Bandler v. Charter One Bank, No. 451-7-03 Rdcv (Cohen, J., Aug. 2, 2010) 

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the 

accompanying data included in the Vermont trial court opinion database is not guaranteed.] 

STATE OF VERMONT 

SUPERIOR COURT CIVIL DIVISION 

Rutland Unit Docket No. 451-7-03 Rdcv 

 

MICHAEL BANDLER, and 

MICHAEL BANDLER & 

COMPANY, INC., 

 Plaintiffs 

v. 

CHARTER ONE BANK 

n/k/a CITIZEN’S BANK, 

Defendant 

DECISION ON DEFENDANT’S MOTION TO DISMISS ARBITRATOR’S 

CLAUSE CONSTRUCTION AWARD, FILED MAY 19, 2010

 This case is about allegedly improper bank account fees charged by defendant 

Citizen’s Bank. After plaintiff Michael Bandler brought his claim in this Court, he was 

ordered him to go to arbitration with the defendant, in accordance with the bank account 

agreement. At arbitration, the plaintiff sought to certify a class of plaintiffs, and the 

arbitrator found that the bank account agreement supported class arbitration. The 

defendant now challenges the arbitrator’s clause construction decision. 

 A hearing on the matter was held on July 1, 2010. Plaintiff Michael Bandler was 

represented by Robert P. McClallen, Esq. Defendant Charter One Bank n/k/a Citizen’s 

Bank was represented by Tavian M. Mayer, Esq. 

BACKGROUND 

 In March 2003, Michael Bandler, on behalf of Michael Bandler & Company, Inc., 

opened a business bank account with Charter One Bank. He also opened a personal 

account. Mr. Bandler executed an account agreement with Charter One for each account. 
2

The Deposit Account Agreement, for both the personal and business accounts, contains 

general provisions that include a dispute resolution arbitration clause. It states: 

Dispute Resolution-Arbitration. In the unlikely event of a 

dispute, the Bank wants to resolve the dispute fairly and 

quickly. In most cases, a problem can be resolved in a 

branch, by telephone, or by writing to our Consumer

Affairs office at [address redacted], Cleveland, OH 44101-

3111. You and I agree that should any dispute or 

controversy arise, you and I will first attempt to resolve the 

dispute informally and promptly through good faith 

negotiations. In the event that the dispute is not clearly 

resolved by informal negotiations, any controversy or claim 

arising out of or relating to this contract, or the breach 

thereof, shall be settled by arbitration administered by the 

American Arbitration Association under its Commercial 

Arbitration Rules, and judgment on the award rendered by 

the Arbitrator(s) may be entered in any court having 

jurisdiction thereof. Any statute of limitations which would 

otherwise be applicable shall apply. Nothing herein shall 

preclude or limit the Bank’s right of set-off. Arbitration 

shall be final and binding on both parties, and both parties 

waive their right to seek remedies in court, including the 

right to a jury trial. 

In the event that multiple claims are asserted, some of 

which are held not subject to these provisions regarding 

arbitration, you and I agree, to the extent allowed by law, to 

stay the proceedings of the claims not subject to these 

provisions until all other claims are resolved in accordance 

with these provisions. In the event that I, notwithstanding 

the provisions of this section, file a lawsuit with respect to 

any claim against you, prior to the appointment of an 

arbitrator, I agree, to the extent allowed by law, to stay the 

proceedings until my claim(s) are resolved in accordance 

with these provisions. In the event the claims are asserted 

against multiple parties, some of whom are not subject to 

these provisions regarding arbitration, you and I agree, to 

the extent allowed by law, to sever the claims subject to 

these provisions and resolve them in accordance herewith. 

Nothing shall preclude either you or me from seeking 

equitable relief in the event an arbitrator is not yet 

appointed, or if the arbitrator is not legally empowered to 

grant the relief requested. 
3

In July 2003, Michael Bandler and Michael Bandler & Company, Inc. brought an 

action against Charter One in this Court, arising out of the opening of the bank accounts. 

Mr. Bandler made various claims against Charter One, including allegations of false 

representations, misleading advertising, imposition of sorting charges, and improper 

overdraft fees and sustained overdraft fees leading to charges being incurred. 

