In Re: Checking Account Overdraft Litigation MDL No. 2036 Jeffrey Buffington v. Suntrust Banks, Inc.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 11-14316 ELEVENTH CIRCUIT
Non-Argument Calendar MARCH 1, 2012
________________________ JOHN LEY
CLERK
D.C. Docket Nos. 1:09-md-02036-JLK,
1:09-cv-23632-JLK
In Re: CHECKING ACCOUNT OVERDRAFT LITIGATION
lllllllllllllMDL NO. 2036
____________________________________________
JEFFREY BUFFINGTON,
JEANETTE BUFFINGTON,
on behalf of themselves and
all other similarly situated,
Plaintiffs - Appellees,
versus
SUNTRUST BANKS, INC.,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(March 1, 2012)
Before TJOFLAT, PRYOR and FAY, Circuit Judges.
PER CURIAM:
SunTrust Banks, Inc. appeals the denial of its renewed motion to compel
Jeffrey and Jeanette Buffington to arbitrate their complaint against SunTrust. 9
U.S.C. § 16(a)(1)(C). The Buffingtons sued SunTrust in a Georgia court for
allegedly violating state law by collecting overdraft fees under its deposit
agreement, and SunTrust removed the action to district court and moved to compel
arbitration based on an arbitration clause in the agreement. The district court
denied the motion to compel on the ground that the arbitration clause was
substantively unconscionable because it contained a class action waiver, but we
vacated that ruling and remanded for further consideration in the light of AT&T
Mobility LLC v. Concepcion, 563 U.S. ___,131 S. Ct. 1740 (2011). On remand,
SunTrust renewed its motion to compel, which the district court denied on the
ground that the arbitration clause was substantively unconscionable under Georgia
law because provisions granting SunTrust the right to recover its expenses for
arbitration allocated disproportionately to the Buffingtons the risks of error and
loss inherent in dispute resolution. Because the reimbursement provisions are
conscionable under Georgia law, we reverse the order denying the renewed motion
to compel of SunTrust and remand with instructions to compel arbitration.
I. BACKGROUND
The Buffingtons filed a complaint in a Georgia court “on behalf of
themselves and all persons similarly situated” against SunTrust. The Buffingtons
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complained that SunTrust breached its contract, converted funds, acted
unconscionably, and was unjustly enriched by assessing overdraft fees improperly
on the Buffingtons’ joint checking account. The Buffingtons alleged that
SunTrust processed transactions deceptively to maximize overdraft fees and
assessed overdraft fees when accounts contained sufficient funds to pay charges.
SunTrust removed the complaint to federal court and moved to compel the
Buffingtons to arbitrate their complaint individually. SunTrust argued that the
Buffingtons had agreed on page 22 of the Rules and Regulations for Deposit
Accounts to submit “any unresolvable dispute, controversy or claim . . . other than
any Excluded Claim or Proceeding, . . . concerning, arising out of or relating to the
Account or these rules and regulations, including any claims regarding the
applicability, interpretation, scope or validity of this arbitration clause and/or these
rules and regulations, . . . [to] individual (not class or classwide) binding
arbitration . . . .” SunTrust requested that the district court stay the Buffingtons’
action pending resolution of the arbitration proceeding.
The Buffingtons opposed the motion to compel and argued that the
arbitration clause was unconscionable. The Buffingtons argued, relevant to this
appeal, that the arbitration clause was procedurally unconscionable because it was
“not presented in a conspicuous manner and fail[ed] to present customers with a
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meaningful choice” because they were “offered [arbitration] on a take-it-or-leave-
it basis.” The Buffingtons also argued that the clause was substantively
unconscionable because their “limited potential recovery” was eclipsed by the
costs of arbitration, including the potential obligation to reimburse SunTrust for its
expenses as a prevailing party. The Buffingtons based their substantive
unconscionability argument on a provision in the arbitration clause stating that
“[t]he prevailing party shall be entitled to an award of the costs and expenses of
the arbitration including an award of reasonable attorneys’ fees for any Claim(s) in
which the party has prevailed, except as otherwise required by applicable law.”
SunTrust replied that the arbitration clause was conscionable. SunTrust
argued that the clause was procedurally conscionable as “prominent and
conspicuous.” SunTrust also argued that the clause was substantively
conscionable because its reimbursement provision “guarantee[d] an award of
attorneys’ fees and expenses to the prevailing party” and the Buffingtons’
potential recovery exceeded the $4,000 that they had accumulated in overdraft
fees.
After we remanded for the district court to reconsider the motion to compel
in the light of Concepcion, SunTrust renewed its motion to compel arbitration and
the Buffingtons opposed the renewed motion. The Buffingtons repeated their
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argument that arbitration was cost-prohibitive and also argued that the arbitration
clause was substantively unconscionable because it contained “fee-shifting
provisions” that “effectively preclude[d] SunTrust customers from bringing a
claim for [the] improper imposition of overdraft fees.” The Buffingtons cited two
provisions in support of their unconscionability argument: (1) the right of a
prevailing party to have its costs reimbursed; and (2) the right of a party
demanding arbitration to recover “reasonable costs and expenses, including
attorneys’ fees” if the other party “wrongfully fails to comply with” that demand.
The district court denied the renewed motion to compel. The district court
ruled that the arbitration clause was substantively unconscionable because two
provisions in the clause “place[d] nearly all the risks of engaging in dispute
resolution” unfairly on the Buffingtons. The district court based its decision on
the reimbursement provision cited by the Buffingtons and a second provision that
permitted SunTrust, “[i]f [a depositor] owe[d] [it] money . . . [that] becomes due, .
