Matthew Kilgore v. Keybank, National Association

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MATTHEW C. KILGORE , individually No. 09-16703 and on behalf of all others similarly situated; WILLIAM BRUCE FULLER, D.C. No. individually and on behalf of all 3:08-cv-02958- others similarly situated; TEH Plaintiffs-Appellees,

v.

KEYBANK, NATIONAL ASSOCIATION ,

successor in interest to Keybank

USA, N.A.; KEY EDUCATION

RESOURCES, a division of Keybank National Association; GREAT LAKES EDUCATION LOAN SERVICES, INC., a Wisconsin corporation, Defendants-Appellants, KILGORE V . KEYBANK, NAT ’L ASS’N

MATTHEW C. KILGORE , individually No. 10-15934 and on behalf of all others similarly situated; WILLIAM BRUCE FULLER, D.C. No. individually and on behalf of all 3:08-cv-02958- others similarly situated, TEH Plaintiffs-Appellants,

OPINION

v.

KEYBANK, NATIONAL ASSOCIATION ,

successor in interest to Keybank

USA, N.A.; KEY EDUCATION

RESOURCES, a division of Keybank National Association; GREAT LAKES EDUCATION LOAN SERVICES, INC., a Wisconsin corporation, Defendants-Appellees.

Appeal from the…

Opinion by Judge HURWITZ; Dissent by Judge PREGERSON.

OPINION

This appeal involves a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans and the loan servicer. The central issue is whether the district court should have compelled arbitration. We hold that this case does not fall under the narrow “public injunction” exception to the Federal Arbitration Act we recognized in Davis v. O’Melveny & Myers, 485 F.3d 1066, 1082-84 (9th Cir.2007), and remand with instructions to compel arbitration.

I.

A.

Silver State Helicopters, LLC (“SSH”) operated a flight-training school in Oakland, California. SSH referred to Key-Bank, N.A. (“KeyBank”) as a “preferred lender” in marketing materials and encouraged prospective students to borrow from KeyBank. KeyBank financed virtu *1056 ally all SSH student tuition; Great Lakes Educational Loan Services (“Great Lakes”) serviced the loans.

Every SSH student borrowing from KeyBank executed a promissory note (“Note”). The Note contained an arbitration clause, located in a section entitled “ARBITRATION,” which provided, in relevant part:

The…

dissenting:

I. Hustled by the school; hustled by the bank.

Silver State Helicopter School did not do a good job training helicopter pilots, placing them in jobs, or managing its own finances. But it did make a convincing sales pitch. Silver State promised its students that they would get the training required to get good paying jobs as commercial helicopter pilots.

At flashy career fairs around California, Silver State worked hard to sign up prospective students for its helicopter pilot training program. Former Silver State student, Mathew Kilgore, declared under penalty of perjury:

Airola’s claims were not true. Silver State accepted almost all applicants who could get their loans approved. Silver State lacked sufficient equipment or instructors to properly train its students. The variable rate interest on the loans would rise far above four percent. 1 Matthew Kilgore, *1062 William Fuller, and the other 120 putative class members believed what Airola told them and signed up. They took out $55,950 loans, which KeyBank promptly forked over to Silver State before students took a single class.

But Silver State knew it was headed for a crash landing. By 2008, Silver State had…