The Great Escape: How One Plaintiffs Sidestep of a Mandatory Arbitration Clause Was Applied to a Class in Bickerstaff v. Suntrust Bank

• Jurisdiction: United States,Federal,Georgia
• Publication year: 2017
• Citation: Vol. 68 No. 2

The Great Escape: How One Plaintiffs Sidestep of a Mandatory Arbitration Clause Was Applied to a Class in Bickerstaff v. SunTrust Bank

David Cromer

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The Great Escape: How One Plaintiff's Sidestep of a Mandatory Arbitration Clause Was Applied to a Class in Bickerstaff v. SunTrust Bank^*

I. Introduction

For decades, class action lawsuits have played an integral role in the American legal system because of their ability to combine a large number of small claims into an action large enough to garner the attention of both defendants and courts.¹ While class actions have undoubtedly provided a crucial service to many Americans, several key questions have persisted regarding the authority of the named party or class representative. Specifically, courts have struggled to define the named party's ability to assemble the class and launch the action. In both the federal courts and the

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courts of Georgia, a trend towards giving more power to the named plaintiff has emerged. In Bicker staff v. SunTrust Bank,² the Georgia Supreme Court was given an opportunity to continue this trend, and it did just that.

In Bickerstaff, the court was presented with a case of first impression as it dealt with the question of whether a party who files suit and attempts to certify a class may satisfy a contractual limitation period for "opting out" of a mandatory arbitration clause on behalf of absent class members. The court answered with a resounding "yes," and in doing so, it greatly increased the power the named representative to a class action possesses. This trend will have lasting effects, even in spite of the Supreme Court of the United States' arbitration-friendly ruling in AT&T Mobility LLC v. Concepcion,³ where the Court held that the Federal Arbitration Act⁴ preempts many state law challenges to arbitration clauses. The importance of Bickerstaff is further evidenced by SunTrust Bank's (SunTrust) unsuccessful appeal to the Supreme Court of the United States.

II. Factual Background

SunTrust included a mandatory arbitration agreement in every contract it entered into with depositors.⁵ In 2010, these arbitration agreements were deemed unconscionable by the United States District Court for the Southern District of Florida.⁶ As a result of this judgment, SunTrust elected to amend its mandatory arbitration clause.⁷ The new contract allowed depositors to opt out of the mandatory arbitration agreement if they sent SunTrust a written notification which expressed that desire within a certain window of time.⁸

However, just before SunTrust altered the terms of its contract, Mr. Jeff Bickerstaff, Jr. (Bickerstaff), a SunTrust customer and depositor,

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filed a complaint against SunTrust. Bickerstaff claimed the bank's overdraft fee amounted to usury, and he filed suit on behalf of himself and all others similarly situated. After this complaint was filed, SunTrust notified all of its depositors, including Bickerstaff, that there was a new contract, and this new document would control all future dealings. Bickerstaff was not aware of the new arbitration provision or the window of time available to reject it when he filed his lawsuit.⁹

Upon receiving Bickerstaff's complaint, SunTrust immediately filed a motion to compel arbitration. The trial court denied this motion, holding that Bickerstaff had substantially complied with the new deposit contract's notification requirements by filing his complaint. Bickerstaff then moved to certify a class of all Georgia citizens with a SunTrust deposit agreement who had at least one overdraft of under $500 resulting from an ATM transaction, and who paid an overdraft fee on that transaction in the last four years. This motion was denied.¹⁰

Both SunTrust and Bickerstaff appealed the trial court's ruling.¹¹ SunTrust argued the trial court erred when it declined to compel Bickerstaff to arbitrate his claim, but the Georgia Court of Appeals affirmed the trial court's holding that Bickerstaff's complaint satisfied the notice requirement. Bickerstaff, on the other hand, appealed from the trial court's denial of his motion for class certification. The court of appeals affirmed the trial court's denial of class certification, holding that Bickerstaff's avoidance of the mandatory arbitration clause applied to him and him alone, and, because the other potential members of Bickerstaff's class had almost certainly not opted out of the arbitration agreement within the allotted time, Bickerstaff's class would be a class of one. Because such a result is unallowable under the numerosity requirement of section 9-11-23 of the Official Code of Georgia Annotated (O.C.G.A.),¹² the attempt to

