The League – Fostering Financial Wellbeing for All

Part II – Updated League Account Agreement Forms Released for Sale

Analysis Compliance Courier

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ANALYSIS:   ARBITRATION AGREEMENTS [Notations in yellow added 11/15/2021]

Some credit unions have considered an arbitration clause as a tool to help reduce the risk of costly litigation. Such clauses often include waivers of the right to class action lawsuits and the right to a jury trial.

This Compliance Courier (Part II) describes arbitration, the American Arbitration Association, and the arbitration agreement that is included in The League’s form #83005, Your Account Agreement, with Arbitration Agreement.  An identical Your Account Agreement, without an arbitration agreement, is also available as form #83006. Please also see the Compliance Courier: Part I – Updated League Account Agreement Forms Released for Sale describing the other updated League account forms, the updates they include, overdraft protection issues, etc.

The American Bar Association (ABA) describes arbitration as a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments. Arbitration is different from mediation because the neutral arbitrator has the authority to make a decision about the dispute.

The ABA describes the arbitration process as similar to a trial in that the parties make opening statements and present evidence to the arbitrator. Compared to traditional trials, arbitration can usually be completed more quickly and is less formal. For example, often the parties do not have to follow state or federal rules of evidence. In some cases, the arbitrator is not required to apply the governing law.

After the hearing, the arbitrator issues an award. Some awards simply announce the decision (a “bare bones” award), and others give reasons (a “reasoned” award).

The arbitration process may be either binding or non-binding. When arbitration is binding, the decision is final, can be enforced by a court, and can only be appealed on very narrow grounds. When arbitration is non-binding, the arbitrator’s award is advisory and can be final only if accepted by the parties.

Arbitration is usually faster and cheaper than going to court.

IS AN ARBITRATION AGREEMENT A GOOD IDEA FOR YOUR CREDIT UNION?

Credit unions are offered an arbitration agreement in form #83005. 
 
It’s up to the credit union to decide whether it wants to use an arbitration agreement, along with features such as a class action waiver and waiver of jury trials. 
 
Credit unions should discuss with their attorney before making a final decision to use an arbitration agreement for credit union services. It is an important decision that will affect the way claims will be handled. If the decision is made to use an arbitration agreement, the credit union should also discuss with counsel whether The League’s arbitration agreement with class action and jury trial waiver in #83005 meets their needs. If it does not, the credit union may either:
  1. Order Your Account Agreement (#83006) instead, and supply its own separate attorney-drafted arbitration agreement, or
  2. Purchase an account agreement brochure from another vendor with an arbitration agreement.
An arbitration agreement may reduce some risks for credit unions, but they are not always successful. Consumer attorneys may challenge the legality of arbitration clauses, and sometimes succeed. Consumer advocates have argued that arbitration clauses and class action waivers are unfair to consumers. Some members may be unhappy with use of an arbitration clauses. Among the criticisms:
  • Some studies have shown that many consumers are unaware that they’ve agreed to arbitration.

    The League’s form #83005, Your Account Agreement, with Arbitration Agreement, seeks to avoid this. It conspicuously discloses in the account agreement title and table of contents that there is an arbitration agreement. The signature cards have been revised to conspicuously disclose the importance of the agreement:

* PLEASE NOTE: The Arbitration Agreement, applicable to consumers, provides that disputes will be resolved by an arbitrator instead of a judge or jury (unless the dispute is excluded or relates to a transaction that cannot, by law, be subject to arbitration or you opt out) which means that YOU WILL NOT BE ABLE TO PARTICIPATE IN A CLASS ACTION. Arbitration procedures are simpler than court procedures, but many procedures permitted in court are limited or not available. You may opt out for a limited time; see the Arbitration Agreement.
  • Arbitration agreements are often forced upon the consumer with no choice.

    The League’s form #83005 conspicuously discloses a 30-day opt-out period. The credit union agrees that a timely opt-out will not affect any other terms and conditions of the consumer’s accounts, agreements, or relationship with the credit union. Credit unions using the form must honor this commitment.

