In Dasher v. RBC Bank, the Eleventh Circuit held that a bank could not retroactively apply a newly-inserted arbitration provision in its customer account agreement to a dispute that was already in litigation unless the existence of the arbitration provision was communicated to counsel. Michael Dasher filed suit against RBC Bank arising out of certain practices implemented by RBC Bank related to overdraft fees. In 2012, PNC Bank acquired RBC Bank and issued a newer version of customer account agreements than those issued by RBC Bank in 2008. The PNC Bank agreement did not contain an arbitration provision, but PNC Bank moved to compel arbitration based on an arbitration provision in the 2008 RBC Bank agreement. The trial court denied this motion and the ruling was upheld on appeal.
In 2013, PNC Bank amended its customer agreement to include an arbitration provision. The amendment indicated that PNC Bank deems account holders to accept the amendment if the account holders fail to opt out and continue to use their accounts. Dasher neither opted out nor ceased using his account after the amendment was included in his customer agreement. In 2014, PNC Bank moved to compel arbitration based on the amendment to its customer agreement and Dasher’s purported acceptance of the amendment. The trial court also denied this motion, and PNC Bank appealed. The Eleventh Circuit affirmed the trial court’s decision.
First, the Court held that the amendment to the customer agreement adding the arbitration provision did not bind Dasher in this case because, although Dasher did not communicate his objection to the arbitration provision to PNC Bank, PNC Bank failed to communicate the existence of the arbitration agreement to Dasher’s counsel. An arbitration agreement that purports to have retroactive effect will only have such effect on a case currently in litigation if the party communicates the existence of that agreement to the opposing party’s counsel. Without such communication, the Court found that Dasher did not assent to the arbitration agreement. Further, Dasher’s communications with PNC Bank clearly indicated hostility towards arbitration. Finally, the Court held that Dasher’s filing of an amended complaint in November 2014 did not “revive” PNC Bank’s arbitration rights. Generally, a party’s subsequent filing of an amended complaint will revive the defendant’s right to arbitration if the amended complaint materially alters the theory or scope of the case. But the Court found that this principle did not apply in this case because Dasher’s amended complaint operated to “shrink” the scope of the case and asserted the same causes of action.
The Dasher opinion clearly shows that courts will not look favorably on a party that attempts to retroactively apply an arbitration agreement to an already-existing dispute. A party seeking to assert arbitration in such a scenario must ensure that the existence of the arbitration provision is communicated both to the customer as well as the customer’s counsel.