Attempt To Add An Arbitration Clause To A Customer Agreement During Litigation Is Ineffective

In Dasher v. RBC Bank (USA), Case No. 15-13871 (decided February 13, 2018), the United States Court of Appeals for the Eleventh Circuit considered whether a bank could invoke an arbitration clause to block litigation when the bank had added the arbitration clause to its customer agreement by amendment while the litigation was in progress. The Eleventh Circuit held that the bank could not.

Mr. Dasher filed a lawsuit against RBC Bank regarding the bank's overdraft practices. A 2008 customer agreement contained an arbitration agreement, but a 2012 amendment to the customer agreement, issued while the case was pending, had removed the arbitration clause. The district court ruled that the 2012 amendment controlled and refused to compel arbitration. While the parties continued to litigate over arbitration under the 2012 agreement, and after the district court had issued its ruling regarding the 2012 agreement, the bank in February 2013 issued an amendment to its customer agreement that included an arbitration clause. The amendment could be accepted by the customer by either not opting out or continuing to use the account. Mr. Dasher had done neither. The bank ultimately made a new motion to compel contending that Mr. Dasher was bound by the arbitration clause in the 2013 amendment.

The Eleventh Circuit ruled that the 2013 amendment was not effective because there was no meeting of the minds as to whether there was an agreement to arbitrate. Before and after the 2013 amendment, Mr. Dasher was vigorously resisting arbitration, evidencing his intent not to...

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