. . [to exercise its] right under the law (called right of offset or setoff) . . . to use
the money from [the depositor’s] Account to pay the debt.”
II. STANDARD OF REVIEW
We review de novo the denial of a motion to compel arbitration. Jenkins v.
First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 873 (11th Cir. 2005).
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III. DISCUSSION
SunTrust contends that the district court should have compelled the
Buffingtons to arbitrate their complaint. SunTrust argues that the district court
erroneously based its finding of substantive unconscionability on a provision not
mentioned by either party and, alternatively, that the clause is severable. Because
we agree with SunTrust that the arbitration clause is conscionable, we need not
address whether the clause is severable.
The district court erred in its resolution of the issue of substantive
conscionability. The arbitration agreement permitted SunTrust to receive “an
award of the costs and expenses of the arbitration including an award of
reasonable attorneys’ fees for any Claim(s) in which [it] . . . prevailed” and to
collect that amount when it “bec[ame] due . . . [under what is] (called right of
offset or setoff).” The district court concluded that these provisions were
unconscionable, but under Georgia law “[a] contract allowing a bank a set-off of
its indebtedness to a depositor against the depositor’s indebtedness to it is not
unconscionable.” Greene v. Citizens & S. Bank of Cobb Cnty., 213 S.E.2d 175,
178 (Ga. App. 1975); see also Musnick v. King Motor Co. of Fort Lauderdale, 325
F.3d 1255, 1259–60 (11th Cir. 2003). The district court also found
unconscionable the right of SunTrust to seize funds that are jointly owned, but “if
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a party to a multiple-party account is indebted to a financial institution, the
financial institution has a right to setoff against the account in which the party has
. . . a present right of withdrawal,” Ga. Code Ann. § 7-1-821. The arbitration
agreement is not substantively unconscionable.
The district court also ruled that the arbitration clause was procedurally
unconscionable, but to be procedurally unconscionable, under Georgia law, a
contract must be “so one-sided” that “‘no sane man not acting under a delusion
would make and that no honest man would’” participate in the transaction. NEC
Techs., Inc. v. Nelson, 478 S.E.2d 769, 771 & n.2 (Ga. 1996) (quoting R.L.
Kimsey Cotton Co. v. Ferguson, 214 S.E.2d 360, 363 (Ga. 1975)). The arbitration
clause in the Buffingtons’ agreement falls well short of this standard. Although
the district court found troubling that the clause was presented to the Buffingtons
“on a take-it-or-leave-it basis with no opt-out provision,” under Georgia law, an
adhesion contract is not per se unconscionable. See Crawford v. Results Oriented,
Inc., 548 S.E.2d 342, 343 (Ga. 2001) (citing Munoz v. Green Tree Fin. Corp., 542
S.E.2d 360, 365 (S.C. 2001)); see also Caley v. Gulfstream Aerospace Corp., 428
F.3d 1359, 1377 (11th Cir. 2005) (despite the existence of a “bargaining disparity”
common to an employment relationship, it did not render the arbitration agreement
entered unconscionable under Georgia law). As the Supreme Court has
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recognized, “[m]ere inequality in bargaining power . . . is not a sufficient reason to
hold that arbitration agreements are never enforceable . . . .” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S. Ct. 1647, 1655 (1991).
The district court also criticized the arbitration clause as “not conspicuous”
because it is “buried on the twenty-second page of a forty page, single-spaced, fine
print document,” but the district court overlooks other aspects of the document
that make apparent the agreement to arbitrate. The arbitration clause is
“capitalized in the . . . table of contents,” and an introductory paragraph to the
clause urges account holders to READ THIS PROVISION CAREFULLY AS
IT WILL HAVE A SUBSTANTIAL IMPACT ON HOW LEGAL CLAIMS
YOU AND WE HAVE AGAINST EACH OTHER and explains in bold typeset
what kinds of disputes are subject to arbitration. The Supreme Court invalidated
in Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S. Ct. 1652 (1996), a
requirement under state law that operated to “singl[e] out arbitration provisions for
suspect status” on the ground that the Federal Arbitration Act requires that “such
provisions be placed ‘upon the same footing as other contracts.’” Id. at 687, 116
S. Ct. at 1656 (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 511, 94 S. Ct.
2449, 2453 (1974)). Neither the district court, nor the Buffingtons on appeal, cite
any case law requiring that notice of or the provisions relating to arbitration be
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“conspicious” and, even if this were the standard, the language in the Buffingtons’
agreement regarding arbitration is conspicious. The arbitration agreement is not
procedurally unconscionable.
The Federal Arbitration Act provides that an arbitration agreement “shall be
. . . enforceable, save upon such grounds as exist at law or in equity for [its]
revocation.” 9 U.S.C. § 2. The arbitration clause in the Buffingtons’ agreement is
neither procedurally nor substantively unconscionable. Because SunTrust is
entitled to “an order directing that such arbitration proceed in the manner provided
for in [its deposit] agreement,” id. § 4, we need not address the alternative
argument of SunTrust about severability.
IV. CONCLUSION
We REVERSE the order that denied the renewed motion of SunTrust to
compel the Buffingtons to arbitration. We REMAND with instructions to compel
arbitration.
REVERSED AND REMANDED WITH INSTRUCTIONS.
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