  • Consumer Reports says: “Because arbitration proceedings are private, and because arbitration clauses almost always forbid plaintiffs from joining together, companies can use arbitration to preemptively crush consumer challenges to their practices, no matter how predatory, discriminatory, unsafe—and even illegal—they may be.”

    This may be a serious problem with some types of businesses. But financial institutions are regulated and examined. Besides many specific issues covered in consumer protection regulations, regulators can take action on unfair and deceptive practices.

    For example, when Wells Fargo opened some 3.5 million bogus bank and credit card accounts in the names of real customers, some customers tried to sue. Wells Fargo arbitration clauses forced consumers into confidential settlements. But the bank suffered for it. CFPB issued a $100 million penalty and Wells Fargo paid another $2.5 million to consumers. 

    This abusive practice should not be a real issue for member-owned credit unions. Credit unions are accountable to their member-owners.

Arbitration agreements, class-action waivers, and jury trial waivers are a legitimate part of the consumer services landscape:
  • In 2011 the U.S. Supreme Court upheld the ability of a consumer to waive their right to a class action, in spite of state law restrictions.
  • In 2017 the Consumer Financial Protection Bureau (CFPB) issued a rule to regulate pre-dispute arbitration agreements, prohibiting class action waivers in contracts for certain consumer financial products and services. Congress killed the rule before it could take effect, so arbitration agreements remain an option.
Every credit union should weigh the pros and cons with its attorney before making a decision on whether to adopt the use of an arbitration clause.
 
Credit unions should also consider the risk of member objections, amplified by social media and press reports. Credit unions members may seek to organize resistance, speaking out at membership meetings, submitting petitions, and calling on the board to reconsider the use of arbitration.

 

THE AMERICAN ARBITRATION ASSOCIATION

Much of the following is provided by the American Arbitration Association (AAA) on its website. It is the most well-known of several arbitration administrators available.

The AAA, founded in 1926, is a neutral, independent, and private not-for-profit organization. It offers a broad range of conflict management services – not just binding arbitration. It also provides education, training, and publications focused on methods for settling disputes out of court.

The AAA serves as an administrator, not as the arbitrator.

Administrator. The administrator’s role is to manage the administrative aspects of the arbitration, such as the appointment of the arbitrator, preliminary decisions about where hearings might take place, and handling the fees associated with the arbitration. As administrator, however, the AAA does not decide the merits of a case or make any rulings on issues such as what documents must be shared with each side. Because the AAA’s role is only administrative, the AAA cannot overrule or change an arbitrator’s decisions or rulings. The administrator will comply with any court orders issued from litigation involving the parties to the dispute.

Administrative Fees. The AAA charges a fee for its services as an administrator.

Arbitrator. Except where the parties to a case reach their own settlement, the arbitrator will make the final, binding decision called the Award on the dispute and render it in writing. The Arbitrator makes all the procedural decisions on a case not made by the Administrator or not decided jointly by the parties. The arbitrator may grant any remedy, relief, or outcome that the parties could have received in court, including awards of attorney’s fees and costs, in accordance with the law or laws that apply to the case.

Arbitrators are neutral and independent decision makers who are not employees of the AAA. Once appointed to a case, an arbitrator may not be removed by one party without the other party’s consent or unless the Administrator determines an arbitrator should be removed and replaced by another arbitrator chosen by the Administrator.

Arbitrator’s Fees.Arbitrators are paid for the time they spend resolving disputes. The business makes deposits as outlined in the fee schedule. Unused deposits are refunded at the end of the case.

Consumer Arbitration Rules. The AAA intends to provide fair administration of consumer disputes. The AAA has developed the Consumer Arbitration Rules for consumers and businesses that want to have their disagreements resolved through arbitration. The Rules were drafted and designed to be consistent with the minimum due process principles of the Consumer Due Process Protocol, developed in 1998 in cooperation with representatives from government agencies, consumer interest groups, education institutions, and businesses.The AAA says it will exercise its authority to decline administration of arbitration demands where an arbitration clause contains material violations of the Protocol.

