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                                                                        [PUBLISH]



            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 13-14244
                      ________________________

         D.C. Docket Nos. 1:09-md-02036-JLK; 1:10-cv-21176-JLK



In Re: CHECKING ACCOUNT OVERDRAFT LITIGATION,
_____________________________________________

DAVID JOHNSON,

                                               Plaintiff - Appellant,

versus

KEYBANK NATIONAL ASSOCIATION,

                                               Defendant - Appellee,


                      ________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                     ________________________

                             (June 18, 2014)
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Before MARCUS and ANDERSON, Circuit Judges, and TREADWELL, * District
Judge.

MARCUS, Circuit Judge:

       Arbitration-friendly federal law recognizes “delegation clauses” that direct

an arbitrator to decide the validity of an arbitration agreement. Still, litigants can

waive their right to enforce these arbitration provisions. Because KeyBank waited

too long to invoke a delegation clause, waiver now bars that path and the district

court must decide any threshold questions of arbitrability.

       After David Johnson, a bank customer, sued for overcharging in overdraft

fees, KeyBank asked the district court to take up the threshold question of

arbitrability and to compel arbitration of Johnson’s claim in accordance with his

deposit agreement. KeyBank said nothing about a delegation clause. The district

court decided the gateway issue, but not in KeyBank’s favor: it refused to enforce

the arbitration agreement as unconscionable. Once a panel of this Court vacated

and remanded that order for reconsideration in light of recent precedent, KeyBank

pointed, for the first time, to a delegation clause and argued that the district court

never should have conducted the threshold inquiry. The district court agreed and

compelled arbitration of the gateway issue. The appellant, Johnson, now argues

that KeyBank waived enforcement of the delegation clause. Alternatively,

*
   Honorable Marc T. Treadwell, United States District Judge for the Middle District of Georgia,
sitting by designation.



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Johnson maintains that the delegation clause does not bind him.

      Circuit precedent compels the conclusion that KeyBank waived enforcement

of the delegation clause. See Barras v. Branch Banking & Trust Co., 

(11th Cir. 2012); Hough v. Regions Fin. Corp., 

(11th Cir.

2012) (per curiam). Barras, Hough, and this appeal each emerged from the same

multidistrict litigation (MDL) before the United States District Court for the

Southern District of Florida: In re Checking Account Overdraft Litigation, MDL

No. 2036. In each case, the bank made no mention of a delegation clause in its

initial motion to compel arbitration. Only after the issuance of unfavorable

unconscionability orders did each bank ask the same district court to leave the

threshold question of arbitrability to the arbitrator. KeyBank’s attempt to

distinguish the waivers recognized in Barras and Hough is unavailing. We vacate

the district court order compelling arbitration of the gateway issue and remand for

further proceedings consistent with this opinion.

                                          I.

      David Johnson opened a deposit account with the Puget Sound Bank in

Tukwila, Washington, in 1991. KeyBank bought Puget Sound Bank in 1993.

While these banks’ 1991 and 1993 deposit agreements lacked arbitration

provisions, they both included a change-of-terms clause that allowed the banks to

“change these Rules at any time.” KeyBank claims that in 1995 it added an



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arbitration provision to Johnson’s agreement by appending a “statement message”

to his December account statement that told customers about new “provisions

regarding how disputes between you and the Bank will be resolved, including a

right to require arbitration of certain disputes.”

      In 2001, when Johnson added his wife to his bank account, he was required

to complete a signature card in which he acknowledged receipt of the deposit

agreement and its arbitration provision. On December 14, 2001, KeyBank

unilaterally added a delegation clause to its deposit agreement that allowed the

parties to refer preliminary questions related to a dispute to an arbitrator. The

amended agreement stated that “[a]ny Claim shall be resolved upon the election of

you or us, by binding arbitration pursuant to this Arbitration Provision and the

applicable [arbitration rules].” It defined a “Claim” as “any claim, dispute, or

controversy between you and us arising from or relating to this Agreement or your

Account(s), including, without limitation, the validity, enforceability, or scope of

this Arbitration Provision or this Deposit Account Agreement.” In other words,

according to the delegation clause, either party could choose to have an arbitrator

decide threshold questions of arbitrability like unconscionability.

