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Moss v. First Premier Bank

United States Court of Appeals, Second Circuit

August 29, 2016

DEBORAH MOSS, on behalf of herself and all others similarly situated, Plaintiff-Appellee,
FIRST PREMIER BANK, a South Dakota state-chartered bank, and BAY CITIES BANK, a Florida state-chartered bank, Defendants-Appellants.[1]

          Argued: April 8, 2016

         Appeal from a July 16, 2015 order of the United States District Court for the Eastern District of New York (Bianco, J.), vacating a prior order compelling arbitration. The parties agreed to arbitrate their disputes before the National Arbitration Forum ("NAF"), which no longer accepts consumer arbitrations. The district court held that it could not appoint a substitute arbitrator because the language of the arbitration agreement contemplated arbitration only before NAF. We agree with the district court and therefore AFFIRM.

          ERIC RIEDER, Bryan Cave LLP (Megan Awerdick Pierson, on the brief), New York, NY, for Defendant- Appellant Bay Cities Bank.

          Bryan R. Freeman, Lindquist & Vennum LLP, Minneapolis, MN; Bryan Craig Meltzer, Herrick, Feinstein LLP, for Defendant-Appellant First PREMIER Bank.

          J. AUSTIN MOORE, Stueve Siegel Hanson LLP (Norman E. Siegel, Steve N. Nix, Stueve Siegel Hanson LLP; Darren T. Kaplan, New York, NY; Hassan Zavareei, Jeffrey D. Kaliel, Tycko & Zavareei, Washington, D.C., on the brief), Kansas City, MO, for Plaintiff-Appellee.

          Before: POOLER, LIVINGSTON, and LOHIER, Circuit Judges.

          POOLER, Circuit Judge:

         Deborah Moss signed an arbitration agreement providing that any disputes between her and her payday lender would be resolved by arbitration before the National Arbitration Forum ("NAF"). When she tried to take her case to arbitration, however, NAF refused to accept it pursuant to a consent decree that prohibited NAF from accepting consumer arbitrations. The district court (Bianco, J.) construed the arbitration agreement as contemplating arbitration only before NAF and declined to compel Moss to arbitrate before a different arbitrator. We agree with the district court's construction of the agreement and accordingly affirm.


         Deborah Moss took out three payday loans from an online payday lender, SFS, Inc. ("SFS"). When a payday lender such as SFS agrees to loan a customer money, it relies on banks to serve as middlemen to debit the customer's account. These banks are known as "Originating Depository Financial Institutions, " or "ODFIs." First Premier Bank and Bay Cities Bank each served as an ODFI for one of Moss's payday loans with SFS.

         When Moss applied for the loans, she electronically signed an application that included an arbitration clause. The arbitration clause on one of the applications provided,

Arbitration of All Disputes: You and we agree that any and all claims, disputes or controversies between you and us, any claim by either of us against the other . . . and any claim arising from or relating to your application for this loan, regarding this loan or any other loan you previously or may later obtain from us, this Note, this agreement to arbitrate all disputes, your agreement not to bring, join or participate in class actions, regarding collection of the loan, alleging fraud or misrepresentation . . . including disputes regarding the matters subject to arbitration, or otherwise, shall be resolved by binding individual (and not joint) arbitration by and under the Code of Procedure of the National Arbitration Forum ("NAF") in effect at the time the claim is filed. . . . Rules and forms of the NAF may be obtained and all claims shall be filed at any NAF office, on the World Wide Web at, by telephone at 800-474- 2371, or at "National Arbitration Forum, P.O. Box 50191, Minneapolis, Minnesota 55405." Your arbitration fees will be waived by the NAF in the event you cannot afford to pay them.

         App'x at 168. The following notice is printed directly beneath the arbitration provision: "NOTICE: YOU AND WE WOULD HAVE HAD A RIGHT OR OPPORTUNITY TO LITIGATE DISPUTES THROUGH A COURT AND HAVE A JUDGE OR JURY DECIDE THE DISPUTES BUT HAVE AGREED INSTEAD TO RESOLVE DISPUTES THROUGH BINDING ARBITRATION." App'x at 168. The other applications Moss signed contained similar arbitration clauses.

         Moss filed a putative class action against First Premier Bank and Bay Cities Bank in federal court, alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, and state law. In short, Moss alleged that the banks unlawfully facilitated high-interest payday loans that have been outlawed in several states.

         The banks moved to compel arbitration on the basis of the arbitration agreements that Moss signed when she applied for the loans. Although the banks were not parties to those agreements, they argued that they were entitled to enforce the agreements against Moss under principles of estoppel. The district court agreed ...

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