A federal court in Minnesota determined that three of Plaintiffs' claims were not subject to the applicable arbitration clause: (1) state-law usury claims; (2) state and federal financial disclosure claims; and (3) state-law unjust enrichment counts. The Eighth Circuit reversed, directing the District Court to compel arbitration of all claims.
The Circuit Court first looked at whether the arbitration clause was broad or narrow, given that arbitration clauses which cover claims "arising out of" or "relating to" an agreement are treated broadly, so the clause at issue here, which contained both terms, was broad.
The Circuit Court then looked at whether "the underlying factual allegations simply touch matters covered by the arbitration provision." Looking at the three claims, the Court found that "each claim implicates the credit offered or provided to the consumers because the facts underlying every claim overwhelmingly detail the financing relationship between the consumers and Bluestem."
Lastly, the Circuit Court noted that the district court had "flipped the inquiry. The question is not whether there was a way to interpret the claims as falling outside the scope of the agreements; instead, where a valid arbitration agreement exists, the claims are arbitrable unless it may be said with positive assurance that the arbitration clause is not susceptible of any interpretation that covers the asserted dispute."
Parm v. Bluestem Brands, Inc., No. 17-1931, 17-1932 (8th Cir. Aug. 7, 2018)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.