A District Court in Maryland confronted a scenario where a bank depositor brought suit based on the setoff of deposit accounts following the depositor’s failure to make payments under a home equity loan. The borrower claimed the bank’s actions constituted a violation of the Truth in Lending Act (“TILA”). The bank sought to compel arbitration of the claim based upon an arbitration agreement embodied in the documents establishing the deposit accounts.

Confronting the court in Lyons v. PNC Bank, N.A. was the interplay between the deposit agreements and statutory prohibition of arbitration contained in the Dodd-Frank Wall Street Reform Act which applied to the TILA cause of action. The court framed the issue as follows:

“It is clear from the plain language that, at the very least, mortgage notes and other security instruments directly tied to a mortgage loan cannot contain arbitration clauses, but the prohibition’s reach beyond such clear cases remains unsettled. Against this backdrop, this Court must determine whether Plaintiff has carried his burden to show that Congress intended [Dodd-Frank] to preclude arbitration where the dispute arises under a mortgage agreement, but the lender seeks to invoke an arbitration clause in a separate contract purportedly empowering it to unilaterally use funds from the mortgagee’s deposit accounts to pay off the mortgage instrument.”

The court denied the motion to compel arbitration, holding that Dodd-Frank’s arbitration prohibition was sufficiently broad to encompass separate and ostensibly discrete deposit accounts.

Fredy Sosa v. Onfido, Inc. provided an Illinois District Court with the obligation to opine whether a company engaged by an online marketplace to verify users’ identities could compel arbitration of claims brought by marketplace customers that their biometric data was being unlawfully stored. The court’s answer was “no.”

In this putative class action, users of the online marketplace Offerup, Inc. agreed by way of the marketplace’s terms and conditions to arbitrate disputes with the marketplace. Users provided photographs to enable verification of their identities. The marketplace outsourced the verification to defendant Onfido, Inc. which allegedly retained and/or used the information in violation of the Illinois Biometric Information Privacy Act.

In response to the users’ claims of statutory violation, Onfido sought to compel arbitration by leveraging Offerup’s terms and conditions to which the users agreed. The court rejected this attempt, finding that Onfido failed to satisfy any of the recognized theories whereby a non-party to the arbitration agreement could invoke its terms.

Retired federal judge and current JAMS neutral Diane Welsh has this article in The Legal Intelligencer discussing her experiences with virtual mediation during COVID-19 and offering her view that “the advantages of virtual mediation suggest that it will be deeply embedded in the ADR landscape long after the pandemic is over.”

The New Jersey Law Journal‘s Editorial Board has this article, discussing the New Jersey Appellate Division’s decision in Knight v. Vivint Solar, __ N.J. Super. __, 2020 N.J. Super. LEXIS 240 (N.J. Super. Ct. App. Div. Dec. 2, 2020), offering the following takeaways to contract draftspersons: “(a) When drafting, say it once and say it well, but do not over-commit to tech. (b) When entering a contract, all parties should have and maintain fully executed copies.”

The Southern District of New York has held that a purported class action against a health club by a member whose access was precluded due to Covid is subject to arbitration. In Jampol v. Blink Holdings, Inc, the court held that even though the Membership Agreement did not provide for arbitration, the Terms of Use to which the member assented did contain a broad arbitration provision and were controlling.

“The question presented to Chief Judge Colleen McMahon was, essentially, whether the pre-filing investigations by an attorney for a patent owner worked to compel arbitration?” This was the issue facing the court, as explained by Gene Quinn of IPWatchdog, Inc., in this article discussing the Southern District’s decision in Perry Street Software, Inc. v. Jedi Technologies, Inc., Case 1:20-cv-04539-CM.

As Mr. Quinn explains, “an attorney for patent owner Jedi Technologies, accessed the defendant’s website in order to engage in pre-filing due diligence, as is both prudent and legally required pursuant to FRCP Rule 11…signed up and viewed [the defendant’s app] as a part of this investigation. The …Terms of Service (TOS) included a boilerplate arbitration clause that purported to prevent users from filing claims in any court of competent jurisdiction, and instead compelling arbitration.”

Spoiler alert…. Judge McMahon held this action by plaintiff’s counsel was insufficient to constitute an agreement to arbitrate.

Quincy Bird of Carlton Fields has authored this article, available through JD Supra, discussing the Arkansas District Court’s decision in Patterson v. American Income Life Ins. Co. Attorney Bird asks at the outset “Has the judicial preference for presuming the survivability of arbitration clauses governing workplace disputes reached canonical status?” He suggests that perhaps it has.

Kevin Brodehl of Patton Sullivan Brodehl LLP discusses the California Appellate Court’s decision in Yao v. Pro-Management Consulting, finding that a California statute providing that a  “person that becomes a member of a limited liability company is deemed to assent to the operating agreement,” does not serve to constitute an agreement to the operating agreement’s arbitration provision in the absence of the member’s execution of the operating agreement. The article is available at JD Supra.

David Reif offers this cautionary tale in his blog post discussing the Third Circuit’s decision in Pennsylvania National Mutual Casualty Insurance Group v. New England Reinsurance Corporation, 2020 U. S. App. LEXIS 40342 (3^rd Cir. Dec. 24, 2020):

“When you move to confirm an award, if you believe that the case might settle while the application is pending, consider whether you want to or need to attach the award itself and, thus, expose it to the world and unnecessarily destroy the presumed confidentiality of arbitration proceedings.”

Heather Perlberg of Bloomberg has this article, which begins with this tag line: “As it buys up medical practices, private equity is popularizing a favored Wall Street cost-cutting tactic—and stripping patients of rights.”