 On November 12, 2003, the Court issued a Final Judgment Order in which it 

determined that the parties had agreed to arbitrate in the account agreement, the “Account 

Rules and Regulations.” In November 2004, the plaintiffs proceeded to arbitration before 

the American Arbitration Association (AAA). 

The plaintiffs then sought to amend their arbitration demand in order to bring the 

arbitration both individually and on behalf of two classes: (1) “Persons who have opened 

accounts with Charter One in Vermont, since Charter One began advertising ‘Free 

Checking’ and have incurred charges.”; and (2) “Persons who have opened accounts with 

Charter One in Vermont, executing agreements which provide for: modification at will 

by Charter One; no requirement of direct notice of changes; and, have been subjected to 

changes which resulted in charges such as sorting and continuing overdraft charges.” 

On September 3, 2006, the arbitrator issued an order entitled “Class Action, 

Clause Construction Partial, Final Arbitration Award.” In this order, the arbitrator 

determined that the arbitration was governed by AAA’s Supplementary Rules for Class 

Arbitrations, that the arbitrator had the authority to address the issue of class arbitration, 

and that class action arbitration was permitted under the bank account agreement. In 

coming to the conclusion that the account agreement supported class action arbitration, 

the arbitrator relied extensively on the case of Green Tree Financial Corp. v. Bazzle, 539 
4

U.S. 444 (2003). 

Following the arbitrator’s class action arbitration order, the Supreme Court of the 

United States granted certiorari to another class action arbitration case, Stolt-Nielsen S.A. 

v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2008), cert. granted, 129 S.Ct. 2793 

(June 15, 2009). The arbitrator then stayed the arbitration proceeding, recognizing that 

“in the interest of cost efficiency . . . the outcome of Stolt-Nielsen could well have a 

significant impact on the future conduct of this arbitration.” Decision on Motion to Stay, 

August 17, 2009. 

On April 27, 2010, the Supreme Court issued its opinion in Stolt-Nielsen S.A. v. 

AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010). On May 19, Charter One filed the 

instant motion to dismiss the arbitrator’s clause construction award. Charter One argues 

that (1) only the Court, not the arbitrator, has the authority to decide whether class 

arbitration is appropriate, and (2) that under the account agreement there is no contractual 

basis for class arbitration. The Court need not address the first argument, as the second is 

dispositive of the motion. 

DISCUSSION 

 The arbitrator proceeded with the clause construction award analysis under 

Section 3 of the AAA’s Supplementary Rules for Class Arbitrations. That section 

provides in pertinent part that: 

[T]he arbitrator shall determine as a threshold matter, in a 

reasoned, partial final award on the construction of the 

arbitration clause, whether the applicable arbitration clause 

permits the arbitration to proceed on behalf of or against a 

class (the "Clause Construction Award"). The arbitrator 

shall stay all proceedings following the issuance of the 

Clause Construction Award for a period of at least 30 days 

to permit any party to move a court of competent 
5

jurisdiction to confirm or to vacate the Clause Construction 

Award . . . If any party informs the arbitrator within the 

period provided that it has sought judicial review, the 

arbitrator may stay further proceedings, or some part of 

them, until the arbitrator is informed of the ruling of the 

court. 

 The arbitrator stayed the proceedings pending the resolution of Stolt-Nielsen S.A. 

v. AnimalFeeds Int’l Corp., and after resolution of Stolt-Nielsen the defendant sought 

review of the clause construction award order in this Court. The defendant seeks review 

in the same manner as the petitioner did in Stolt- Nielsen, following the arbitrator’s 

issuance of the clause construction award in accordance with Rule 3 of the Supplemental 

Rules Class Arbitrations. Stolt-Nielsen, 130 S.Ct. at 1765-66. Thus, the issue of whether 

the parties agreed to class arbitration is ripe for review.1 

Here, the defendant contends that the decision of the arbitrator must be vacated, 

but in order to obtain that relief, it “must clear a high hurdle.” Stolt-Nielsen, 130 S.Ct. at 

1768. It is not enough for the defendant “to show that the panel committed an error-or 

even a serious error.” Id. It is only when arbitrators stray from interpretation and 

application of the agreement and effectively dispense their own brand of industrial justice 

that their decisions may be unenforceable. Id. In that situation, an arbitration decision 

may be vacated on the ground that the arbitrator exceeded his or her powers, for the task 

of an arbitrator is to interpret and enforce a contract, not to make public policy. See Id. 

