By Howard S. Suskin

The U.S. Court of Appeals for the Eleventh Circuit concluded that a confidentiality provision in an arbitration clause in a bank account holder agreement was substantively unconscionable.  Larsen v. Citibank FSB, 871 F.3d 1295 (11^th Cir. Sep. 26, 2017).    The case concerned a putative class of account holders who challenged the bank’s overdraft policy.   The arbitration clause in the account holder agreement required both parties to keep confidential any decision of an arbitrator.   The account holder argued that this provision disproportionately favored the bank as a repeat participant in the arbitration process.  The court agreed, concluding that where the outcomes of prior arbitration proceedings remain concealed, as the arbitration clause purported to require, prospective claimants have little context in which to assess the value of their cases, to avoid repeating past claimants’ mistakes, or to leverage prior successes.  The court further reasoned that the information disadvantage that the bank holds at the outset of a dispute may have the effect of discouraging consumers from pursuing valid claims.  The court concluded that severing the confidentiality clause would not significantly alter the tone or nature of arbitration between the account holders and the bank.   Accordingly, the court severed the confidentiality clause and enforced the remainder of the clause.