Parm v. Nat'l Bank of Cal., N.A.

• Decision Date: 29 August 2016
• Docket Number: No. 15–12509,15–12509
• Citation: 835 F.3d 1331
• Parties: Jessica Parm, Plaintiff–Appellee, v. National Bank of California, N.A., Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

835 F.3d 1331

Jessica Parm, Plaintiff–Appellee,

v.National Bank of California, N.A., Defendant–Appellant.

No. 15–12509

United States Court of Appeals, Eleventh Circuit.

Date Filed: August 29, 2016

Darren T. Kaplan, Darren Kaplan Law Firm, PC, New York, NY, Norman E. Siegel, John Austin Moore, Steve N. Six, Stueve Siegel Hanson, LLP, Kansas City, MO, Julie Feigeles, Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Miami, FL, Jeffery D. Kaliel, Hassan Zavareei, Tycko & Zavareei, LLP, Washington, DC, for Plaintiff–Appellee.

John Friedemann, Kyle M. Fisher, Friedemann Goldberg, LLP, Santa Rosa, CA, Ross A. Albert, John P. MacNaughton, Morris Manning & Martin, LLP, Atlanta, GA, John Beisner, Jessica D. Miller, Anand S. Raman, Geoffrey M. Wyatt, Skadden Arps Slate Meagher & Flom, LLP, Washington, DC, Stuart H. Singer, Boies Schiller & Flexner, LLP, Fort Lauderdale, FL, for Defendant–Appellant.

Before ED CARNES, Chief Judge, DUBINA, Circuit Judge, and HUCK,^* District Judge.

DUBINA, Circuit Judge:

This appeal arises out of a lawsuit filed by Appellee Jessica Parm (“Parm”) against Appellant Northern Bank of California (“NBCal”) regarding a payday loan Parm acquired in 2013. The district court denied NBCal's motion to compel arbitration under Parm's loan agreement, finding the arbitration clause unenforceable because it was unconscionable and required the parties to arbitrate in an unavailable forum. NBCal argues that the agreement does provide an arbitral forum, and the district court erred when it failed to submit the question of arbitrability to an arbitrator under the agreement's delegation clause. After reviewing the record, reading the parties' briefs, and having the benefit of oral argument, we affirm.

I. BACKGROUND

A. Facts

In 2013, Parm entered into a loan agreement with Western Sky Financial, LLC (“Western Sky”) over the internet from her computer in Georgia. Western Sky is a South Dakota limited liability company owned by a member of the Cheyenne River Sioux Tribe (“CRST”). The agreement provided that Parm would receive a $1,000 loan subject to certain fees and an annual interest rate of 233.71%, totaling $4,831.06 in payments. The loan also provided that Western Sky could initiate automated or other electronic fund transfers from the bank account she included on her loan application. NBCal is the financial institution that authorized these electronic transfers.

Resolution of this appeal requires interpretation of the loan agreement's arbitration provision. The provision states in relevant part:

WAIVER OF JURY TRIAL AND ARBITRATION. PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. Unless you exercise your right to opt-out of arbitration in the manner described below, any dispute you have with Western Sky or anyone else under this loan agreement will be resolved by binding arbitration. Arbitration replaces the right to go to court, including the right to have a jury, to engage in discovery (except as may be provided in the arbitration rules), and to participate in a class action or similar proceeding. In Arbitration, a dispute is resolved by an arbitrator instead of a judge or jury. Arbitration procedures are simpler and more limited than court procedures. Any Arbitration will be limited to the dispute between yourself and the holder of the Note and will not be part of a class-wide or consolidated arbitration proceeding.

Agreement to Arbitrate . You agree that any Dispute, except as provided below, will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement.

Arbitration Defined . Arbitration is a means of having an independent third party resolve a Dispute. A “Dispute” is any controversy or claim between you and Western Sky or the holder or servicer of the Note. The term Dispute is to be given its broadest possible meaning and includes, without limitation, all claims or demands (whether past, present, or future, including events that occurred prior to the opening of this Account), based on any legal or equitable theory (tort, contract, or otherwise), and regardless of the type of relief sought (i.e. money, injunctive relief, or declaratory relief). A Dispute includes, by way of example and without limitation, any claim based upon marketing or solicitations to obtain the loan and the handling or servicing of my account whether such Dispute is based on a tribal, federal or state constitution, statute, ordinance, regulation, or common law, and including any issue concerning the validity, enforceability, or scope of this loan or the Arbitration agreement.