Under the Consumer Arbitration Rules, the product or service must be for personal or household use. Consumers and businesses are permitted to seek relief in a small claims court for disputes or claims within the scope of the small claims court’s jurisdiction.

The AAA does not administer consumer debt collection arbitrations. See the AAA Notice on Consumer Debt Collection Arbitrations.

The AAA Consumer Arbitration Rules and the current fees can be viewed at this link.

Consumer Clause Registry

The AAA maintains a publicly available Consumer Clause Registry (Registry). The Registry contains a list of businesses that have submitted their consumer arbitration clauses with the AAA and where, upon review, the AAA has determined that the clause substantially and materially complies with the due process standards of the Consumer Due Process Protocol and the Consumer Arbitration Rules.

If a business has not registered its consumer clause prior to the filing of a consumer case, the AAA will require that the business register its clause at that time. The Registry fee to initially review a business’s arbitration agreement and maintain it in the clause registry list is a yearly, non-refundable fee.

Credit unions that want to submit their consumer arbitration clause to the Registry, or to better understand the process for registering a consumer arbitration clause, may click on the Register a Consumer Arbitration Clause button at this link.

Credit unions and the general public may search the Registry for free to locate and review any AAA-approved consumer arbitration clauses. Click on View Registered Consumer Arbitration Clauses at this link. 

AAA currently states:

Consumer Clause Review and Registry Fee

Please note that all fees described below are subject to change and non-refundable.

For businesses submitting a clause, the cost of reviewing the clause and maintaining that clause on the Registry is $500. A yearly Registry fee of $500 will be charged to maintain each clause on the Registry for each calendar year thereafter.

If the AAA receives a demand for consumer arbitration arising from an arbitration clause that was not previously submitted to the AAA for review and placement on the Registry, the business will incur an additional $250 fee for the AAA to conduct an immediate review of the clause.

Any subsequent changes, additions, deletions, or amendments to a currently registered arbitration agreement must be submitted for review and a review fee of $500 will be assessed at that time.

LEAGUE ARBITRATION AGREEMENT INCLUDED IN AAA REGISTRY

The League has replaced form #82004 Your Account Agreement with subscribing credit unions’ choice of two new forms:

  • #83005 Your Account Agreement, with Arbitration Agreement
  • #83006 Your Account Agreement

The Membership and Account Agreement in #83005 and #83006 is identical. But form #83005 includes a binding arbitration agreement as well. Credit unions have a choice of whether to use the form with the arbitration agreement or the one without it. They might choose #83006 because they decline to adopt the use of an arbitration agreement. Or they might choose that form because they will provide their own attorney drafted arbitration agreement. See the separate Compliance Courier:  Part I – New League Account Agreement Forms for more about the newly updated account forms now offered by The League.

The consumer arbitration agreement that is included in #83005 (rev. 9/21) was submitted to AAA for review for material compliance with due process standards contained in the Consumer Due Process Protocol and the Consumer Arbitration Rules. The form has been approved, so it appears in the Consumer Clause Registry at this time. The League does not intend to resubmit the form for additional review for the 10/21 revision which has changes relating to the effective date of the arbitration agreement, and does not intent to pay the annual fees to maintain the arbitration agreement in the Registry in future years.

The approval of The League’s Arbitration Agreement gives credit unions some assurance that it complies with the rules as of its approval date in October 2021. This is an administrative determination by the AAA and cannot be relied upon or construed as a legal opinion or advice regarding the enforceability of the arbitration clause.

  • The AAA reviews the parties’ arbitration clause only, and not the entire contract. 
  • The AAA’s review of the arbitration clause is only an administrative review to determine whether the clause complies with the AAA’s minimum due process standards in consumer arbitrations. However, the AAA’s review is not an opinion on whether the arbitration agreement, the contract, or any part of the contract is legally enforceable. 

