Szetela v. Discover Bank

John Szetela (plaintiff) joined a class action against Discover Bank (Discover) (defendant) that asserted breach of contract, fraudulent misrepresentation, and deceptive business practices, among other claims, for Discover’s practice of improperly charging fees and penalties to credit cardholders for exceeding their credit limits. Prior to joining the lawsuit, Szetela had received notification from Discover that his cardholder agreement had been amended to include an arbitration clause. The arbitration clause permitted either party to elect arbitration in the event of a dispute, and it included a provision indicating that should arbitration occur, neither Szetela nor Discover would be permitted to join or consolidate their claims with others or arbitrate as a member of a class. Upon receipt of the notification of the amendment to his cardholder agreement, Szetela’s only forms of recourse were to accept the amendment or close his account, which Szetela had maintained with Discover for several years. After Szetela was added to the class action, Discover moved to enforce the arbitration clause, including the provision that Szetela arbitrate his claim as an individual rather than as a member of a class. Discover’s motion was granted, and Szetela appealed on the grounds that the arbitration clause was unconscionable and should not have been enforced. The damages for Szetela’s individual lawsuit amounted to $29.