Iappini v. Silverleaf Resorts, Inc., 4:15 CV 695 RWS.

• Court: United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
• Writing for the Court: RODNEY W. SIPPEL, District Judge.
• Citation: 116 F.Supp.3d 932
• Parties: Robert IAPPINI, et al., Plaintiffs, v. SILVERLEAF RESORTS, INC., Defendant.
• Docket Number: No. 4:15 CV 695 RWS.,4:15 CV 695 RWS.
• Decision Date: 20 July 2015

116 F.Supp.3d 932

Robert IAPPINI,¹ et al., Plaintiffs,
v.
SILVERLEAF RESORTS, INC., Defendant.

No. 4:15 CV 695 RWS.

United States District Court, E.D. Missouri, Eastern Division.

Signed July 20, 2015.

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Eric F. Kayira, Kayira Law, LLC, Clayton, MO, for Plaintiff.

Andrew P. Speicher, Timothy A. Daniels, Figari And Davenport, L.L.P., Dallas, TX, Charles W. Hatfield, John W. Moticka, Stinson And Leonard LLP, St. Louis, MO, for Defendant.

MEMORANDUM AND ORDER

RODNEY W. SIPPEL, District Judge.

This Missouri Merchandising Practices Act (MMPA) class action is before me on defendant Silverleaf Resorts, Inc. (Silverleaf)'s motion to compel arbitrations and dismiss without prejudice, or alternatively to stay the action pending arbitration. Plaintiffs Robert and Lilly Iappini brought suit individually and on behalf of a purported class of consumers who purchased time-share units located in Missouri from Silverleaf after January 1, 2010. Plaintiffs allege that Silverleaf used deceptive and misleading tactics to induce them to purchase timeshare units and that they attempted but were unable to timely cancel their time-share purchases because Silverleaf "clogged" their right to cancel by not answering their phones during the contractual cancellation period. Plaintiffs seek damages under the MMPA as well as the rescission of their time-share contracts.

The written contracts between Plaintiffs and Silverleaf include an Arbitration Addendum governed by the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et seq. The Arbitration Addendum appears to compel binding arbitration for any disputes arising out of or relating to the contracts or the parties' relationships. The Arbitration Addendum also contains what appears to be a class action waiver, requiring all claims to be arbitrated on an individual basis.

Silverleaf now moves to compel individual arbitration of all of Plaintiffs' claims. Plaintiffs oppose the motion, arguing that

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1) the class action waiver is ambiguous, 2) the class action waiver is unenforceable because it is substantively and procedurally unconscionable, and 3) Plaintiff's claims fall under the FAA's savings clause and should not be subject to arbitration. For the reasons that follow, I find that the arbitration agreements are unambiguous, enforceable, and applicable to all of Plaintiffs' claims. As a result, I will compel individual arbitrations and will dismiss this suit without prejudice.

Legal Standard

The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et seq.,"establishes a liberal federal policy favoring arbitration." Torres v. Simpatico, Inc., 781 F.3d 963, 968 (8th Cir.2015) (quoting AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 1748, 179 L.Ed.2d 742 (2011) ). "[T]he FAA limits a district court's initial role in any challenge to an arbitration agreement to deciding whether 'the making of the agreement for arbitration or the failure to comply therewith' is at issue." MedCam, Inc. v. MCNC, 414 F.3d 972, 974 (8th Cir.2005) (quoting 9 U.S.C. § 4 ). "[The United States Court of Appeals for the Eighth Circuit] has refined this inquiry to asking 1) whether the agreement for arbitration was validly made and 2) whether the arbitration agreement applies to the dispute at hand, i.e., whether the dispute falls within the scope of the arbitration agreement." Id. (emphasis in original); see also Torres, 781 F.3d at 968–69.

An arbitration agreement's scope is interpreted literally, with any doubts resolved in favor of arbitration. MedCam, 414 F.3d at 975. A district court should compel arbitration "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." Id. (internal quotations omitted).

