Larsen v. Citibank FSB

Decision Date26 September 2017
Docket NumberNos. 15-10779 10-12957.,s. 15-10779 10-12957.
Citation871 F.3d 1295
Parties Thomas LARSEN, etc., et al., Plaintiffs, David Johnson, on behalf of himself and all others similarly situated, Plaintiff–Appellee, v. CITIBANK FSB, et al., Defendants, Keybank National Association, Defendant–Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

871 F.3d 1295

Thomas LARSEN, etc., et al., Plaintiffs, David Johnson, on behalf of himself and all others similarly situated, Plaintiff–Appellee,
v.
CITIBANK FSB, et al., Defendants, Keybank National Association, Defendant–Appellant.

Nos. 15-10779 10-12957.

United States Court of Appeals, Eleventh Circuit.

September 26, 2017


Stephen F. Rosenthal, Podhurst Orseck, PA , Miami, FL, Mark Adam Griffin, Karin B. Swope, Keller Rohrback, LLP, Seattle, WA, G. Franklin Lemond, Jr., Edward Adam Webb, Webb Klase & Lemond, LLC, Atlanta, GA, for Plaintiff–Appellee.

John M. Cooney, Alan Gary Kipnis, Arnstein & Lehr, LLP, Fort Lauderdale, FL, Ronald E. Beard, Rudy Albert England, Brian J. Meenaghan, Mary Schug Young, Lane Powell, PC, Seattle, WA, for Defendant–Appellant.

Before TJOFLAT, JULIE CARNES and MELLOY,* Circuit Judges.

JULIE CARNES, Circuit Judge:

Plaintiff David Johnson filed a putative class-action suit against Defendant KeyBank National Association in 2010, alleging that KeyBank improperly manipulated the order of debit card transactions in customer accounts in order to maximize collection of overdraft fees. This appeal relates not to the substance of Johnson's suit but to the enforceability of an arbitration provision contained in the agreement that governs Johnson's accounts with KeyBank. KeyBank seeks to compel arbitration of Johnson's substantive claims, while Johnson argues that the applicable arbitration provision is invalid against him. The district court denied KeyBank's motion to compel on grounds of unconscionability. KeyBank now appeals. Following oral argument and careful consideration of the record, we reverse the district court's order and remand the case to the district court with instructions to compel arbitration.

BACKGROUND

Johnson's relationship with KeyBank began in 1991, when he opened a checking account at Puget Sound Bank in Tukwila, Washington. KeyBank acquired Puget Sound Bank two years later and took over Johnson's checking account thereafter. Johnson has opened at least six additional deposit accounts with KeyBank since that time.

The underlying claims against KeyBank relate to a single checking account that Johnson has held jointly with his wife since 2001 (the "Joint Account"). In substance, Johnson argues that KeyBank improperly changed the sequence of debit card transactions from the Joint Account in order to

871 F.3d 1301

maximize overdraft fees charged to the account. Johnson filed a class-action suit in 2010 in the United States District Court for the Western District of Washington. The case was transferred for pretrial purposes to a multidistrict proceeding pending in the Southern District of Florida under 28 U.S.C. § 1407. Johnson seeks to litigate this dispute as a class action in federal court, while KeyBank urges that Johnson's claims must be resolved through individual arbitration. It has been settled in this proceeding that, in light of the Supreme Court's holding in AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), Johnson has waived his right to arbitrate on a class basis. See In re Checking Account Overdraft Litigation , 754 F.3d 1290, 1293 (11th Cir. 2014).

The timing of the formation of the pertinent contractual relationship between Johnson and KeyBank is a threshold factual issue in this appeal. Johnson first opened the checking account as an individual customer in 1991, and he held the account individually for ten years before converting it in 2001 to a joint account with his wife. Although Johnson recalls few of the details surrounding the conversion of the individual account to the Joint Account, there is no dispute that he and his wife visited a KeyBank branch on October 11, 2001, and signed a signature card (the "2001 Signature Card") to effectuate the conversion.

