CA1: How a big company snookered itself into a bad posture at arbitration (and jurisdiction on appeal)

Berenson v. National Financial Services, No. 06-1112.  This involves a dispute between parties with an agreement to arbitrate that covers most disputes, but not class actions.  The District Court determined that “it would adjudicate the merits of the Berensons' claims before addressing the issues of class certification. All parties agreed to this arrangement.”  While a motion for class certification was pending, the District Court granted a number of motions for summary judgment in part, including the class-action claims, stating that he would issue a full decision later.   Thereafter NFS moved to compel arbitration.  That motion was granted.  Then the judge issued a complete “summary judgment memorandum and order, explaining its earlier ruling” which was partially favorable to the plaintiffs.  NFS seizes on this and holds that such explanatory order actually rescinded the arbitration order, NFS claims that it can now seek interlocutory review under the Federal Arbitration Act, 9 U.S.C. § 16 (a)(1)(B).  But the First disagrees, and basically says that NFS brought this on itself by agreeing to go to the merits and is seeking to use the Supreme Court’s decision in AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986) as a “sword” rather than a shield.”  So, the First lacks jurisdiction over the appeal.

The subject matter is interesting because it involves all the problems with electronic payment systems that allow people (like myself) to pay all sorts of bills from their computer.  There are different variants of them, which can, from time to time deprive people of interest, which the plaintiffs argued violated the the EFTA – 15 U.S.C. § 1693.

Barry Barnett comments here.