MELBOURNE, Fla.–The U.S. Court of Appeals for the Eleventh Circuit has affirmed a lower court’s decision denying Space Coast Credit Union’s attempt to force arbitration in a dispute with business account holders Merritt Island Woodwerx and True Touch Services related to overdraft fees.
The case centers on fees charged under Space Coast’s account agreements, which included an arbitration clause requiring disputes to be resolved through the American Arbitration Association (AAA). However, the AAA refused to administer the claims because Space Coast had not registered its arbitration clause or paid the required fees, according to the court.
Following this, the businesses filed a class-action lawsuit. Court documents show Space Coast later brought its agreement into compliance with AAA rules and sought to compel arbitration, but the courts ruled that its delay and failure to comply initially meant it had defaulted on its arbitration rights.
Precedent Cited
The appellate court said this situation was controlled by a recent precedent (Bedgood v. Wyndham Vacation Resorts), finding that companies cannot block litigation after their own failure made arbitration impossible.
The court ruling means the plaintiffs can now pursue a class action case against Space Coast. It is only the latest case in which overdraft fees have been the target of class actions against credit unions.