(citing Federal Arbitration Act, 9 U.S.C. § 10(a)(4)); see also 12 V.S.A. § 5677(a)(3) 

(under Vermont Arbitration Act, a court shall vacate an award where the arbitrators 

 

1

 The Vermont Arbitration Act, 12 V.S.A. § 5677(c), requires that an application to vacate an award be 

made within 30 days after delivery of a copy of the award to the applicant, except that if predicated upon 

corruption, fraud or other undue means, it may be made within 30 days after such grounds are known or 

should have been known. The parties have not raised this issue, either in the pleadings or at the hearing on 

July 1, 2010. Thus, the Court considers any argument as to this issue waived. 
6

exceeded their powers). In this case, as in Stolt-Nielsen, the Court must conclude that 

what the arbitrator did was simply to impose his own view of sound policy regarding 

class arbitration. See Stolt-Nielsen, 130 S.Ct. at 1767-68. 

In Stolt-Nielsen, the Court found that “instead of identifying and applying a rule 

of decision derived from the FAA or either maritime or New York law, the arbitration 

panel imposed its own policy choice and thus exceeded its powers.” 130 S.Ct. at 1770. 

Here, similarly, the arbitrator did not identify and apply a rule of decision derived from 

the Vermont Arbitration Act or other Vermont law. Furthermore, rather than analyzing 

whether the parties actually agreed to class arbitration, the arbitrator put the onus on 

Charter One to prove that class arbitration was precluded. 

The arbitrator dismissed Charter One’s argument that because the deposit account 

agreement repeatedly referred to the depositor in the singular and the arbitration clause 

referred specifically to “both parties,” class arbitration was not contemplated by the 

parties. The arbitrator found that the contract language did not expressly forbid, and, was 

in fact wholly consistent with class arbitration. Furthermore, the arbitrator found that 

even if the contract language was not wholly consistent with class arbitration, the contract 

was ambiguous and the arbitrator would construe any ambiguity in a manner permitting 

class arbitration. 

 This Court cannot read the arbitrator’s decision as anything other than a nonlegally supported policy choice. The arbitrator first relied on Green Tree Financial Corp. 

v. Bazzle, 539 U.S. 444 (2003), for the proposition that that the “meaning of the language 

[of the contract] should be referred to an arbitrator who would have discretion to interpret 

it as either permitting or forbidding class arbitrations.” See Arbitrator’s Decision, p. 5. 
7

However, the arbitrator did not analyze the contract language beyond concluding that the 

arbitration clause in Green Tree was more contrary to class arbitration than the arbitration 

clause in the present case. Arbitrator’s Decision, p.5 n.4. The arbitrator concluded that 

references to the depositor and the bank in the singular could be read as consistent with 

class arbitration because “a class action is a quasi-procedural mechanism for 

amalgamating a series of individual claims, each of which remains an individual claim 

even after it is brought under the umbrella of a class action.” Id. The arbitrator cited no 

law for this conclusion, and the Court can only read it as a policy choice by the arbitrator 

to allow class arbitration unless class arbitration is expressly precluded in a contract. 

The Court must also read the arbitrator’s conclusion that the contract was 

ambiguous, and that the arbitrator would construe any ambiguity in a manner permitting 

class arbitration, as nothing more than a policy choice. The arbitrator supported its 

conclusion that class arbitration was appropriate by citing federal law which found that 

federal policy favored arbitration and that ambiguities as to the scope of arbitration would 

be resolved in favor of arbitration. See Id. (citing Volt Information Systems, Inc. v. Board 

of Trustees of Leland Stanford Junior University, 489 U.S. 468, 476 (1989)). However, 

the issue here is not whether arbitration in general was supported under the contract, but 

whether class arbitration was supported. 

Furthermore, the arbitrator cited black letter law for the proposition that 

ambiguities in a contract are construed against the drafter, in this case Charter One. 

