Bradby v. Koetting

Summary

The United States District Court for the Eastern District of Virginia denied three motions to compel individual arbitration in a putative class action arising from a tribal lending scheme. The court held that the delegation and arbitration provisions in the underlying loan agreements were unenforceable under the prospective-waiver doctrine because, in conjunction with governing-law provisions, they prospectively waived state-law remedies and potentially undefined federal-law rights.

Holdings

1. Because plaintiffs specifically challenged the enforceability of the delegation clauses, the court could consider those challenges despite their overlap with challenges to the arbitration agreements as a whole.
2. Prospective waiver doctrine applies to contractual provisions that prospectively waive state-law substantive rights and remedies, not merely federal statutory rights.
3. The arbitration and delegation provisions in the loan agreements were unenforceable because their governing-law and arbitration terms prospectively waived plaintiffs' state-law substantive rights and remedies and thereby violated public policy.

Questions Presented

1. Whether the defendants' arbitration and delegation provisions were enforceable under the Federal Arbitration Act.
2. Whether the governing-law and arbitration provisions prospectively waived plaintiffs' state-law substantive rights and remedies.
3. Whether the court could decide plaintiffs' specific challenges to the delegation clauses rather than refer those challenges to an arbitrator.

Disposition

other