Under current AAA policy, the administrative review of a consumer arbitration clause indicates that the AAA is prepared to administer consumer-related disputes filed pursuant to the approved clause, which is then eligible to be included on the Consumer Clause Registry. The AAA’s willingness to administer disputes under an approved arbitration clause is contingent upon the business’s continued willingness to have all present and future consumer related-disputes that are handled by the AAA administered in accordance with the Consumer Rules and the Protocol. The AAA reserves the right to decline administration in the future if the business deviates from the Consumer Rules and/or Protocol or does not comply with the “Consumer Clause Registry Terms and Conditions,” including payment of annual fees.

However, if a credit union purchases and uses The League’s form #83005 Your Account Agreement, with Arbitration Agreement, it is not deemed to be using an AAA-approved form from the Consumer Registry. Unfortunately, under AAA rules, the approval for The League’s form does not extend to its use by a credit union. A credit union using the form might choose to:

  1. Pay the fees for AAA review of the credit union’s submission of its own completed version of the form for placement in the Registry in the credit union’s name (incurring initial and annual fees from the start); or
  2. Decline to submit the form for review and placement in the Registry until such time as a case is moved to arbitration (only paying initial and annual Registry fees from that point).
The second option may seem reasonable, if one views the approval of The League’s clause as an indication that the credit union will easily be able to get its clause approved as necessary if a need for arbitration arises. That would normally result in a cost savings.

 

SUMMARY OF #83005 ARBITRATION AGREEMENT

The League’s new form, #83005 Your Account Agreement, with Arbitration Agreement offers an arbitration agreement drafted by the Husch Blackwell law firm. Except for some significant exclusions, the Arbitration Agreement is intended to apply to any claim by a consumer that might arise in the context of the credit union’s account relationship with the member. The League’s account ownership agreements (signature cards) and The League’s Arbitration Agreement all say the Arbitration Agreement applies to claims by consumers (not businesses).

All arbitration agreements are not the same. Strategic choices are involved. We summarize The League’s clause here. Please review it for a good understanding of the ground rules set for arbitration under this agreement. For precise details, read the actual Arbitration Agreement in form #83005.

The form and changes to the signature cards are intended to make it very clear to consumers that they are agreeing to an arbitration clause, but that they have a 30 day opt-out period.
 
The Arbitration Agreement in form #83005 starts with a conspicuous notice that it contains provisions for binding (mandatory) arbitration, waiver of class actions, and waiver of jury trial.
 
It says that either the credit union or the consumer may choose that a claim (as defined in the agreement) will be resolved by binding arbitration under the terms within. It explains that in arbitration a dispute is resolved by a neutral arbitrator instead of a judge or jury. Arbitration procedures are simpler than court procedures, but many procedures permitted in court are limited or not available in arbitration.
 
The form says that an individual has the right, for 30 days, to opt out of the Arbitration Agreement. If an individual fails to opt out of the Arbitration Agreement and they continue to be a member at the credit union after the Effective Date, they will have agreed to the Arbitration Agreement. [As described later, the Effective Date of the Arbitration Agreement is 31 days after the accountholder is notified of the Arbitration Agreement. The accountholder is “notified” of the Arbitration Agreement on the date that the credit union mails or delivers the account agreement to the accountholder or sends it to them electronically.]
 
If the consumer and credit union cannot informally resolve a claim, the consumer agrees that they or the credit union may choose to submit the claim to binding arbitration under the terms of the Arbitration Agreement.
 
A. Definitions.

Definitions are provided to clarify the meaning of certain words used in the Arbitration Agreement.

The words you, your, and yours are often used. They are defined to mean a consumer:

  1. who signs or has signed an Account Ownership Agreement,
  2. who signs or has signed any other account opening document, or
  3. for whom membership has been or is approved through the credit union’s application process.

Since the terms you, your, and yours refer to consumers, the Arbitration Agreement does not apply to businesses.

Even though the Arbitration Agreement does not apply to businesses, credit unions using #83005 for consumer accountholders would use the same form for business accountholders. Do not use form #83005 for some members and form #83006 for others.