"Because 'arbitration is a matter of contract,' whether an arbitration provision is valid is a matter of state contract law, and an arbitration provision may be 'invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.' " Torres v. Simpatico, Inc., 781 F.3d 963, 968–69 (8th Cir.2015) (quoting Concepcion, 131 S.Ct. at 1745–46 ) (internal quotations omitted). Under Missouri law, "arbitration agreements are tested through a lens of ordinary state-law principles that govern contracts, and consideration is given to whether the arbitration agreement is improper in light of generally applicable contract defenses .... such as fraud, duress, or unconscionability." Robinson v. Title Lenders, Inc., 364 S.W.3d 505, 515 (Mo.2012). "If a valid and enforceable arbitration agreement exists under state-law contract principles, any dispute that falls within the scope of that agreement must be submitted to arbitration." Torres, 781 F.3d at 968–69 (citing Faber v. Menard, 367 F.3d 1048, 1052 (8th Cir.2004) ). "[N]o state-law rule that is 'an obstacle to the accomplishment of the FAA's objectives' should be applied to invalidate an arbitration agreement." Robinson v. Title Lenders, Inc., 364 S.W.3d at 515 (quoting Concepcion, 131 S.Ct. at 1748 ).

Discussion

Plaintiffs do not dispute that their claims falls within the scope of the Arbitration Addendum. Rather, Plaintiffs argue that the class action waiver in the Arbitration Addendum is invalid for unconscionability.

The Arbitration Addendum states, in relevant part:

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Arbitration Disclosure: By entering into the Contract, you agree in regard to any Claim, as defined in the Arbitration Provision below, either you or we can choose to have that Claim resolved by binding arbitration as set forth in the Arbitration Provision.... IF ARBITRATION IS CHOSEN BY ANYONE WITH RESPECT TO A CLAIM NEITHER YOU NOR WE WILL HAVE THE RIGHT TO LITIGATE THAT CLAIM IN COURT OR TO HAVE A JURY TRIAL ON THAT CLAIM, OR TO ENGAGE IN PRE–ARBITRATION DISCOVERY EXCEPT AS PROVIDED FOR IN THE PROCEDURES AND RULES. FURTHER, YOU WILL NOT HAVE THE RIGHT TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIM SUBJECT TO ARBITRATION.

Arbitration Provision:

1. Any claim, dispute or controversy regarding the Contract or our relationship (a "Claim" or "Claims") shall be resolved, upon the election by you or us, by binding arbitration pursuant to this Arbitration Provision. For purposes of this Arbitration Provision, a Claim shall include, but not be limited to, any claim, dispute or controversy of every kind and nature arising from or relating to the Contract or our relationship, promotions or oral or written statements related to the Contract, the Vacation Interest acquired under the Contract, ... and the validity, enforceability, and scope of this Arbitration Provision and the Contract. This includes claims based on contract, regulatory provisions, tort (including intentional tort), fraud, negligence, statutory provisions, constitutional provisions, common law, equitable principles or other sources of law....

* * *

4. You and we also agree that no Claim shall be arbitrated on a class action, private attorney general or other representative action basis. Further, arbitration can only decide your or our Claim and may not consolidate or join the claims of other persons who may allege similar claims, and the arbitration may award relief only on an individual (non-class, non-representative) basis.

* * *

12. Any questions about whether a Claim is subject to arbitration shall be resolved by interpreting this Arbitration Provision in the broadest way the law will allow it to be enforced....

* * *

Right to Opt Out:

IF YOU DO NOT WISH TO BE BOUND BY THIS ARBITRATION ADDENDUM, YOU MUST NOTIFY SELLER IN WRITING WITHIN 90 DAYS FROM THE EFFECTIVE DATE OF THIS ARBITRATION ADDENDUM ....

A. Ambiguity of the Class Action Waiver

Plaintiffs argue that the class action waiver in the Arbitration Addendum is ambiguous and should be interpreted in their favor. Specifically, Plaintiffs argue that the first sentence of paragraph 4 is ambiguous, which states, "You and we also agree that no Claim shall be arbitrated on a class action, private attorney general or other representative action basis." Despite arguing elsewhere in their brief that the class action waiver "effectively bans" their ability to bring a class action, Plaintiffs

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contend in the context of this argument that they "interpret this inconspicuously drafted provision to mean that class action litigation is not subject to arbitration."

Contract interpretation is a matter of law. Robbins v. McDonnell Douglas Corp., 27 S.W.3d 491, 496 (Mo.Ct.App.2000). In interpreting a contract, a court must not "unreasonably distort the language of a policy or exercise inventive powers for the purpose of creating an ambiguity when none exists." Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo.2007). "An ambiguity does not exist merely because the parties dispute the meaning of the...