The 2001 Signature Card characterizes the Joint Account as a "replacement" of Johnson's preexisting individual account. Importantly, by signing the 2001 Signature Card, Johnson and his wife confirmed their understanding that "all accounts opened under this Plan are subject to [KeyBank's] Deposit Account Agreement" and acknowledged receipt of a copy of that agreement. While there is no testimonial evidence that Johnson and his wife were, in fact, provided a copy of the agreement at the time they signed the 2001 Signature Card, the record does reflect that it was standard KeyBank policy to provide a copy of that agreement to at least one of the parties to a joint account.

At the time, the governing agreement was KeyBank's June 2, 1997, deposit account agreement (the "1997 Agreement"), which contained an arbitration provision. The 1997 Agreement also preserved KeyBank's right to make unilateral changes to the terms of the Agreement after providing accountholders with appropriate notice, such as through so-called "statement messages" that KeyBank frequently mailed to customers along with their monthly account statements.

KeyBank has exercised this right of unilateral amendment several times since October 2001, and the deposit account agreement governing the Joint Account has evolved accordingly. The current version of the agreement—and the one on which Johnson bases his substantive claims—dates to December 2009 (the "2009 Agreement"). There are three features of the 2009 Agreement relevant to this appeal. First is, of course, the arbitration provision that Johnson now seeks to invalidate (the "2009 Arbitration Provision"). This provision has appeared in KeyBank's deposit account agreement in some form since at least 1995. Second is a choice-of-law provision, which specifies that Ohio law shall govern all disputes relating to customer accounts. Third is a change-in-terms provision, which preserves KeyBank's right "to change or add to" the terms of the Agreement upon "such notice ... as [KeyBank] determine[s] is appropriate."

KeyBank maintains that Johnson affirmatively agreed to the 1997 Agreement—including its arbitration provision—when he signed the 2001 Signature Card. That being so, the Joint Account has, at all

871 F.3d 1302

times since its creation in 2001, been governed by a deposit account agreement that contains an agreement to arbitrate. As such, KeyBank concludes, Johnson is unequivocally bound by the 2009 Arbitration Provision, which is merely an updated version of the arbitration provision to which Johnson originally assented. KeyBank further contests the district court's conclusion that the 2009 Arbitration Provision is unenforceable under applicable state law.

Notwithstanding his written attestation confirming he had received the agreement, Johnson counters that he did not receive a copy of the 1997 Agreement at the time the account was formed and therefore did not bind himself to it upon signing the 2001 Signature Card. He further insists that he has not separately agreed to arbitrate at any point during the lifetime of the Joint Account. Instead, he argues, the Joint Account is governed by the earlier version of the KeyBank deposit account agreement governing his original individual account, which agreement lacked an arbitration provision altogether. Thus, Johnson argues that no agreement to arbitrate exists between himself and KeyBank. In the alternative, he argues that—even if an agreement to arbitrate exists between the parties—such an agreement is unconscionable and illusory under relevant state law.

KeyBank moved to compel arbitration in the district court on August 22, 2014. In deciding this motion, the district court considered only two issues: (1) whether the law of Washington or of Ohio governs the enforceability of the arbitration provision; and (2) whether, under applicable state law, the arbitration provision is unconscionable and therefore unenforceable. The district court did not consider the threshold question of whether an agreement to arbitrate was formed in the first instance.

In its final analysis, the district court denied KeyBank's motion to compel arbitration, finding that Washington law governed the question of enforceability and that, under such law, the provision was unconscionable. KeyBank has appealed from this order. We now reverse the district court's decision and hold that arbitration must be compelled in this case.

STANDARD OF REVIEW

We review a district court's denial of a motion to compel arbitration de novo . Collado v. J. & G. Transp., Inc. , 820 F.3d 1256, 1259 (11th Cir. 2016). We may affirm the district court's decision on any ground supported by the record. Ironworkers Local Union 68 v. AstraZeneca Pharms., LP , 634 F.3d 1352, 1360 (11th Cir. 2011).

DISCUSSION

The parties have raised several issues on appeal, only two of which were addressed by the district court below. We may decide each of the issues the parties have raised on de novo review, as the parties have been fully heard on the issues and the record is complete. Walter v. Blue Cross & Blue Shield United of Wisconsin , 181 F.3d 1198, 1202 (11th Cir. 1999). Considering each argument in turn, we find no ground on which to relieve Johnson of his commitment to arbitrate this dispute.

I. Existence of Agreement to Arbitrate

The threshold issue is whether, as a...

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