Arbitrator’s Decision, p. 5-6. However, he never conducted any analysis as to whether 

the contract was actually ambiguous. Apparently the arbitrator concluded that mere 

silence in the account agreement as to class arbitration equaled ambiguity in the contract. 
8

The arbitrator’s final rational supporting his decision further reveals its true nature 

as a policy choice. The arbitrator wrote, “it is significant that when depositors signed the 

Deposit Account Agreements containing the Arbitration Clauses, they could not possibly 

have understood that the vague language of those Clauses constituted a waiver of any 

right to participate in a class action.” Arbitrator’s Decision, p. 6. Beyond the fact that the 

arbitrator never analyzed any of the so-called “vague” clauses in the agreement, it was 

also error to make the assumption that agreements support class arbitration unless 

otherwise waived. The arbitrator cited no law for the proposition that a right to class 

arbitration exists unless otherwise waived. Again, this was a policy choice. 

Here, the arbitrator strayed from interpretation and application of the agreement 

and effectively dispensed his own brand of industrial justice. Stolt-Nielsen, 130 S.Ct. at 

1768. The arbitration decision is therefore vacated on the ground that the arbitrator 

exceeded his powers, “for the task of an arbitrator is to interpret and enforce a contract, 

not to make public policy.” Id. (citing 9 U.S.C. § 10(a)(4)); see also 12 V.S.A. 

§ 5677(a)(3) (a court shall vacate an award where the arbitrators exceeded their powers). 

As a result, the Court must either direct a rehearing by the arbitrator or decide the 

question that was originally referred to the arbitrator. Stolt-Nielsen, 130 S.Ct. at 1770 

(citing 9 U.S.C. § 10(b)); see also 12 V.S.A. § 5677(d) (if court vacates the award 

because the arbitrators exceeded their powers, the court may order a rehearing before the 

arbitrators who made the award or their successors). Because the Court concludes that 

there can be only one possible outcome on the facts before it, the Court sees no need to 

direct a rehearing by the arbitrator. See Stolt-Nielsen, 130 S.Ct. at 1770. 

The interpretation of an arbitration agreement is generally a matter of state law. 
9

Stolt-Nielsen, 130 S.Ct. at 1773. The Vermont Supreme Court has stated that “[i]n 

deciding whether parties agreed to arbitrate a matter, we apply the ordinary rules of 

contract interpretation.” State v. Phillip Morris USA, Inc., 2008 VT 11, ¶ 13, 183 Vt. 176. 

The Court interprets contracts to give effect to the parties' intent, which it presumes is 

reflected in the contract's language when that language is clear. R&G Properties, Inc. V. 

Column Financial, Inc., 2008 VT 113, ¶ 17, 184 Vt. 494. The Court also strives to “give 

effect to every part of the instrument and form a harmonious whole from the parts.” Id. 

Where the terms of an agreement are plain and unambiguous, they will be given 

effect and enforced in accordance with their language. O’Connell-Starkey v. Starkey, 

2007 VT 128, ¶ 8, 183 Vt. 10. An ambiguity in a contract exists when a writing in and of 

itself supports a different interpretation from that which appears when it is read in light of 

the surrounding circumstances, and both interpretations are reasonable. Dep’t of Corr. v. 

Matrix Health Systems, P.C., 2008 VT 32, ¶ 12, 183 Vt. 348. 

Here, only one interpretation is reasonable and ambiguity does not exist. Under 

the general provisions of the deposit account agreement, the terms “I,” “me,” “my” and 

“our” refer to the depositor (whether joint or individual), and the terms “you,” and “your” 

refer to the Bank. The agreement goes on to repeatedly refer to the depositor in the 

singular. There is never any referral to plural parties or to class arbitration. 

The Court will not read a term into an agreement unless it arises by necessary 

implication. Field v. Costa, 2008 VT 75, ¶ 17, 184 Vt. 230. And, the Court does “not 

insert terms into an agreement by implication unless the implication arises from the 

language employed or is indispensable to effectuate the intention of the parties.” Id. 

