Eleventh Circuit Rules that Delegation Provision is Valid under the FAA

In In re Checking Account Overdraft Litigation, No. 11-14282 (11th Cir. March 21, 2012). Maxine Given filed a class action against Manufacturers and Traders Trust Company (M&T Bank), alleging that M&T Bank improperly charged its checking account customers overdraft fees. The customer agreement included an arbitration clause obligating customers to arbitrate disputes arising out of the checking account; it also stated that whether a dispute was subject to arbitration was to be decided by an arbitrator.

The district court denied M&T Bank’s motion to compel arbitration, finding that Given’s claims were not within the scope of the parties’ arbitration agreement. M&T Bank appealed.

The Eleventh Circuit held that a clause delegating to an arbitrator the decision of whether the arbitration agreement covered a particular controversy was valid under the Federal Arbitration Act. The court stated that “[c]ourts should enforce valid delegation provisions as long as there is `clear and unmistakable’ evidence that the parties manifested their intent to arbitrate a gateway question.”

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by Victoria VanBuren
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