A federal district court in Louisiana held that an arbitration award has the effect of res judicata and will not be vacated unless the objecting party establishes one of the specific grounds for vacating the award under the Federal Arbitration Act (FAA).

In Theriault v. FIA Card Services, N.A., No. 07-2978, 2008 WL 2787465 (E.D. La. July 17, 2008), Theriault opened a credit card account with FIA Card Services ("FIA"). The parties' original contract stated that FIA reserved the right to make binding amendments to the contract. Later, FIA amended the contract by adding a mandatory, binding arbitration agreement, which required arbitration with the National Arbitration Forum (FORUM).

Theriault had an opportunity to notify FIA that he did not consent to the arbitration agreement and to revoke the amended contract, but he did not do so, and he continued to use his credit card. Theriault subsequently sent a letter to FIA disputing his account balance. After Theriault defaulted on his account, FIA initiated arbitration with the FORUM. An award was issued in favor of FIA. Theriault then sued FIA for an alleged violation of the Truth in Lending Act (TILA) and moved to vacate the award. FIA moved for summary judgment on the TILA claims and moved to confirm the award.

Theriault argued that there was no valid arbitration agreement between the parties and that the arbitrator acted arbitrarily and without authority in issuing the award. Theriault denied receipt of the original credit card contract and the amendment requiring arbitration of disputes.

The Court rejected Theriault's arguments and confirmed the award. The Court listed the five exclusive grounds for vacating or correcting an arbitration award under sections 10-11 of the FAA, and held that arbitration awards are res judicata and must be confirmed unless statutory grounds are established for vacating or correcting the award.

The Court observed that the arbitrator decided that the parties entered into a valid, written agreement to arbitrate which governed all the issues in dispute, and that the evidence supported a decision in FIA's favor. The Court held that the FORUM award had the effect of res judicata, and, because Theriault failed to prove or even allege any of the five statutory grounds for vacating the award, the Court was compelled to confirm the arbitration award.

Theriault also alleged that FIA violated TILA because it failed to respond to his letter disputing his account balance. FIA argued that the contents of Theriault's letter did not meet TILA's requirements, so it could not have violated TILA by failing to respond. The Court agreed with FIA and granted FIA's motion for summary judgment on Theriault's TILA claims. The Court held that because Theriault's letter did not set forth the reasons for his belief that there was a billing error, it did not comply with TILA and did not trigger a duty to respond.