Virginia Lawyers Weekly VA Lawyers Weekly
A plaintiff who has filed a putative class action seeking to avoid collection on payday loans he obtained online has his case sent back to the district court, as the 4th Circuit says the trial court erred in denying defendant banks’ renewed motions seeking to enforce arbitration clauses in the loan agreements between plaintiff and the payday lenders.
Plaintiff’s putative class action contends defendant banks are used by the lenders to debit payments from customer bank accounts in states where the loans are illegal and unenforceable.
Our first determination is whether we have jurisdiction. Plaintiff argues the banks are appealing an interlocutory order denying motions for reconsideration – rather than an order denying motions seeking arbitration under §§ 3 or 4 of the Federal Arbitration Act – and therefore that § 16(a) of the FAA, which would otherwise confer jurisdiction, does not apply. We disagree. Because the renewed motions by their very terms sought enforcement of plaintiff’s purported arbitration agreements, we have jurisdiction over this appeal regardless of the district court’s characterization of those motions.
Defendants BMO Harris and Bay Cities each labeled their motions as a “Renewed Motion to Compel Arbitration and to Stay Litigation.” The terms “compel” and “stay” invoke §§ 4 and 3, respectively. The two banks thus employed the first, simplest and surest way to guarantee appellate jurisdiction under § 16(a). We generally do not look beyond the caption of a denied motion when determining our jurisdiction under the FAA unless we suspect the motion has been mis-captioned in an attempt to take advantage of § 16(a). There is no basis for suspicion here: BMO Harris and Bay Cities both made clear in their respective motions that they were seeking enforcement of arbitration clauses.
Unlike BMO Harris and Bay Cities, defendant Generations Federal Credit Union moved to dismiss plaintiff’s claims against it. We have previously held that a motion to dismiss is an appropriate vehicle to invoke the full spectrum of FAA remedies, including a stay under § 3. Here, Generations asked the district court to dismiss plaintiff’s claims against it because plaintiff agreed that any disputes related to the loan agreement would be determined exclusively through arbitration. This language makes clear that Generations moved to enforce an arbitration agreement.
We conclude that § 16(a) provides us with jurisdiction over this interlocutory appeal because the essence of the requested relief in the renewed motions is that the issue presented be decided exclusively by arbitration and not by a court. We deny plaintiff’s motion to dismiss for lack of jurisdiction.
Turning to the merits of the appeal, we conclude the district court erred by construing the renewed motions as motions for reconsideration and then denying them on that basis. No authority – not the FAA, the Federal Rules of Civil Procedure or any other source of law of which we are aware – limits a party to only one motion under §§ 3 or 4 of the FAA. Also, because the renewed motions presented different issues than did the initial motions, the district court could not have relied on the law of the case doctrine to deny the renewed motions. Neither the fact that the district court denied the initial motions nor the court’s reasoning for doing so dictated the resolution of the renewed motions. We must vacate the court’s order as inconsistent with the emphatic federal policy in favor of arbitral dispute resolution.
On remand, the district court must determine whether plaintiff’s claims are referable to arbitration under an agreement in writing for such arbitration, unless it finds that the banks are in default in proceeding with such arbitrations. With respect to the two banks that seek orders compelling arbitration, the court must decide whether those banks are aggrieved by the failure, neglect or refusal of plaintiff to arbitrate under a written agreement for arbitration.
Vacated and remanded.
Dillon v. BMO Harris Bank NA (Duncan) No. 14-1728, May 29, 2015; USDC at Greensboro, N.C. (Eagles) Kevin S. Ranlett for appellants; Stephen N. Six for appellee. VLW 015-2-087, 19 pp.
