In early April, the Fourth Circuit Court of Appeals considered whether an arbitration agreement was “a written provision” for purposes of the Federal Arbitration Act where the parties modified the contract through their conduct. The case arose from an automobile loan, where the loan stated that “any change to this contract must be in writing and we must sign it.” After the borrower was having difficulties making payments, CitiFinancial sent an Amended Agreement for the borrower’s review and signature. In the Amended Agreement, CitiFinancial included an arbitration agreement and a class waiver. The borrower signed the Amended Agreement, but CitiFinancial raised the amount charged per month by 86¢–which the borrower proceeded to pay.

Sometime later, the borrower defaulted on the auto loan, and the new servicer repossessed the vehicle. The borrower initiated a putative class action lawsuit, and the loan holder sought to compel arbitration. The lower court compelled arbitration, but then dismissed the suit so that an immediate appeal could be taken. On appeal, the Fourth Circuit had to address whether there was an agreement between the parties and whether the arbitration clause was “in writing” for purposes of the FAA.

Under the principle of estoppel, the Fourth Circuit held that a proper contract existed between the parties. Moving on to the consideration of “in writing,” the Fourth Circuit held that because “the arbitration agreement was in writing and [the borrower] assented to be bound by that agreement when she made payments in the amount CitiFinancial requested, it does not matter, for purposes of enforceability under the FAA, that she also assented to other terms that may not have been in writing.” The Fourth Circuit reasoned that all that is required is that the arbitration agreement be in writing—not that there be any written assent to these obligations, following the lead of the Second, Sixth, and Eleventh Circuits. As such, the Fourth Circuit affirmed the dismissal so that the case could be taken to arbitration.

Galloway v. Santander Consumer USA, Inc., Case No. 15-1392 (4th Cir. Apr. 8, 2016).