      KeyBank claims that customers like Johnson were notified of the 2001

addition of the delegation clause through a direct mailing. In addition, KeyBank

alleges that Johnson received notice of the arbitration agreement and delegation



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clause through mailings or statement messages in 2004 and 2009. Johnson

maintains that he does not recall receiving notice of the arbitration agreement.

      Johnson filed a putative class action on February 18, 2010, in the United

States District Court for the Western District of Washington. Johnson alleged that

KeyBank violated Washington law by changing the order of debit card transactions

to increase the overdraft fees it charged on Johnson’s account. In April 2010, the

United States Judicial Panel on Multidistrict Litigation transferred the case for

pretrial purposes to a multidistrict proceeding pending in the United States District

Court for the Southern District of Florida.

      On May 3, 2010, KeyBank moved to compel arbitration and stay all

proceedings. KeyBank invoked the arbitration provision in Johnson’s deposit

agreement and cited the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 3, 4.

Johnson opposed the motion, claiming the provision was unconscionable as a

matter of Washington state law. In both its original motion and its reply in

support, KeyBank asked the district court to decide the threshold question of

unconscionability. On June 16, 2010, the district court refused to compel

arbitration. The court found the arbitration provision was substantively

unconscionable because, in light of a class action waiver, the potentially high costs

of arbitration would discourage individual actions. KeyBank appealed.

      Less than a week after the district court entered this order, the United States



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Supreme Court issued its decision in Rent-A-Center, West, Inc. v. Jackson, 

(2010). The Court held that delegation clauses were enforceable: when a

contract so provides, courts must allow an arbitrator to consider an

unconscionability challenge to an arbitration agreement as a whole. 

Because jurisdiction over this case already had passed to the Eleventh Circuit on

appeal, KeyBank moved the district court for an indicative ruling under Federal

Rule of Civil Procedure 62.1. KeyBank’s motion asked the trial court to signal

that it would reconsider its order in light of Rent-A-Center if given permission by

this Circuit. The district court denied the Rule 62.1 motion.

      On August 21, 2012, the Eleventh Circuit vacated the district court order

refusing to compel arbitration and remanded “for further consideration in light of”

three subsequently issued cases: Rent-A-Center, 

; AT&T Mobility

LLC v. Concepcion, 

(2011); and Cruz v. Cingular Wireless, LLC,

(11th Cir. 2011). Johnson v. Key Bank Nat’l Ass’n, No. 10-12957-

DD (11th Cir. Aug. 21, 2012). On remand, after limited arbitration-related

discovery, KeyBank filed a Renewed Motion to Compel Arbitration. Following a

hearing, the district court on August 27, 2013, granted KeyBank’s renewed motion

and ordered arbitration on the threshold question of arbitrability because the

deposit agreement contained an enforceable delegation clause. This timely appeal

ensued.



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                                          II.

                                          A.

      We review de novo a district court order granting a motion to compel

arbitration. 

.

      KeyBank, citing to non-arbitration cases, argues that we should review the

district court’s underlying factual findings for clear error and that we should infer

unstated factual findings consistent with the court’s decision. This relaxed

standard of review does not fit the summary-judgment-like nature of an order

compelling arbitration, which is “in effect a summary disposition of the issue of

whether or not there has been a meeting of the minds on the agreement to

arbitrate.” Magnolia Capital Advisors, Inc. v. Bear Stearns & Co., 272 F. App’x

782, 785 (11th Cir. 2008) (unpublished) (quoting Par-Knit Mills, Inc. v.

Stockbridge Fabrics Co., 

, 54 n.9 (3d Cir. 1980)). In applying de novo

review to an order compelling arbitration, we follow a long line of established

precedent. See, e.g., Dale v. Comcast Corp., 

, 1219 (11th Cir.

2007); Bautista v. Star Cruises, 

, 1294 (11th Cir. 2005); Emp’rs Ins.

of Wausau v. Bright Metal Specialties, Inc., 

, 1321 (11th Cir. 2001).

                                          B.

      “Arbitration should not be compelled when the party who seeks to compel

arbitration has waived that right.” Morewitz v. W. of Eng. Ship Owners Mut. Prot.



