Stone v. Wells Fargo Bank, N.A. (Maryland U.S.D.C.)

Filed January 17, 2019

Opinion by Judge Ellen L. Hollander

Holding: An arbitration agreement between a bank customer and the bank was enforceable because  the arbitration provision was broad and sufficiently related to the dispute between the parties.

Facts:

Plaintiff Meghan Stone (“Stone”) alleged that Wells Fargo Bank (the “Bank”) improperly took funds from her account, in violation of the terms of her service agreement (the “Agreement”) with the Bank.  The service agreement contained an arbitration provision requiring arbitration for any “dispute”  that could not be resolved informally. The Agreement defined “dispute” as “any unresolved disagreement” between the parties that relates “in any way to services, accounts or matters; to [Stone’s] use of any of the Bank’s banking locations or facilities; or to any means [she] may use to access [her] accounts.” The Agreement also incorporated the American Arbitration Association Rules (the “AAA Rules”), which state that “the arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement or to the arbitrability of any claim.”

In December 2014, Stone discovered that the Bank had removed approximately $45,000 from her accounts with the Bank and denied her use of her secure line of credit.  After she informed the Bank of its error, the Bank refused to return the funds and instead, suspecting identity fraud, investigated Stone’s account, resulting in fifteen felony counts and two misdemeanor counts relating to theft, fraud, and identity theft levied against Stone until they were dismissed in February 2015. 

Stone sued the Bank, alleging its employees improperly used and took her money and then negligently initiated the identity fraud investigation against her.  Her charges against the Bank included negligence, respondeat superior, and malicious prosecution (the “Charges”).  The Bank filed a Motion to Compel Arbitration and Dismiss the Action (the “Motion”), claiming the Agreement’s arbitration provision applied to the dispute with Stone.  Stone filed an opposition to the Motion, arguing the Charges were not governed by the Agreement because the Bank’s actions did not “relate or have anything to do with [her] accounts with [the Bank].”  The Bank replied, requesting either an AAA arbitrator to determine the scope of the arbitration provision, or the Court to hold Stone’s Charges arbitrable.

Analysis:

The Court first determined whether an arbitrator or the Court itself should decide whether the Charges were arbitrable.  Citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995), the Court emphasized that courts should not assume the parties agreed to “arbitrate arbitrability” without “clear and unmistakable” evidence that they intended to arbitrate the scope of an arbitration agreement.  While in some circuits, incorporating the AAA Rules into an agreement provides “clear and unmistakable” evidence, in the Fourth Circuit it remains an open question as to whether an unsophisticated party like Stone can provide clear and unmistakable evidence simply by incorporating the AAA Rules.  Given the Bank’s status as a Fortune 500 company and the fact that Stone, as a consumer, most likely did not intend for the incorporation of the AAA rules to demonstrate her desire for arbitration, the Court determined that the Court itself, and not an arbitrator, should determine whether the Charges were arbitrable. 

The Court then analyzed whether the Charges were subject to arbitration by first determining whether the parties had voluntarily agreed to arbitration, and then what subject matter the parties agreed was subject to the arbitration provision.  In this case, there was no dispute that there was a written arbitration agreement between the parties.  The Court then proceeded to consider whether the claims made by Stone were within the scope of that agreement, stating that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” In this case, the Court analyzed the language of the arbitration clause itself and categorized it as a "broad" provision.  This, coupled with the strong public policy of federal courts in favor of arbitration, required Stone to provide  "positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute."

The Court concluded that the arbitration provision relates to (i) the negligence charge because it concerns the Bank’s services; (ii) the respondeat superior charge because it is directly related to the negligence charge, which is covered by the arbitration clause; and (iii) the malicious prosecution charge because there is a “significant relationship” between the events underlying the malicious prosecution charge and Stone’s use of the Bank’s services and accounts.  Thus, the Court granted the Bank’s Motion to Compel Arbitration on all of Stone's claims.

The full opinion is available in PDF.