Wood v. Cooper Chevrolet, Inc., CV 99-PT-3350-E.

• Decision Date: 20 April 2000
• Docket Number: No. CV 99-PT-3350-E.,CV 99-PT-3350-E.
• Citation: 102 F.Supp.2d 1345
• Parties: Georgette WOOD, Plaintiff, v. COOPER CHEVROLET, INC., Defendant.
• Court: U.S. District Court — Northern District of Alabama

102 F.Supp.2d 1345

Georgette WOOD, Plaintiff, v. COOPER CHEVROLET, INC., Defendant.

No. CV 99-PT-3350-E.

United States District Court, N.D. Alabama, Eastern Division.

April 20, 2000.

Earl P. Underwood, Jr., Underwood & Associates, Anniston, AL, for Georgette Wood, plaintiff.

John M. Galese, Galese & Ingram PC, Birmingham, AL, for Cooper Chevrolet, Inc., defendant.

MEMORANDUM OPINION

PROPST, Senior District Judge.

This cause comes to be heard on defendant Cooper Chevrolet, Inc.'s ("Cooper" or "defendant") Motion to Compel Arbitration or to Stay all Proceedings Including Discovery, filed January 20, 2000.

BACKGROUND

Plaintiff Georgette Wood ("Wood" or "plaintiff") purchased a used 1997 Chevrolet Cavalier from Cooper on September 21, 1998. The automobile was manufactured out of state and delivered into Alabama. Wood obtained financing through America's First Federal Credit Union. During the purchase transaction, Wood executed a document titled "Sales Contract and Security Agreement" which itemized the amount financed. Wood also executed a document titled "Retail Buyer's Order" which contained an "Arbitration Agreement" (the "Agreement") in the lower left hand portion of the document. The Agreement states in pertinent part:

Buyer/Lessee acknowledges and agrees that the vehicle purchased or leased herein has traveled in interstate commerce. Buyer/Lessee thus acknowledges that the vehicle and other aspects of the sale, lease or financing transaction are involved in, affect, or have a direct impact upon, interstate commerce. Buyer/Lessee and dealer agree that all claims, demands, disputes, or controversies of every kind or nature that may arise between them concerning any of the negotiations leading to sale, lease or financing of the vehicle, terms and provisions of the sale, lease or financing agreement, arrangements for financing, purchase of insurance, purchase of extended warranties or service contracts, the performance or condition of the vehicle, or any other aspects of the vehicle and its sale, lease or financing shall be settled by binding arbitration conducted pursuant to the provision of 9 U.S.C. Section 1 et. seq. and according to the Commercial Rules of the American Arbitration Association.... Either party may demand arbitration by filing with the American Arbitration Association a written demand for arbitration along with a statement of the matter in controversy. A copy of the demand for arbitration shall simultaneously be served upon the other party. The buyer/lessee and the dealer agree that the arbitration proceedings to resolve all such disputes shall be conducted in the city where dealer's facility is located.

Plaintiff filed suit on December 20, 1999, alleging violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1640 et seq., based on Cooper's allegedly false representations in its itemization of the amount financed. Defendant filed its answer and this motion to compel binding arbitration on January 20, 2000.