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& Indem. Ass’n (Luxembourg), 

, 1365 (11th Cir. 1995). “[Q]uestions

of arbitrability must be addressed with a healthy regard for the federal policy

favoring arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 

, 24 (1983). But “the doctrine of waiver is not an empty shell.” 

. Waiver occurs when both: (1) the party seeking arbitration

“substantially participates in litigation to a point inconsistent with an intent to

arbitrate”; and (2) “this participation results in prejudice to the opposing party.”

when the party opposing arbitration “undergo[es] the types of

litigation expenses that arbitration was designed to alleviate.” 

Ernst, Inc. v. Manhattan Constr. Co., 

, 269 (5th Cir. 1977) (per

curiam) 1).

       Two binding Eleventh Circuit decisions from the same Checking Account

Overdraft Litigation MDL involved here held that similarly situated banks had

waived similar delegation clause arguments. See Barras, 

; Hough,

. In Barras, BB&T Bank moved to compel arbitration. When the

district court denied its motion on unconscionability grounds, BB&T appealed to

this Court. We remanded for further consideration in light of Concepcion. On

remand, BB&T renewed its motion to compel arbitration, but then, for the first

time, it argued that a delegation clause specified that an arbitrator, not the court,

1
 In Bonner v. City of Prichard, 

, 1209 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.


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should decide the threshold question of arbitrability. The district court refused to

compel arbitration, ruling that BB&T had “waived its right to arbitrate the

threshold issue of unconscionability.” 

. On appeal, we

affirmed the finding of waiver. We distinguished Rent-A-Center, where the

defendant had preserved the delegation clause issue because it “argued consistently

that [the threshold] issue was assigned by agreement to the arbitrator.” 

BB&T litigated its case for over a year without moving the district court

to submit the threshold issue of enforceability to the arbitrator; rather, it asked the

district court to hold that the arbitration agreement was enforceable.” 

did not initially invoke the delegation clause, the plaintiff “had incurred the

expense of opposing the original motion as well as on appeal to this Court.” 

Hough, Regions Bank moved to compel arbitration. The

district court denied the motion on unconscionability grounds, but the Eleventh

Circuit vacated and remanded for reconsideration in light of Concepcion. On

remand, Regions for the first time pointed to a delegation clause, but the district

court found Regions waived that argument by failing to raise it in its original

motion to compel or in its reply in support of that motion. Again, we affirmed.

“Regions did not invoke [the] delegation provision in response to the Houghs’

arguments that the clause was unconscionable. Regions instead asked the district

court to ‘deny the conscionability challenge.’” 

.



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“Regions, as a party to the contract it signed, is presumed to know that it had the

right to arbitrate the issue of conscionability, and waived that aspect of the

agreement to arbitrate by taking actions that were inconsistent with that right of

arbitration.” 

Hough drew support for its waiver decision

from Doe v. Princess Cruise Lines, Ltd., 

(11th Cir. 2011), in which

we rebuffed a defendant’s belated attempt to enforce a delegation clause when at

first “it asked the district court to decide for itself whether the dispute was subject

to arbitration.” 

“Only when the matter was illuminated by the light of

an unfavorable decision from the district court did the cruise line suddenly see that

the court ought not have answered the question after all.” 

is materially indistinguishable from Barras and Hough, and the

two-pronged Morewitz waiver analysis yields the same result here: KeyBank has

waived enforcement of the delegation clause. First, KeyBank substantially

participated in litigation in a way that was inconsistent with an intent to have an

arbitrator determine the enforceability of the arbitration provision. When arguing

its original May 3, 2010, motion to compel arbitration, KeyBank made no mention

of the delegation clause. Instead, in its accompanying memorandum of law,

KeyBank declared that “[t]his [District] Court must determine which state law to

apply in analyzing whether KeyBank’s Arbitration Provision is ‘unconscionable’

under state law.” In its reply brief concerning the same motion, KeyBank stated,



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“[a]s both parties in this case acknowledge, the first issue for this [District] Court

to determine is whether there is an actual conflict between the laws of Washington

and Ohio with respect to the specific terms of the class action waiver.” Plainly,

KeyBank asked the court to resolve the threshold question of arbitrability. The

district court did so on June 16, 2010, when it entered an order denying KeyBank’s

motion to compel arbitration because the arbitration provision was unconscionable.

