Stout v. Byrider, No. 99-3854

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtCLAY
Citation228 F.3d 709
Parties(6th Cir. 2000) James D. Stout; Shirley A. Brown, Plaintiffs-Appellants, v. J.D. Byrider, a/k/a Docherty Motors, Inc.; T & J Acceptance Corporation, d/b/a Carnow Acceptance Company,Defendants-Appellees. Argued:
Docket NumberNo. 99-3854
Decision Date23 June 2000

Page 709

228 F.3d 709 (6th Cir. 2000)
James D. Stout; Shirley A. Brown, Plaintiffs-Appellants,
v.
J.D. Byrider, a/k/a Docherty Motors, Inc.; T & J Acceptance Corporation, d/b/a Carnow Acceptance Company,Defendants-Appellees.
No. 99-3854
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
Argued: June 23, 2000
Decided and Filed: September 8, 2000

Appeal from the United States District Court for the Northern District of Ohio at Akron. No. 98-02830--James S. Gwin, District Judge.

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Copyrighted Material Omitted

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Copyrighted Material Omitted

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Sylvia M. Antalis, John T. Murray, MURRAY & MURRAY, Sandusky, Ohio, for Appellants.

Gary W. Johnson, John A. Albers, WESTON, HURD, FALLON, PAISLEY & HOWLEY, Cleveland, Ohio, William F. Kolis, Jr., WICKENS, HERZER & PANZA, Lorain, Ohio, for Appellees.

Before: SILER and CLAY, Circuit Judges; STAFFORD, District Judge*.

OPINION

CLAY, Circuit Judge.

Plaintiffs James D. Stout and Shirley A. Brown appeal the denial of their motion for class certification and dismissal of this action for fraud and violations of the Ohio Consumer Sales Practices Act and the federal Truth in Lending Act arising from Plaintiffs' purchases of used motor vehicles from Defendants J.D. Byrider, a.k.a. Docherty Motors, Inc., and T & J Acceptance Corporation. For the following reasons, we AFFIRM.

I.

Docherty Motors is a closely held Ohio corporation which has sold used motor vehicles since 1995, and which advertises itself as providing financing to consumers with imperfect credit records. The corporation

Page 713

owns three J.D. Byrider franchises in northern Ohio. Each franchise has a manager who reports to Docherty Motors' executive vice-president.

Each franchise has a service department which performs repairs only on vehicles purchased at J.D. Byrider; the service department does both warranty and nonwarranty work. Prior to sale, each vehicle is inspected by Docherty Motors employees who perform a "safety check;" Docherty Motors also permits customers to take vehicles for a pre-purchase inspection at a mechanic of their choice.

Docherty Motors offers financing through T & J Acceptance Corporation to those individuals who may not qualify for traditional financing such as banks or credit unions. T & J owns three CarNow Acceptance Corporation ("CNAC") franchises, located at each J.D. Byrider dealership. CNAC provides standardized guidelines for the procedure for closing a sale and loan. Byrider personnel are trained to handle sales and financing transactions in a uniform manner. A CNAC representative handles the closing on each customer's purchase, which includes individual presentation of a power of attorney for vehicle registration and license, federal odometer statement, Ohio temporary registration application, Best Extended Service Agreement (if applicable), Buyer's Order, Retail Installment Contract and Security Agreement, insurance responsibility form, Buyer's guide, check list, and customer survey questionnaire. Closings at the Sandusky dealership are videotaped by a wall mounted camera for training and quality assurance purposes. The CNAC representative provides a brief explanation of each document, answers questions about the documents, and gives buyers an opportunity to review the paperwork prior to signing. After late 1997, customers were also presented with arbitration agreements which are separate, written agreements in normal and bold-faced type.

Vehicles purchased at Docherty Motors come with a limited warranty for three months or 3,000 miles. Customers may purchase an extended service agreement which covers the same items as the limited warranty, or they may decline it. There is no financial incentive for Defendants' employees if a customer purchases an extended service agreement. The extended service agreement is presented at the same time as the other documents as part of closing.

The videotapes of Plaintiffs' transactions show that the documents were individually presented to Plaintiffs for their review and signature. The CNAC representative provided a hypothetical example to Stout of how the arbitration agreement might work. Brown also reviewed the arbitration agreement prior to signing. Under Brown's agreement, the only dispute not subject to arbitration is a claim by Defendants that she failed to make payments on a timely basis in compliance with the contracts; her arbitration is to be conducted through the Better Business Bureau. Under Stout's agreement, the only claims not subject to arbitration are claims under $10,000, and claims relating to repossession and replevin of the vehicle; his arbitration is to be conducted through the American Arbitration Association. Both Plaintiffs purchased extended service agreements lasting eighteen months or 18,000 miles for $895. Brown utilized the extended service agreement for replacing the engine in a car she had purchased.

On December 7, 1998, Plaintiffs James D. Stout and Shirley A. Brown, individually and on behalf of all similarly situated individuals, filed a class action complaint in the United States District Court for the Northern District of Ohio against J.D. Byrider, a.k.a. Docherty Motors, Inc., and T & J Acceptance Corporations, d.b.a. CarNow Acceptance Company. The complaint alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, the Ohio Consumer Sales Practices Act

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("OCSPA"), Ohio Rev. Code § 1345.01, and common law fraud.

Defendants moved to strike the class action allegations, to stay the proceedings and to compel arbitration under the parties' arbitration agreement. Plaintiffs moved to certify the proposed class. The district court denied Plaintiffs' motion for class certification, holding that Plaintiffs' claims were not typical of the putative class, that insufficient commonality existed amongst the putative class members, and that Plaintiffs were inadequate representatives for the class.