The words, we, us, and our refer to the credit union unless the context indicates otherwise.

The word account means any one or more share or other accounts and all related features of such accounts (including, but not limited to, any overdraft protection feature) the consumer, has or has had with the credit union in the past, present, or future. 

Please note that an account is different from a membership. Several accounts are often included under one membership.

Claim means any and all disputes arising out of, affecting, or relating to:

  • the consumer’s accounts in any way, and/or
  • any aspect of the consumer’s relationship with the credit union, including any events leading up to the establishment of the consumer’s membership or the opening of any account (for example, disclosures, promotions, advertisements, or oral or written statements).

This means the Claim can be one arising out of any account the consumer has with the credit union, subject to the exclusions below. Although loans are not generally covered, claims may relate to overdraft protection plans.

See the Arbitration Agreement in #83005 for more guidance about what a Claim includes.
 

B. Excluded Transactions

As mentioned above, the words you, your, and yours are limited to consumers only, so businesses are not subject to this Arbitration Agreement. Claims are not defined as including loans other than overdraft protection. Furthermore, the Arbitration Agreement specifically excludes:

– any “consumer credit transaction” as set forth in the Military Lending Act (MLA) and/or its implementing regulations or to any “covered borrower” as also defined in the MLA,
and 
– any consumer credit transaction secured by a dwelling, including a mortgage or a home equity line of credit secured by your principal dwelling. Regulation Z §1026.36(h)prohibits arbitration agreements for such loans.

In addition, the Arbitration Agreement shall not apply to: claims that are initiated in or transferred to small claims court provided the small claims action: 

  • Is within the scope of such small claims court’s jurisdiction; 
  • Does not seek to certify a class or combine the Claims of multiple persons (except as set forth in the Definition section above); and 
  • Does not seek to recover damages in excess of the limit permissible for a small claims action under applicable state law.

C. Right to Opt Out of Arbitration Agreement

Each individual signer on an account has the right to opt out of the Arbitration Agreement. The credit union agrees that doing so will not affect any other terms and conditions of the consumer’s accounts, or relationship with the credit union.  Be sure this protection is implemented if your credit union is using this form!

To opt out, the consumer must notify the credit union in writing of their intent to do so within thirty (30) days after the credit union has notified the accountholder of the Arbitration Agreement. The accountholder is “notified” of the Arbitration Agreement on the date that the credit union mails or delivers the account agreement to the accountholder or sends it to them electronically.

The notice of intent to opt out must be a letter that is signed by the consumer that uses words to convey their election to opt out, such as “I am opting out of the Arbitration Agreement.” The letter must also include their name and address. They may send the notice to the credit union, Attn: Risk Management, at the address specified by the credit union in its Arbitration Agreement.

The credit union must designate a staff member or department to receive all mail that is addressed Attn: Risk Management.
 
The staff member must carefully collect and log all arbitration opt-out notices that the credit union receives.
 
The consumer is instructed to retain a copy of the letter they send. Any individual’s opt-out of arbitration will apply only to the Arbitration Agreement delivered within 30 days prior to the opt-out notification (and not to any prior or subsequent arbitration agreement into which the consumer entered with the credit union).
 
If a consumer does not opt-out of the Arbitration Agreement, the individual will have agreed that Claims made after the effective date of the Arbitration Agreement will, at the election of either the consumer or the credit union, be resolved by binding arbitration administered by the American Arbitration Association, as described in the agreement. [The Effective Date of the Arbitration Agreement is 31 days after the accountholder is notified of the Arbitration Agreement. The accountholder is “notified” of the Arbitration Agreement on the date that the credit union mails or delivers the account agreement to the accountholder or sends it to them electronically.] If there is no opt-out, the Arbitration Agreement commonly applies even if the Claims relate to conduct that occurred prior to the effective date. The parties may agree upon a different arbitrator, in accordance with the provisions of the Arbitration Agreement.
 
