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
Marylands credit laws. Instead of responding to Vadens counterclaim in
state court, Discover filed suit seeking to compel arbitration of Vadens
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
petitioners complaint rest on state law or potential counterclaim rest on
federal law.

Ethel Gonzalez Kercado M00455215 25-marzo-2015

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.
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

Ethel Gonzalez Kercado M00455215 25-marzo-2015

state court to enforce the arbitration agreement pursuant to federal

arbitration act or a state statutory remedy similar to a petition.