Buffington v. SunTrust Banks, Inc. and Hough v. Regions Financial Corp.
Amicus briefs urging the U.S. Court of Appeals for the Eleventh Circuit to grant rehearing or rehearing en banc of a pair of panel decisions enforcing “loser-pays” (or fee-shifting) provisions in the banks’ arbitration clauses.
The plaintiffs in Buffington and Hough alleged that the banks violated Georgia state law by collecting overdraft charges under their deposit agreements. The banks moved to compel arbitration. SunTrust’s clause provided, in relevant part, “You agree to be liable to the Bank for any loss, costs, including, but not limited to reasonable attorney’s fees, or expense, to the extent permitted by law that we incur as a result of any dispute involving your Account.” Regions’ clause contained a similar term: “You agree to reimburse us for our costs and expenses (including reasonable attorneys’ fees) in connection with [any relevant dispute] where we are the prevailing party.”
Judge King of the U.S. District Court for the Southern District of Florida struck down both banks’ loser-pays provisions as unconscionable under Georgia law. But the 11th Circuit reversed both decisions. The plaintiffs are seeking rehearing or rehearing en banc, and Public Justice has filedamicus briefs in support of those motions.
In our amicus briefs, joined by Jacksonville Legal Aid, Public Citizen, and the National Consumer Law Center, we explain that “loser-pays” provisions are not inherent or related to arbitration, but are extraneous terms designed to deter consumers from arbitrating claims at all. As many courts have recognized, such terms create an insurmountable hurdle for consumers by putting them at risk of having to pay tens of thousands of dollars in the corporation’s fees if they lose. We describe how courts have safeguarded the legitimacy of the private arbitration system by enforcing fair, lawful arbitration clauses but refusing to enforce abusive terms that would give corporations an undue advantage over their customers, like these loser-pays terms. Finally, we argue that rehearing is warranted because the panels did not actually address the legality of imposing attorneys’ fees on non-prevailing consumers, but rather only addressed unrelated issues such as non-mutual arbitration clauses and methods of collecting awards from consumers through a set-off.