Garcia v. Wachovia Bank, N.A. (In re Checking Account Overdraft Litig. MDL No.)
| Decision Date | 17 October 2016 |
| Docket Number | CASE NO. 1:09-MD-02036-JLK |
| Parties | IN RE: CHECKING ACCOUNT OVERDRAFT LITIGATION MDL No. 2036 THIS DOCUMENT RELATES TO: FIRST TRANCHE ACTIONS Garcia, et al. v. Wachovia Bank, N.A. S.D. Fla. Case No. 1:08-cv-22463-JLK Spears-Haymond v. Wachovia Bank, N.A. S.D. Fla. Case No. 1:09-cv-21680-JLK N.D. Cal. Case No. 3:08-cv-4610 |
| Court | U.S. District Court — Southern District of Florida |
THIS CAUSE is before the Court upon Defendant's Motion to Dismiss All Claims of Unnamed Class Members in Favor of Arbitration (DE 4183), filed June 10, 2015. The Court has carefully considered the motion, response, reply, supplemental authority, and the documents attached to each, as well as the oral argument of counsel. The Court denies the motion for the reasons explained more fully below.
Each Wachovia account was governed by a Deposit Agreement that included an arbitration clause. See Class Arbitration Motion, p. 1. The "material terms remained consistent over the relevant time period." Id. at 3 n.2; see also Decl. of B. Arrowood, DE 3292-1 at ¶ 6. The clause is "permissive, rather than mandatory, allowing either party to request arbitration." See Order Denying Arb., DE 3415 at 2; also Dep. Agreement ("If either you or we request, any dispute or claim concerning your account or your relationship with us will be decided by binding arbitration . . ."), DE 3292-15 at ¶ 25. Thus, for a party to invoke its arbitration rights, it must make a timely request to arbitrate. See DE 2224 at 2 (). As the Ninth Circuit noted in rejecting Wells Fargo's attempt to compel the members of a certified class to arbitrate, such a permissive arbitration clause "stands in contrast to the mandatory arbitration provision found in many consumer contracts, such as the provision in Concepcion." Gutierrez v. Wells Fargo Bank, 704 F.3d 712, 720 (9th Cir. 2012) (citing AT&T Mobility, LLC v. Concepcion, 563 U.S. 333 (2011)).
On November 6, 2009, this Court directed Wachovia to file all "merits and non-merits motions," including motions to compel arbitration. See DE 134; also Garcia v. Wachovia Corp., 699 F.3d 1273, 1276 (11th Cir. 2012). Nevertheless, Wachovia did not invoke arbitration. Instead, Wachovia and other banks moved to dismiss, a motion which this Court denied for the most part. See DE 217, 305.
In April 2010, this Court afforded Wachovia yet another opportunity to invoke arbitration by directing the Bank, if it so chose, to move to compel. See DE 360. The Bank responded that it did not intend to seek arbitration except possibly as to one recently added Plaintiff.1 See DE 387; also Garcia, 699 F.3d at 1276. On May 21, 2010, Wachovia filed its answers andaffirmative defenses to the amended complaints. See DE 503, 504. Soon thereafter, the Court opened discovery and established litigation deadlines. See DE 463, 891. Substantial litigation ensued, during which Wachovia litigated the case as a major class action:
For more than a year, the parties prepared their cases for trial. They engaged in extensive discovery: they served and answered interrogatories, produced approximately 900,000 pages of discovery documents, and took approximately 20 depositions. The parties also litigated several motions before the district court.
Garcia, 699 F.3d at 1276; see also DE 3415 at 5 ().
On April 29, 2011, just after Concepcion was published, Wachovia first sought to compel arbitration against the named Plaintiffs. See DE 1384. The Bank claimed that seeking arbitration prior to Concepcion would have been futile. This Court (and subsequently the Eleventh Circuit) rejected this argument and found that Defendant, because of its own strategic litigation decisions and conduct, waived any right it may have once had to compel arbitration. DE 3415 at 5-9; Garcia, 699 F.3d at 1277-80. That motion and subsequent appeal delayed this case for a year-and-a-half.
Following the Eleventh Circuit's mandate, Wachovia once again fully embraced the litigation machinery. See, e.g., DE 3191, 3193, 3194 (agreeing to revised scheduling and class certification deadlines), 3283, 3284, 3285, 3286, 3288, 3289, 3290 (opposing Plaintiffs' amended motions for class certification and moving to strike certain evidence).
