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Consumer Financial Services Alert
Eleventh Circuit Upholds Arbitration Clause in Deposit Account Agreement

The United States Court of Appeals for the Eleventh Circuit reversed a lower court decision and ordered members of the putative class action to arbitration.  Named plaintiffs challenged SunTrust’s deposit agreement arbitration provision. The lower court held that the arbitration clause was procedurally and substantively unconscionable because the clause was not conspicuous and the provisions allowing SunTrust to recover its arbitration expenses disproportionately allocated the risks of error and loss inherent in dispute resolution to plaintiffs.

In reversing the district court’s ruling, the Eleventh Circuit rejected the district court’s finding that the arbitration clause was “not conspicuous,” reasoning that the district court “overlook[ed] other aspects of the document that make apparent the agreement to arbitrate.” Particularly, that the arbitration clause was capitalized in the table of contents and the introductory paragraph to the clause “urged” account holders in capital and bold typeset to read the provision carefully because of the “substantial impact” on how legal claims are resolved. The Eleventh Circuit also ruled that the clause was substantively conscionable because, under Georgia law, a contract allowing a bank set-off of indebtedness to a depositor against the depositor’s indebtedness to it is not unconscionable.

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