The customer disputed several charges to her business rewards bank account as fraudulent, refusing to pay the charges until the bank provided information regarding the charges. The bank then sued the customer for breach of contract under state law for the unpaid charges (the “bank’s prior action”), but the case was dismissed for the bank’s failure to prosecute. The customer later sued the bank, alleging it had violated the Fair Credit Reporting Act (“FCRA”) by failing to investigate the disputed charges. In response, the bank moved to compel arbitration. The district court denied the bank’s arbitration motion, finding that the bank’s prior action mirrored the customer’s action because both actions were merely the parties disputing whether the customer owed the charges.
In Barnett v. Am. Express Nat’l Bank, No. 24-60391, 2025 WL 2143697, 2015 U.S. App. LEXIS 18976 (5th Cir. July 29, 2025), the Fifth Circuit reversed and remanded the district court’s holding, finding that, based on its recent decision in Forby v. One Technologies, LP, the bank did not waive its right to arbitrate the customer’s FCRA claim. 13 F.4th 460 (5th Cir. 2021). The court explained that “[a] party can waive its right to arbitration by invoking the judicial process,” but, as explained in Forby, such judicial process is only invoked “to the extent it litigates a specific claim it subsequently seeks to arbitrate.” The court ultimately found that because the bank’s prior action involved different claims than the customer’s FCRA action, the bank “did not substantially invoke the judicial process as to those claims.” Specifically, the court emphasized that even though both claims arose from the same set of facts and both centered around the customer’s debt, that did not make the two claims the same.
By Kristin Meurer [email protected]
Edited By Callighan Ard [email protected]
Edited By Hayden Mariott [email protected]