Several months after remand, Defendant moved to enforce arbitration against the proposed classes which this Court denied on April 8, 2013. See DE 3292, 3415. On appeal, the Eleventh Circuit vacated that decision, held this Court lacked jurisdiction to resolve the question,and the named plaintiffs lacked standing to defend that finding on appeal. See Spears-Haymond v. Wells Fargo Bank, N.A., 780 F.3d 1031, 1034 (11th Cir. 2015).
Following the Eleventh Circuit's mandate in Spears-Haymond, and with the benefit of oral argument, this Court granted Plaintiffs' Motion for Class Certification on June 8, 2015. See DE 4180. On June 10, 2015, Wachovia filed another arbitration motion as to the absent class members. See DE 4183. On June 22, 2015, Wachovia filed a Motion for Reconsideration of the Class Certification Order. See DE 4186. On June 25, 2015, Plaintiffs filed their Motion to Defer Briefing and Ruling on Wachovia's Class Arbitration Motion, which the Court granted on June 29, 2015. See DE 4189, 4193.
On August 21, 2015, this Court denied reconsideration. See DE 4211. Defendant then petitioned the Eleventh Circuit for review pursuant to Rule 23(f). On December 1, 2015, the Eleventh Circuit denied the petition. See DE 4253. Thereafter, Plaintiffs sought leave to conduct limited, arbitration-specific discovery prior to responding to the Class Arbitration Motion, which this Court granted. See DE 4271, 4282. Following discovery, Plaintiffs filed their opposition to the Class Arbitration Motion. See DE 4294.
In order to resolve the Class Arbitration Motion, this Court must first evaluate the scope of the Eleventh Circuit's decision in Spears-Haymond. Wachovia argues that Spears-Haymond bars the unnamed class members from advancing the argument that the Bank waived its arbitration rights. See DE 4183 at 7-8. Conversely, Plaintiffs argue that Spears-Haymond stands for the proposition that a decision as to class arbitration is one that is appropriately resolved only after class certification. See DE 4294 at 4-5. The Court agrees with Plaintiffs.
In Spears-Haymond, the Eleventh Circuit held that because the class had not yet been certified, there was no justiciable controversy between the Bank and the unnamed class members and thus this Court lacked jurisdiction to decide whether their claims were subject to arbitration. 780 F.3d at 1037. Spears-Haymond did not hold that a defendant can never waive arbitration rights as to class members, or that a defendant's pre-certification litigation activities are irrelevant to the waiver inquiry. The Eleventh Circuit did not address the key question - whether Defendant waived its arbitration rights as to the unnamed class members. Spears-Haymond expressly left the resolution of the unnamed class member waiver issue for another day. 780 F.3d at 1039 (). Thus, now that the classes have been certified, the unnamed class members are entitled to argue that Defendant has waived its right to enforce arbitration.
The Eleventh Circuit has set forth the following test for waiver of arbitration rights:
"First, [courts] decide if, under the totality of the circumstances, the party has acted inconsistently with the arbitration right." Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1315-16 (11th Cir. 2002) (internal quotation marks omitted). A party acts inconsistently with the arbitration right when the party "substantially invokes the litigation machinery prior to demanding arbitration." S & H Contractors, 906 F.2d at 1514 (internal quotation marks and alterations omitted). "[S]econd, we look to see whether, by [acting inconsistently with the arbitration right], that party has in some way prejudiced the other party." Ivax Corp., 286 F.3d at 1316 (internal quotation marks omitted). To determine whether the other party has been prejudiced, "we may consider the length of delay in demanding arbitration and the expense incurred by that party from participating in the litigation process." S & H Contractors, 906 F.2d at 1514.
Garcia, 699 F.3d at 1277. This Court and the Eleventh Circuit previously held the named Plaintiffs satisfied the waiver test. The Court now applies the same test to the facts and circumstances of the class members.
It is well-established that active and voluntary participation in litigation is inconsistent with arbitration. See S & H, 906 F.2d at 1514. This reflects Congress' intent that arbitrable disputes be moved "out of court and into arbitration as quickly and easily as possible." Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983). Among the FAA's central purposes is to encourage efficient and speedy dispute resolution. AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 344-45 (2011); also Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 220 (1985) (...
To continue reading
Request your trial