The Importance Of Vaden V. Discover Bank

Law360, New York (May 1, 2009, 12:00 AM EDT) -- The U.S. Supreme Court redefined the enforceability of agreements to arbitrate in its March 9 decision in Vaden v. Discover Bank, et al., 556 U.S. ___ (2009).

While Vaden involved a dispute between a credit card holder and credit card company, the decision may significantly impact the securities industry by making it easier for investors to avoid arbitration, despite the existence of a valid arbitration agreement.

Factual Background

Discover Bank’s servicing affiliate commenced the suit in state court based exclusively on state law in Maryland. The...
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