An arbitration provision in a payday loan agreement was held unenforceable because the provision’s exclusive designated arbitrator, the Cheyenne River Sioux Tribal Nation, was unavailable and no substitute could be appointed. Parm v. Nat’l Bank of Cal., N.A., 2016 WL 4501661 (11th Cir. Aug. 29, 2016) (Dubina, J.).
The lender, Western Sky Financial, conceded that the designated arbitrator was unavailable, given the court’s earlier holding to that effect in a case involving a similar arbitration provision, Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014). The lender argued that the provision before the court was distinguishable from the Inetianbor provision because it permitted the AAA or JAMS to administer the arbitration. But the court rejected that argument, citing contractual language that mandated that the arbitration be conducted by a representative of the tribe, even if administered by AAA or JAMS. The court also declined to appoint a substitute arbitrator under section 5 of the Federal Arbitration Act (FAA), finding that the named forum was an integral part of the agreement to arbitrate. In this respect, too, the court found Inetianbor to be indistinguishable.
August 29 was not a banner day for arbitration enforcement: the Second Circuit also held, in Moss v. First Premier Bank, 2016 WL 4501670 (2d Cir. Aug. 29, 2016), that the National Arbitration Forum’s refusal to accept consumer disputes precluded arbitration because the agreement in question did not specify an alternative forum and because the selection of the NAF was integral to the agreement, preventing judicial appointment of an arbitrator under FAA § 5. The court acknowledged a circuit split on this issue.
Posted by Tom Byrne.