Ethel Gonzalez Kercado M00455215 25-marzo-2015

Vaden v. Discover Bank

Characters: Betty Vaden

Discover Bank

Summary

The case began as a simple breach of contract claim, later on in July 2005 Discover Bank and Discover Financial Services, Inc. sued Discover card holder Betty Vaden for a debt of $10,610.74. plus interest and litigation expenses. Vaden later on filed several class- action counterclaims alleging that the finance charges, interest, and late fees charges by discover violated Maryland’s credit laws. Instead of responding to Vaden’s counterclaim in state court, Discover filed suit seeking to compel arbitration of Vaden’s counterclaims.

Facts

Discovery sues Betty Vans for a financial debt of $10,610.74 Vans filed several class-action counterclaims Discovery filed suit in the United States District Court seeking to compel arbitration Vaden appealed the decision of the district court arguing that the distract court lacked

subject matter jurisdiction to entertain the petition. The supreme court granted Vadens petition for certiorari

Problem

The problems are whether a district court, if ask to compel arbitration pursuant to petition when a federal question suit is already bejore the court, when the parties satisfy the requirements for diversity of citizenship jurisdiction, or when the dispute over arbitrability involves a maritime contract, should look through the petition and grant the requested relief if the court would have federal question jurisdiction over the underlying controversy, and second if the court should adopt the look through test, whether a district court may exercise jurisdiction over a petition when the petitioner’s complaint rest on state law or potential counterclaim rest on federal law.

The problem occur because Discover instead of responding to Vadens counterclaims in state court filed suit in the united states district court and Vaden appealed that the district lack jurisdiction.

Vaden also argue that Discover Financial Services was the real party in interest, not Discover Bank, and that compelling arbitration was improper because Discover Bank lacked standing and there was not a valid arbitration agreement between Vaden and Discover Bank.

Ethel Gonzalez Kercado M00455215 25-marzo-2015

Alternative course action

a. The court advises Discover, and similarly situated litigants, because federal court intervention is not necessary to enforce an arbitration agreement.

b. Discovery can bring the arbitrate independently in federal court, the district court should have jurisdiction to hear the petition to compel arbitration over the dispute.

c. Establish that a district court has jurisdiction over the controversy as a whole using the same criteria that would applied in standard federal pleading practice

Course evaluation

a. If Discover would get a similar litigant he would be able to get to an agreement with vans .Parties may seek recourse by petitioning a state court to enforce the arbitration agreement pursuant to federal arbitration act or a state statutory remedy similar to a petition when the parties satisfy the requirements for diversity of citizenship jurisdiction, or when the dispute over arbitrability involves a maritime contract.

b. It would be inconsistent with the federal rules of pleading to allow jurisdiction to rest on a hypothesis of how ‘one might imagine a federal question suit involving the parties disagreement’’ could have been styled to present a federal question.

c. The court will dismissed Vadens petition to compel arbitration for lack of jurisdiction

Best alternative

The best course of action would be letter a, because through that alternative Discover would get a similar litigant and would be able to get to an agreement with Vans. The Parties may also seek recourse by petitioning a state court to enforce the arbitration agreement pursuant to federal arbitration act or a state statutory remedy similar to a petition.