AAA points out that because its role is only administrative, it cannot overrule or change an arbitrator’s decisions or rulings. AAA charges a fee for its services. A fee schedule is included at the end of the Consumer Arbitration Rules in the Costs of Arbitration section of the Rules. The AAA’s Consumer Arbitration Rules can be obtained on the AAA website free of charge.
 
Either the consumer or the credit union may choose to resolve a particular Claim through arbitration, even if the other party has already initiated litigation in court, by:
  • Making written demand for arbitration upon the other party,
  • Initiating arbitration against the other party, or
  • Filing a motion to compel arbitration in court.

D. Additional Provisions

The Arbitration Agreement includes a conspicuous notice telling the consumer that if either they or the credit union elect to resolve a particular claim through arbitration, they will give up their right to go to court to assert or defend their rights or have a jury decide the claim. Also, their ability to obtain information from the credit union and to appeal is more limited in an arbitration proceeding than in a lawsuit. Other rights that the consumer would have if they went to court may also not be available in arbitration. Arbitrator decisions are enforceable as any court order and are subject to very limited review by a court.

1. Applicable Law. The consumer and the credit union agree that the Membership and Account Agreement and the Arbitration Agreement involve interstate commerce and will be interpreted and enforced in accordance with the Federal Arbitration Act (FAA) to the fullest extent possible. This is notwithstanding any state law to the contrary. If a court finds the FAA does not apply, and the finding cannot be appealed, then the accountholder’s state arbitration law governs. In addition, the Arbitrator must follow, to the extent applicable:

  • The substantive law of the state (e.g., Wisconsin) in which the parties entered into the transaction giving rise to the Arbitration Agreement;
  • The applicable statutes of limitations; and
  • Claims of privilege recognized at law.

In the event of a conflict between AAA Rules and the Arbitration Agreement, the Arbitration Agreement will supersede, to the extent of the inconsistency. Except as provided in the Arbitration Agreement, the Arbitrator will not be bound to follow federal, state or local rules of procedure and evidence or any state or local laws concerning arbitration proceedings.

2. Selection of Arbitrator. The Arbitration Agreement provides that the Claims will be resolved by a single arbitrator, and administered by the American Arbitration Association (“AAA”) (1-800-778-7879) in accordance with AAA’s Consumer Arbitration Rules (“Rules”), which can be accessed here free of charge. The Arbitrator will be selected in accordance with AAA’s Rules and must have experience in the types of financial transactions involved in the Claims.

If AAA is unavailable or unwilling to resolve the Claims, and if the consumer and credit union do not agree on a substitute forum, then the consumer and the credit union will request that a court with proper jurisdiction appoint an arbitrator.

Arbitrators are neutral and independent decision makers, not employees of the AAA. The Rules provide that once appointed to a case, an Arbitrator may not be removed by one party without the other party’s consent or unless the Administrator determines an arbitrator should be removed and replaced by another arbitrator chosen by the Administrator.

3. Effective Date. The Arbitration Agreement is effective on the 31st day after the credit union has notified an accountholder of the Arbitration Agreement  (“Effective Date”) ‐ unless an individual signer on an account opts out in accordance with the requirements of the RIGHT TO OPT OUT provision. The accountholder is notified of the Arbitration Agreement on the date that the credit union mailed it to the consumer, handed it to the consumer, or sent it to the consumer electronically. The Arbitration Agreement will survive the termination of the membership and closure of any account.

The arbitration agreement is in Part II of form #83005. Part I consists of the membership and account agreement. 

  • For any already existing account (suffix), Part I takes effect 30 days after notification (giving the form to the accountholder). 
  • Part I takes effect immediately upon delivery for any new account (suffix). 

When sending a change in terms notice for #83005 to existing accountholders, make clear to the consumer that: 

  • Part I Membership and Account Agreement takes effect 30 days after notification (by giving the form to the accountholder personally, by mailing it, or by electronic delivery).
  • Part II Arbitration Agreement takes effect 31 days after notification (by giving the form to the accountholder personally, by mailing it, or by electronic delivery) except in regard to an individual person who exercises the right to opt-out within 30 days after notification.

