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11th Circuit Court recognizes arbitration provision under the Dodd-Frank Act
The United States Court of Appeals for the 11th Circuit published a decision last month holding that the Dodd-Frank Act “does not prohibit the enforceability of delegation clauses contained in consumer arbitration agreements ‘in any way.’” In this case of Attix. v. Carrington Mortgage Services, LLC., the 11th Circuit Court reversed a decision from the U.S. District Court denying Carrington’s motion to compel arbitration. This opinion remains significant because it is one of the first appellate decisions in the country concerning the Dodd-Frank Act’s arbitration provision.
Of note, in this case, the plaintiff is suing the defendant for convenience fees charged by a third-party phone payment processor. The third-party had terms and conditions that contained an arbitration clause as well as a clause that requires an arbitrator to decide the arbitrability of the claims. There is no dispute that the plaintiff accepted the terms and conditions, but the plaintiff is arguing that they violate the Dodd-Frank Act.
The 11th Circuit Appeals Court ultimately decided that because the Dodd-Frank Act does not specify who should determine the arbitrability of claims and in this case the arbitration agreement specifies that an arbitrator should make the decision of arbitrability, then that is what should follow. If the Forced Arbitration Injustice Repeal (FAIR) Act becomes law, it does address the issue and specifies that the court should determine the applicability of the FAIR Act to an agreement, not an arbitrator.
NAFCU will continue to monitor updates on this case and any future legal decisions of note to credit unions.