts’ annual rate of interest would never fall below 6.5%. Also of note was that the account contract was only two pages in length and did not include an arbitration provision or any language limiting an accountholder’s ability to enforce the agreement in court.
BB&T acquired the predecessor bank through merger in 2001 and sent its Bank Services Agreement (“BSA”) to accountholders in 2001 with amended BSAs being sent in 2004 and 2017. Each version of the BSA contained arbitration provisions, with the 2017 version expanding the arbitration provision. Both the 2017 version and the previous version also contained class action waivers and all of the agreements included language stating that continued use of the account after receiving notice of the changes constituted acceptance of the changes.
In 2018, BB&T notified the plaintiffs that the interest rate for the MMIAs would drop from 6.5% to 1.05% which, not surprisingly, led to the plaintiffs here filing suit against BB&T in March, 2019.
BB&T moved to dismiss and compel arbitration. The district court granted those motions, Sevier filed an appeal to the Sixth Circuit which reversed finding that the plaintiffs did not mutually assent to the materially modified agreements, and in September of this year, BB&T filed a petition for a writ of certiorari with the Supreme Court of the United States. Sevier filed its Brief in Opposition on November 12 and now the industry will wait to see if the Supreme Court will agree to hear the matter.
Reasons to Watch: Beyond the potential for another Supreme Court decision regarding the enforcement of consumer arbitration agreements, this case is noteworthy because of the impact the Sixth Circuit ruling could have on the ability to enforce arbitration agreements added to updated account agreements and consumer contracts. While distinguishable, the Sixth Circuit’s ruling is yet another reminder that contested arbitration agreements are likely to continue receiving additional scrutiny in the current environment. Be sure to check TCPA Defense Force and FCRA Land for updates and additional guidance once the Supreme Court announces its decision granting or denying the petition.