Originally from:

Journal of American Arbitration (JAA) - Vol. 4, No. 1

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ARTICLES

The Fourth Circuit Adopts Broad
Interpretation of Subject Matter Jurisdiction in
Cases in which a Controversy Underlying an
Arbitration Agreement Presents a Broad
Federal Question in Discover v. Vaden
By Abigail Whiffen

I. OVERVIEW
In June 2003, Discover Financial Services (DFS), the servicing
affiliate of Discover Bank (Discover), sued Betty Vaden, a Discover card
holder since 1990, for her unpaid credit card balance that was in excess
of $10,000. In response to the suit, Vaden filed several class action
counterclaims under Maryland state contract law against DFS. Most of
the claims alleged breach of contract regarding increased interest rates
and late fees. Discover countered by filing suit in federal district court
under § 4 of the Federal Arbitration Act (FAA) to compel Vaden to
submit her counterclaims to arbitration pursuant to a 1999 amendment it
had sent its card holders that included an arbitration clause. Discover
contended that Vaden’s counterclaims were preempted by the Federal
Deposit Insurance Act. Vaden then filed a motion to dismiss and a
motion for summary judgment, alleging that, first, “Discover Bank
lacked standing to sue for arbitration since the class action counterclaims
were filed against [DFS], not Discover Bank.” And, second, she argued
“that she never validly entered into an arbitration agreement” because