The following section, entitled “Choice of Arbitrator,” notified Parm that she

shall have the right to select any of the following arbitration organizations to administer the arbitration: the American Arbitration Association ...; JAMS ...; or an arbitration organization agreed upon by you and the other parties to the Dispute. The arbitration will be governed by the chosen arbitration organization's rules and procedures applicable to consumer disputes, to the extent that those rules and procedures do not contradict either the law of the Cheyenne River Sioux Tribe or the express terms of this Agreement to Arbitrate.

...

B. Procedural History

Parm filed a putative class action lawsuit against NBCal in December 2014. Her complaint alleged that NBCal, acting as an originating depository financial institution, illegally permitted Western Sky to initiate electronic fund transfers from borrower checking accounts under unlawful payday loan agreements. The complaint also challenged the enforceability of the arbitration provision in the agreement by claiming that “the purported tribal arbitral forum and governing rules do not exist now and did not exist at the time the agreements were electronically signed.” NBCal filed motions to compel arbitration under Parm's loan agreement and to dismiss the complaint. Relying on our opinion in Inetianbor v. CashCall, Inc. , 768 F.3d 1346 (11th Cir. 2014), cert. denied , ––– U.S. ––––, 135 S.Ct. 1735, 191 L.Ed.2d 701 (2015) and its discussion in Parnell v. CashCall, Inc. , 181 F.Supp.3d 1025, 2016 WL 3356937 (N.D. Ga. Mar. 14, 2016), the district court found the arbitration agreement unenforceable for lack of available forum and unconscionability and denied NBCal's motion to compel arbitration. NBCal subsequently perfected this appeal.

II. STANDARD OF REVIEW

“We review de novo the district court's denial of a motion to compel arbitration.” Jenkins v. First Am. Cash Advance of Ga., LLC , 400 F.3d 868, 873 (11th Cir. 2005).

III. DISCUSSION

The arbitration agreement in this case is governed by the Federal Arbitration Act (“FAA”) because the loan agreement was executed via interstate commerce. See 9 U.S.C. § 2 ; Parnell v. CashCall, Inc. , 804 F.3d 1142, 1146 (11th Cir. 2015). “The FAA places arbitration agreements on equal footing with all other contracts and sets forth a clear presumption—‘a national policy’—in favor of arbitration.” Parnell , 804 F.3d at 1146 (citing Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 443, 126 S.Ct. 1204, 1207, 163 L.Ed.2d 1038 (2006) ). Section 4 of the FAA permits a party, such as NBCal, to seek assistance from a district court where the other party refuses to proceed under a written agreement to arbitrate. See 9 U.S.C. § 4. That court must treat the agreement to arbitrate as “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Id. at § 2 ; see Parnell , 804 F.3d at 1146 (“Arbitration provisions will be upheld as valid unless defeated by fraud, duress, unconscionability, or another ‘generally applicable contract defense.’ ” (quoting Rent–A–Center v. Jackson , 561 U.S. 63, 67–68, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010) )).

The loan agreement in this case contains a delegation clause, requiring the parties to submit threshold issues of “validity, enforceability, or scope of the loan or the Arbitration agreement” to arbitration. Delegation clauses are severable from the underlying agreement to arbitrate. See Rent–A–Center , 561 U.S. at 70–73, 130 S.Ct. at 2778–79. Because the loan agreement contains a delegation clause, our review is limited, at least initially, to Parm's direct challenges to that clause.¹ See Rent–A–Center , 561 U.S. at 72–73, 130 S.Ct. at 2779 ; Parnell , 804 F.3d at 1148–49. Only if we determine that the delegation clause is itself invalid or unenforceable may we review the enforceability of the arbitration agreement as a whole.

A.

We first assess Parm's contention and the district court's finding that the delegation clause is unenforceable because the arbitration agreement provides no available forum for an arbitrator to decide threshold issues of arbitrability. Both rely on our opinion in Inetianbor, which found a similar Western Sky arbitration agreement unenforceable due to the unavailability of the CRST as the exclusive and integral arbitral forum. Inetianbor , 768 F.3d at 1352–54. And it is true that if we find Parm's arbitration agreement materially indistinguishable, we are bound by prior panel precedent to follow Inetianbor's conclusion that the agreement is unenforceable for lack of available forum and affirm the district court. See Anders v. Hometown Mortgage Servs., Inc. , 346 F.3d 1024, 1031 (11th Cir. 2003). NBCal contends that Inetianbor does not bind this court as the distinct “Choice of Arbitrator” clause gives Parm the option to select the American Arbitration Association (“AAA”) or JAMS—both well-respected arbitration organizations—as neutral arbitral fora.² To assess these arguments, we turn to the text of Parm's arbitration agreement.

First, because the parties have not provided us with a clear statement of CRST contract interpretation, we apply Georgia's plain-meaning rule to interpret the loan agreement. See Parnell , 804 F.3d at 1147 ...