Only after the district court refused to compel arbitration did KeyBank -- in its

unsuccessful motion for a Rule 62.1 indicative ruling -- ask the district court to

enforce the delegation clause and submit the threshold question to arbitration.

      As for the second prong, Johnson suffered prejudice from KeyBank’s failure

to raise the delegation clause argument earlier. “Substantially invoking the

litigation machinery qualifies as the kind of prejudice . . . that is the essence of

waiver.” E.C. 

. “A prime objective of an agreement to

arbitrate is to achieve ‘streamlined proceedings and expeditious results.’” Preston

v. Ferrer, 

, 357 (2008) (quoting Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 

, 633 (1985)).

      Instead of pressing the delegation clause from the start, KeyBank took

Johnson two trips around the pretrial-motion-and-appeal carousel: first to litigate

the threshold question of arbitrability in the district court, and second to double-

back and reconsider who should decide the threshold question. KeyBank invoked



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the district court’s litigation machinery to decide the gateway issue, forcing

Johnson to spend resources opposing the original motion and contesting its appeal

-- precisely the kind of litigation costs that the delegation provision intended to

alleviate. See 

. By slowing the process and magnifying

its costs, KeyBank’s delay undermined the purpose of the Federal Arbitration

Act’s “liberal federal policy favoring arbitration agreements.” Moses H. Cone

Mem’l 

.

      Barras and Hough compel the conclusion that Johnson suffered prejudice

sufficient to create waiver because KeyBank’s delay forced him to bear the same

types of costs and engage in the same types of procedures. See 

; see also 

(“We conclude that [defendant] had

ample opportunity to demand arbitration well in advance of the decision that

significantly changed the legal position of the parties to the prejudice of

[plaintiff].”). At the outset, KeyBank had every chance to ask the district court to

refer the threshold question to an arbitrator. See Given v. M&T Bank Corp., 

, 1257 n.1 (11th Cir. 2012) (holding, in a case from the same MDL, that

a bank did not waive a delegation clause argument “because the bank has raised it

throughout the litigation”). KeyBank instead chose a different path that drove up

Johnson’s litigation expenses. Waiver requires that KeyBank live with its

decision.



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      None of KeyBank’s arguments against waiver are persuasive. First,

KeyBank argues that our round one remand impliedly excluded the possibility of

waiver by allowing KeyBank to raise anew the delegation clause issue highlighted

in Rent-A-Center. KeyBank invokes the mandate rule, a subsidiary of the law-of-

the-case doctrine, which “compels compliance on remand with the dictates of the

superior court and forecloses relitigation of issues expressly or impliedly decided

by the appellate court.” United States v. Ben Zvi, 

, 95 (2d Cir. 2001)

(emphasis omitted) (quoting United States v. Bell, 

, 66 (4th Cir. 1993)).

But KeyBank reads far too much into our earlier order. By remanding to the

district court for “further consideration in light of [Concepcion, Rent-A-Center, &

Cruz],” the remand left open the possibility that KeyBank had waived a Rent-A-

Center delegation clause argument. Our action was akin to a Supreme Court “mass

production, assembly-line remand order” that vacates a lower court decision and

remands for further consideration in light of recent precedent. United States v.

Ardley, 

, 994 (11th Cir. 2001) (Carnes, J., concurring in the denial of

rehearing en banc). “There is no implication in the standard language of those

orders that the [lower court] is to do anything except reconsider the case now that

there is a new . . . decision that may, or may not, affect the result.” 

our

decisions in Barras and Hough, which found waiver after a remand for

reconsideration in light of Concepcion, the previous appellate remand did not



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decide whether KeyBank had preserved a delegation clause argument. See 

reconsideration in light of recent precedent properly “included whether

the appellant had procedurally defaulted [an] issue by not raising it in his briefs”).

The remand gave the district court the first crack at sorting out the implications of

recent Supreme Court and Eleventh Circuit developments without determining

how these cases applied or whether arguments had been waived.