Defendants moved for summary judgment on all of Plaintiffs' claims; Plaintiffs moved for partial summary judgment on their TILA claim. The district court denied Defendants' motion to stay the proceedings but granted Defendants' motion to compel arbitration, holding after review of the record including the videotape of Plaintiffs' transactions, that the arbitration agreements were enforceable under Ohio and federal law and dismissing Plaintiffs' amended complaint "without prejudice to reinstatement should further proceedings be needed after arbitration." The district court did not rule on either party's motion for summary judgment.

Plaintiffs appealed to this Court.

II.

This Court reviews the ruling of the district court compelling arbitration de novo. See Ferro Corp. v. Garrison Indus., 142 F.3d 926, 931 (6th Cir. 1998).

Under the Federal Arbitration Act, 9 U.S.C. § 2, ("FAA"), a written agreement to arbitrate disputes which arises out of a contract involving transactions in interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." The FAA was designed to override judicial reluctance to enforce arbitration agreements, to relieve court congestion, and to provide parties with a speedier and less costly alternative to litigation. See Allied-Bruce Terminx Cos. v. Dobson, 513 U.S. 265, 270, 280 (1995); Mastrobuono v. Shearsan Lehman Hutton, Inc., 514 U.S. 52, 52-54 (1995). When asked by a party to compel arbitration under a contract, a federal court must determine whether the parties agreed to arbitrate the dispute at issue. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). Claims relating to fraud in the making of the arbitration agreed are determined by the court. See C.B.S. Employees Fed. Credit Union v. Donaldson, Lufkin and Jenrette Sec. Corp., 912 F.2d 1563, 1566 (6th Cir. 1990). Courts are to examine the language of the contract in light of the strong federal policy in favor of arbitration. See Soler Chrysler-Plymouth, 473 U.S. at 626; Arnold v. Arnold, 920 F.2d 1269, 1281 (6th Cir.1990)....

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  • Camac Fund, L.P. v. McPherson (In re McPherson), Case No. 21-10205-MMH
    • United States
    • U.S. Bankruptcy Court — District of Maryland
    • June 2, 2021
    ...S.D.N.Y. 2017); see also Uszak v. AT & T Mobility Services LLC, 658 Fed.Appx. 758, 761 (6th Cir. 2016) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). The Court refers to this four-factor test as the "arbitrability analysis." The Court believes that the arbitrability anal......
  • Camac Fund L.P. v. McPherson (In re McPherson), Case No. 21-10205-MMH
    • United States
    • U.S. Bankruptcy Court — District of Maryland
    • June 1, 2021
    ...S.D.N.Y. 2017); see also Uszak v. AT & T Mobility Services LLC, 658 Fed.Appx. 758, 761 (6th Cir. 2016) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). The Court refers to this four-factor test as the "arbitrability analysis." The Court believes that the arbitrability anal......
  • Olden v. LaFarge Corp., No. 02-1148.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • September 7, 2004
    ...conditional grant of class certification. A class certification order is reviewed for an abuse of discretion. See Stout v. J.D. Byrider, 228 F.3d 709, 716 (6th Cir.2000). "The district court's decision certifying the class is subject to a `very limited' review and will be reversed `only upo......
  • Reeb v. Ohio Dept. of Rehab. and Correction, No. 04-3994.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • January 24, 2006
    ...to certify a class, as it possesses the inherent power to manage and control its own pending litigation. Page 644 Stout v. J.D. Byrider, 228 F.3d 709, 716 (6th Cir.2000). However, we will find an abuse of discretion when the district court relies on erroneous findings of fact, applies the w......
  • Request a trial to view additional results
562 cases
  • Camac Fund, L.P. v. McPherson (In re McPherson), Case No. 21-10205-MMH
    • United States
    • U.S. Bankruptcy Court — District of Maryland
    • June 2, 2021
    ...S.D.N.Y. 2017); see also Uszak v. AT & T Mobility Services LLC, 658 Fed.Appx. 758, 761 (6th Cir. 2016) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). The Court refers to this four-factor test as the "arbitrability analysis." The Court believes that the arbi......
  • Camac Fund L.P. v. McPherson (In re McPherson), Case No. 21-10205-MMH
    • United States
    • U.S. Bankruptcy Court — District of Maryland
    • June 1, 2021
    ...S.D.N.Y. 2017); see also Uszak v. AT & T Mobility Services LLC, 658 Fed.Appx. 758, 761 (6th Cir. 2016) (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). The Court refers to this four-factor test as the "arbitrability analysis." The Court believes that the arbi......
  • Olden v. LaFarge Corp., No. 02-1148.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • September 7, 2004
    ...conditional grant of class certification. A class certification order is reviewed for an abuse of discretion. See Stout v. J.D. Byrider, 228 F.3d 709, 716 (6th Cir.2000). "The district court's decision certifying the class is subject to a `very limited' review and will be reversed `onl......
  • Reeb v. Ohio Dept. of Rehab. and Correction, No. 04-3994.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (6th Circuit)
    • January 24, 2006
    ...to certify a class, as it possesses the inherent power to manage and control its own pending litigation. Page 644 Stout v. J.D. Byrider, 228 F.3d 709, 716 (6th Cir.2000). However, we will find an abuse of discretion when the district court relies on erroneous findings of fact, applies the w......
  • Request a trial to view additional results

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