4. Administration of Arbitration Proceedings. A Claim in an arbitration proceeding may be decided by the Arbitrator based on the parties’ written submissions.

If the Arbitrator determines that a hearing is necessary, it may be conducted by telephone or by video. Otherwise, if the Arbitrator determines an in-person hearing is necessary, the hearing will take place in the county where the consumer:

  • Resides,
  • Is personally served,
  • Where they signed or authenticated an Account Card or any other account or membership opening document, or
  • Any other place reasonably convenient to the consumer where applicable law permits or pursuant to the Rules.

Any claims and defenses that can be asserted in court can be asserted in the arbitration.

The Arbitrator will be entitled to award the same remedies that a court can award, including any kind of injunctive relief or award of attorney fees that a court could award in a single-plaintiff non-class court proceeding.

The exchange of non-privileged information will be available to the fullest extent permitted under AAA’s Rules.

The Arbitrator’s award can be entered as a judgment in court in accordance with applicable state law.

Upon request of either party, the Arbitrator must provide a brief written explanation of the basis for the award, explaining the application of the law to the facts presented.

Except when the law provides otherwise, the agreement provides that the Arbitrator’s award is not subject to review by the court, and it cannot be appealed. Judgment on the arbitration award may be entered by any court of competent jurisdiction.

The credit union will pay for any filing, administration, and arbitrator fees imposed on the consumer by the AAA or other arbitrator forum except that, if the consumer elects to file the arbitration, they will pay the filing fee to the extent required by the rules of AAA or the other arbitrator forum but, in no event, will they pay more than it would cost to file a lawsuit in court.

The consumer will be responsible for their own attorneys’ fees and other costs and expenses unless they prevail on their Claim in the arbitration. In that event, if the arbitrator awards the consumer attorney fees and/or their other costs and expenses, the credit union will pay the consumer’s fees, costs, and expenses.

The consumer will not be required to pay any attorneys’ fees or costs incurred by the credit union.

5. Waiver of right to trial by jury. Regardless of whether a controversy is arbitrated or resolved by a court, the consumer and credit union waive any right to a jury trial, to the fullest extent allowed by law. The Wisconsin Supreme Court has held that contractual pre-litigation jury waivers are enforceable under Wisconsin law. Parsons v. Associated Banc-Corp., 2017.

6. Class action waiver. This is one of the most important provisions in the Arbitration Agreement. The Arbitration Agreement conspicuously states that any arbitration of a claim will be on an individual basis. The consumer understands and agrees that they are waiving the right to participate as a class representative or class member in a class action lawsuit. As part of this waiver, they agree that:

  • They waive the right to act as a private attorney general in court or in arbitration;
  • That except as otherwise may be provided in the arbitration agreement, claims brought by or against the consumer may not be joined or consolidated with claims brought by or against any other person; and
  • The arbitrator shall have no authority to conduct a class-wide arbitration, private attorney general arbitration or multiple-party arbitration.

7. Amendments. Notwithstanding anything to the contrary in the Arbitration Agreement or in any other agreement between the consumer and the credit union, the Arbitration Agreement may be amended by the credit union only upon 30-day notice to the consumer. However, any such amended agreement will not apply to any claim that has already been filed, has accrued, or of which the credit union otherwise has knowledge.

8. Severability. If any provision in the Arbitration Agreement, other than the Class Action Waiver, is found to be unenforceable, it will be severed, and the remaining provisions will remain fully enforceable. 

But, in the event the Class Action Waiver in the Arbitration Agreement is found to be unenforceable for any reason, the remainder of the Arbitration Agreement will also be unenforceable. That is because it would be undesirable to have a class action claim in arbitration.

For information about AAA procedures, visit AAA’s website.

Questions
 

For questions or issues with ordering the new forms on our website, please contact Jeff Bonk.

For questions about use of the forms, please call The League’s Compliance Hotline at (608) 640-4050 or email the Compliance Mailbox.

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