(emphasis in original). Here, class arbitration is not “indispensable to effectuate the 
10

intention of the parties.” To the contrary, class arbitration is at odds with the intention of 

the parties under the agreement. The dispute resolution-arbitration section of the 

agreement states: “You and I agree that should any dispute or controversy arise, you and I 

will first attempt to resolve the dispute informally and promptly through good faith 

negotiations.” Class arbitration would not effectuate the intention of the parties because 

they intended that the first step in any dispute would be to attempt to resolve the dispute 

informally through good faith negotiations. A class certification would essentially skip 

this first step in the dispute resolution process that the parties agreed to. Thus, not only is 

there no agreement between the parties as to class arbitration, but class arbitration is 

actually contradictory to the intentions of the parties under the deposit account 

agreement. 

The Supreme Court’s analysis in Stolt-Nielsen is equally instructive. The Federal 

Arbitration Act imposes certain rules of fundamental importance, “including the basic 

precept that arbitration is a matter of consent, not coercion.” Stolt-Nielsen, 130 S.Ct. at 

1773 (quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford 

Junior Univ., 489 U.S. 468, 479 (1989)) (internal quotations omitted). The Court has said 

on numerous occasions that “the central or primary purpose of the FAA is to ensure that 

private agreements to arbitrate are enforced according to the their terms.” Stolt Nielsen, 

130 S.Ct. at 1773 (citations omitted). When construing an arbitration agreement or an 

arbitration clause, “courts and arbitrators must give effect to the contractual rights and 

expectations of the parties[,]” and the “parties intentions control.” Id. at 1773-74 (internal 

quotations omitted). 

After analyzing various principles regarding the FAA, the Supreme Court 
11

concluded that “a party may not be compelled under the FAA to submit to class 

arbitration unless there is a contractual basis for concluding that the party agreed to do 

so.” Stolt-Nielsen, 130 S.Ct. at 1775 (emphasis in original). Here, as in Stolt-Nielsen, the 

arbitrator viewed the arbitration agreement from the standpoint of whether the parties 

intended to preclude class arbitration, rather than whether they agreed to class arbitration. 

See Id. (critical point, in the view of the arbitration panel, was that petitioners did not 

establish that the parties to the agreements intended to preclude arbitration). This is 

evident from the arbitrator’s conclusion that when the depositors signed the deposit 

account agreement, “they could not possibly have understood that the vague language of 

those Clauses constituted a waiver of any right participate in a class action.” Arbitrator’s 

Decision at p. 6. This Court, like the Stolt-Nielsen Court, finds the arbitrator’s conclusion 

to be “fundamentally at war” with the principle that arbitration is a matter of consent. See 

130 S.Ct. at 1775. 

While “procedural” questions which grow out of the dispute and bear on its final 

disposition are presumptively for an arbitrator to decide, “[a]n implicit agreement to 

authorize class-action arbitration . . . is not a term that the arbitrator may infer solely from 

the fact of the parties' agreement to arbitrate. This is so because class-action arbitration 

changes the nature of arbitration to such a degree that it cannot be presumed the parties 

consented to it by simply agreeing to submit their disputes to an arbitrator.” Id. The 

differences between bilateral and class-action arbitration “are too great for arbitrators to 

presume . . . that the parties’ mere silence on the issue of class-action arbitration 

constitutes consent to resolve their disputes in class proceedings.” Id. at 1776. 

The question is whether “the parties agreed to authorize class arbitration.” Id. 
12

(emphasis in original). As this Court concluded above, the parties did not agree to class 

arbitration under the deposit account agreement. And, reading class arbitration into the 

agreement would actually defeat the intention of the parties. Thus, the arbitration shall 

proceed as a bilateral arbitration. 

ORDER 

(1) Defendant Charter One’s Motion to Dismiss Arbitrator’s Clause Construction 

Award, filed May 19, 2010, is GRANTED. 

 (2) The arbitrator’s Class Action, Clause Construction Partial, Final Arbitration 

Award is VACATED. 

(3) The arbitration shall proceed as a bilateral arbitration. 

 Dated at Rutland, Vermont this _____ day of ________________, 2010. 

____________________ 

Hon. William Cohen 

Superior Court Judge