Judge Finds Santander Bank's Arbitration Agreement Ambiguous

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A federal judge in Newark has refused, at least for now, to compel arbitration of a wage-and-hour class action suit against Santander Bank N.A., finding that language in the company's arbitration agreement with mortgage loan officers is ambiguous.

The agreement, signed by plaintiffs in the case, is rendered ambiguous by a clause indicating the employee has received a description of the company's commission plan for mortgage officers, U.S. District Judge Madeline Cox Arleo of the District of New Jersey ruled in Ranieri v. Banco Santander S.A.

The bank issued the plaintiffs two documents describing employment terms on their first day of work—the mortgage development officer agreement, which contained an arbitration agreement as one of its six sections, and the mortgage sales commission plan. Santander maintained that the plaintiffs agreed to arbitration of workplace disputes because they received and signed the MDO as a condition of employment.

The plaintiffs, for their part, maintained that their signatures acknowledged receipt of the mortgage sales commission plan but not their intent to be bound by the terms of the MDO.

Because the contract is susceptible to two logical interpretations, Arleo denied the defendants' motion to compel individualized arbitration.

Arleo said the plaintiffs' signatures could be read to mean only that they received the agreement, or that they agreed to its terms. And because the defendants drafted the agreement, case law holds that any ambiguous language should be held against them, Arleo added.

The judge also denied Santander's motion to dismiss or stay the action. She said the question of arbitrability would only be resolved by the court with the aid of additional discovery.

The sentence in question, printed in bold on the MDO, read, "I certify, by my signature below, that I have received a copy of the Mortgage Sales Commission Plan, which has been provided to me."

The judge said a signature on an agreement typically indicates agreement with the entire contract. But the ambiguous language in the present case "makes this case atypical because the purpose of the signature can be construed in more than one way."

Santander cited two prior cases where arbitration was compelled based on prior versions of the same documents, one in the Eastern District of Pennsylvania and the other in the Southern District of New York. But Arleo said those cases were not helpful—in the Pennsylvania case, the plaintiff brought a challenge on unconscionability grounds but made no reference to the signature clause, and in the New York case, there was no dispute that the parties entered the MDO agreement containing the arbitration clause at issue.

Defendants could not cite any case where a signature served to bind the parties under such ambiguous circumstances, and the court is unaware of any such cases, Arleo said.

The suit seeks certification as a collective action under the Fair Labor Standards Act and as a class action under the New Jersey Wage and Hour Law on behalf of New Jersey mortgage loan officers for Santander. The plaintiffs are paid on an hourly basis but are prohibited from claiming more than 40 hours, even though they routinely have to work before and after their regular shifts, during their lunch break and on weekends, the suit alleges.

Named plaintiff Donna Ranieri said she routinely handled customer calls and walk-in customers in the bank during her lunch break, but company policy requires employees to record an uncompensated lunch period under such circumstances, according to court papers. The class has more than 1,000 members, the suit says.

The suit was filed in June 2015. Santander moved to compel individual arbitration and to dismiss or stay the suit.

Arleo upheld a clause in the MDO stating that Pennsylvania law would govern the agreement, based on application of New Jersey choice-of-law rules. The judge noted that the claims in the present case don't have a substantial connection to that state, but she said that state's law was a reasonable choice because Santander has branches in Pennsylvania and because that state, like New Jersey, has a general policy in favor of arbitration.

Sarah Bouchard of Morgan Lewis in Philadelphia, representing Banco Santander, did not return a call seeking comment.

Michael DiChiara of Krakower DiChiara in Park Ridge, local counsel for the plaintiffs, referred a reporter to his co-counsel, Rhonda Wills of Wills Law Firm in Houston. Wills did not return a call about the case. Contact the reporter at ctoutant@alm.com.

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