DISCUSSION

A. Parties' Contentions

Defendant argues that the transaction at issue affected interstate commerce and therefore falls within the ambit of the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq. Under the FAA and numerous Supreme Court decisions, Cooper asserts, courts are to give ample regard to the federal policy favoring arbitration. This policy, Cooper asserts, applies even when considering statutory rights, citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 23, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 480-483, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 238-242, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 629, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). Cooper argues that the Supreme Court in McMahon created the analytical framework employed by courts when determining whether binding arbitration of a statutory claim is allowable. Under that test, Cooper asserts that plaintiff cannot, and has not, shown that the binding arbitration agreement between them should not be enforced. Specifically, Cooper contends that alleged violations of the TILA are arbitrable, relying on Thompson v. Illinois Title Loans, Inc., 2000 WL 45493 (N.D.Ill.2000); Sagal v. First USA Bank, N.A., 69 F.Supp.2d 627 (D.Del.1999); and Lopez v. Plaza Finance Co., 1996 WL 210073 (N.D.Ill.1996). Cooper asserts that plaintiff's argument that the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691 et seq., forbids requiring the waiver of any rights under a federal consumer protection statute as a condition for the extension of credit is simply misplaced because arbitration, Cooper argues, does not deny statutory rights. Rather it simply moves them from a judicial forum to an arbitral forum. Finally, Cooper asserts that the arbitration filing fees are not excessive, that the AAA allows for reduction or deferral of the fees, and that if the court decides that arbitration may be denied solely because of the fees, then it will pay the filing fees and the costs of the arbitration, subject to realignment at the end of the process by the arbitrator.

Wood argues that, in enacting the TILA, Congress intended to create a statutory right to class action suits for plaintiffs, relying on Senate Report 93-278. Wood also calls upon the general acceptance of class action suits as an important mechanism in consumer protection, citing Deposit Guaranty Nat'l Bank of Jackson, Miss. v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980). Based on her theory of a statutory right to class action law suits under the TILA, Wood argues that requiring a consumer to agree to binding arbitration as a condition for extending credit is a violation of the ECOA because class actions are not arbitrable, citing Caldwell v. KFC Corp., 958 F.Supp. 962 (D.N.J.1997); and Owens v. Magee Fin. Serv., 476 F.Supp. 758 (E.D.La.1979). Lastly, Wood asserts that the arbitration clause is unenforceable because she will have to pay the arbitration costs, which will effectively eviscerate any remedy she might receive under the TILA, relying on Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054 (11th Cir.1998); and Randolph v. Green Tree Financial Corp., 178 F.3d 1149 (11th Cir.1999), cert. granted, ___ U.S. ___, 120 S.Ct. 1552, 146 L.Ed.2d 458 (2000).

B. Analysis

1. The FAA & the TILA

Congress enacted the FAA pursuant to its broad Commerce Clause powers. See Prima Paint Corp. v. Flood & Conlin Mfg. Co., 388 U.S. 395, 405, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). There is no dispute between the parties that this case involves interstate commerce to such a degree that the FAA is implicated. The automobile came from out of state, is driven on interstate highways, and the Agreement, signed by both parties, states that the transaction affects interstate commerce. Based on this, the FAA applies to this case. Section 2 of the FAA provides that a:

written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2.

Congress and the Supreme Court have made no bones regarding their position on arbitration: they are in favor of it. The Supreme Court has repeatedly noted that Congress enacted the FAA to preempt state anti-arbitration laws, and to put arbitration clauses on an equal footing with a contract's other terms. See Gilmer, 500 U.S. 20, 25-26, 111 S.Ct. 1647 (citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 510, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974); Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); and Mitsubishi Motors Corp., 473 U.S. 614, 626-27, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)); see also Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 270, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). This pro-arbitration policy applies to statutory rights as well as common law rights. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 23, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (claims arising under the Age Discrimination in Employment Act (ADEA), 29 U.S.C.A. §§ 621-634, held arbitrable); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 480-483, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989) (claims arising under § 12(2) of the Securities Act of 1933, 15 U.S.C.A. § 771(2), held arbitrable); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 238-242, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (claims arising under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78j(b), and civil claims arising under the Racketeer Influenced and Corrupt Organizations Act (civil RICO), 18 U.S.C.A. §§ 1961-1968, held arbitrable); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 629, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (claims arising under the Sherman Act, 15 U.S.C.A. §§ 1-7, held arbitrable).

The Supreme Court, in McMahon, laid out the relevant framework for courts to apply when considering the arbitrability of particular statutory claims:

The [FAA], standing alone, therefore mandates enforcement of agreements to arbitrate statutory claims. Like any statutory directive, the [FAA's] mandate may be overridden by a contrary congressional command. The burden is on the party opposing arbitration, however, to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue. If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent will be deducible from [the stat...