      Second, KeyBank claims that the doctrine of waiver does not apply here

because Rent-A-Center worked an intervening change in controlling law by

enforcing clauses that delegated unconscionability determinations. Barras and

Hough implicitly rejected this very argument by finding waivers instead of ruling

that Rent-A-Center caused an intervening change in the law. See 

-75; 

. Moreover, as early as 1986, the Supreme

Court held that “[u]nless the parties clearly and unmistakably provide otherwise,

the question of whether the parties agreed to arbitrate is to be decided by the court,

not the arbitrator.” AT&T Techs., Inc., v. Commc’ns Workers, 

, 649

(1986). The Rent-A-Center opinion itself acknowledged that, in the past, the Court

had “recognized that parties can agree to arbitrate ‘gateway’ questions of

. We are bound by the conclusions of our cases

that Rent-A-Center was not an intervening change that wiped away KeyBank’s

waiver.



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          Finally, KeyBank argues that, unlike the banks in Barras and Hough, it

invoked the delegation clause when it filed a Rule 62.1 motion for an indicative

ruling after the district court had refused to compel arbitration but before the

Eleventh Circuit decided the round-one appeal. Federal Rule of Civil Procedure

62.1 lays out a district court’s options when faced with a motion for relief it cannot

grant because of a pending appeal. The district court may defer or deny the

motion, but it also may indicate that it would grant the motion on remand or that

the motion raises a substantial issue.2 See Munoz v. United States, 451 F. App’x

818, 819 (11th Cir. 2011) (unpublished) (“Rule 62.1 was adopted in 2009 . . . to

2
    In full, the Rule provides:

          Rule 62.1. Indicative Ruling on a Motion for Relief That Is Barred by a Pending
          Appeal

          (a) Relief Pending Appeal. If a timely motion is made for relief that the court
          lacks authority to grant because of an appeal that has been docketed and is
          pending, the court may:

                  (1) defer considering the motion;

                  (2) deny the motion; or

                  (3) state either that it would grant the motion if the court of appeals
                  remands for that purpose or that the motion raises a substantial
                  issue.

          (b) Notice to the Court of Appeals. The movant must promptly notify the circuit
          clerk under Federal Rule of Appellate Procedure 12.1 if the district court states
          that it would grant the motion or that the motion raises a substantial issue.

          (c) Remand. The district court may decide the motion if the court of appeals
          remands for that purpose.

Fed. R. Civ. P. 62.1.


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codify the practice that most courts had been following.”). If a district court issues

an indicative ruling, remand remains at the discretion of the court of appeals. Fed.

R. Civ. P. 62.1 advisory committee’s note; see Fed. R. App. P. 12.1 (“If the district

court states that it would grant the motion or that the motion raises a substantial

issue, the court of appeals may remand for further proceedings but retains

jurisdiction unless it expressly dismisses the appeal.”). KeyBank brought a Rule

62.1 motion because it had already divested the district court of jurisdiction by

filing an interlocutory appeal in the Eleventh Circuit.

      KeyBank acknowledges, as it must, that its Rule 62.1 motion came after the

district court refused to compel arbitration, but it argues that the banks in Barras

and Hough waited to mention the delegation clause until after their first motions to

compel arbitration were briefed, argued, decided, appealed, and then remanded.

KeyBank believes that because it did not wait quite so long to raise the

issue -- speaking up after the original motion had been briefed, argued, decided,

and appealed, but before it was briefed on appeal and remanded -- Johnson avoided

prejudice because the “litigation machinery” had not been substantially invoked.

Not so. KeyBank’s unsuccessful motion for an indicative ruling notably came

after Johnson had borne the costs of contesting the initial motion to compel

arbitration and after KeyBank had engaged the apparatus of appeal. KeyBank’s

Rule 62.1 attempt to revive the delegation clause argument came too late to save



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Johnson the expense of twice fighting the unconscionability battle in federal court.

It cannot save KeyBank from waiver.

      Quite simply, KeyBank waived its delegation clause argument when it

waited to raise the issue until after it had asked the district court to decide

arbitrability -- and lost. See 

-75; 

. Accordingly, we vacate the district court order compelling arbitration on the

threshold question of arbitrability and remand for further proceedings.

      VACATED and REMANDED.




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