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certify a class failed according to the court of appeals.¹³ Bickerstaff appealed from the court of appeals judgment, and the Georgia Supreme Court granted certiorari.¹⁴

III. Legal Background

A. Strength in Numbers: O.C.GA. § 9-11-23

In the state of Georgia, class actions are governed by O.C.G.A. § 9-11-23.¹⁵ This code section was based on Federal Rule of Civil Procedure 23,¹⁶ and its language mimics that of Rule 23 almost without deviation.¹⁷ This uniformity means Georgia state courts often analyze federal courts' interpretations of Rule 23 in adjudicating questions regarding O.C.G.A. § 9-11-23.¹⁸ O.C.G.A. § 9-11-23(a) sets out four requirements that must be satisfied in order for a class action to be appropriate: (1) the parties must be so numerous that joinder would not be practicable; (2) there must be questions of law or fact common to the class; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; and (4) the representative parties must be able to fairly and adequately protect the interests of the class.¹⁹ Additionally, O.C.G.A. § 9-11-23(b) provides a list of situations where class actions are appropriate vehicles for remedy.²⁰ First, a class action may be appropriate when separate actions might result in inconsistent judgments, or when these individual judgments might impair or impede the interests of the other parties.²¹ Second, a class action may be appropriate when the party opposing the class has acted or refused to act in a manner generally applicable to the class as a whole, making class-wide judgment proper.²² Third, a class action may be appropriate when the court finds that the common questions of law or fact predominate over any individual concerns, and a class action is the best way to provide a remedy when the situation is viewed in light of the interests of the individual members in controlling the litigation, the extent of any already ongoing litigation, the

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desire to keep the litigation in a particular forum, and the difficulties likely to be encountered pertaining to the management of the class.²³

B. For Whom the Statute Tolls: The Power of Class Representatives to Toll the Statute of Limitations for the Whole Class in American Pipe & Construction Co. v. Utah

In the landmark case American Pipe & Construction Co. v. Utah,²⁴ the Supreme Court of the United States began the trend of granting more power to the named plaintiff, as the Court held that the named party's commencement of the class action suspends or "tolls" the running of the statute of limitations for all asserted members of the class.²⁵

In 1964, the United States filed civil complaints against American Pipe & Construction Co. for conspiring to restrict the trade of steel and concrete piping. After lengthy negotiations, a final judgment was agreed to on May 24, 1968, and this agreement enjoined the defendant from violating antitrust laws.²⁶ Almost a year later, on May 13, 1969, the state of Utah launched a class action against American Pipe & Construction Co., alleging the company had conspired to rig prices of concrete and steel. Utah claimed its suit represented various public bodies, including state and local agencies who had used the pipes provided by the defendant. This suit was found to be within the applicable statute of limitations, as it was filed less than a year after the original judgment. However, the defendants moved for an order stating that the plaintiffs could not proceed as a class. The district court judge granted the motion, holding that the class did not satisfy the numerosity requirement of Rule 23 because there were not enough state and local entities that could demonstrate injury to justify the class.²⁷ Eight days later, more than sixty towns, municipalities, and water districts in Utah filed motions under Rule 24(a)(2)²⁸ to intervene as plaintiffs as of right, or, alternatively, to intervene by permission under Rule 24(b)(2).²⁹ Each of these parties had been claimed as members of the original failed class, and the district court denied these motions, holding that the statute of limitations had run, and

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the filing of the class action had not tolled the running of the limitations period. The United States Court of Appeals for the Ninth Circuit affirmed the denial of intervention as of right, but it reversed the denial of permissive intervention.³⁰ The Supreme Court granted certiorari.³¹

Writing for the majority, Justice Stewart first traced the history of Rule 23, highlighting a number of problems that had existed under the rule as it stood before its substantial reworking in 1966.³² Specifically, Justice Stewart drew attention to how, under the older version of the rule, courts had been divided as to whether parties should be allowed to join or intervene as members of a class once the statute of limitations had run, even when the initial class action had begun at a proper time.³³ According to Justice Stewart, that confusion was not present under the updated version of Rule 23, as there were "no conceptual or practical obstacles in the path of holding that the filing of a timely class action complaint commences the action for all members of the class as subsequently determined."³⁴ The Court argued this was...