Beneficial National Bank, U.S.A. v. Obie Payton

Obie Payton (defendant) signed a credit-card agreement with Beneficial National Bank (plaintiff) that let Beneficial change the agreement's terms. Beneficial later mailed cardholders, including Payton, notice that it was adding mandatory arbitration unless the cardholder rejected the change within 30 days; Payton did not opt out in time. His account was later assigned to Household Bank, which similarly notified cardholders of an arbitration provision. Payton sued Beneficial and Household Bank in state court alleging the arbitration provision was procured by fraud; the banks then sued in federal court to compel arbitration under the Federal Arbitration Act, and Payton moved to dismiss for lack of jurisdiction while the banks moved to compel arbitration.