United States District Court, S.D. Mississippi, Southern Division
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S
MOTION [2] TO COMPEL ARBITRATION OR, ALTERNATIVELY, RULE
12(b)(6) MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON
WHICH RELIEF CAN BE GRANTED
HALIL
SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE
BEFORE
THE COURT is the Motion [2] to Compel Arbitration or,
Alternatively, Rule 12(b)(6) Motion to Dismiss for Failure to
State a Claim upon Which Relief Can Be Granted filed by
Defendant National Truck Funding, LLC. This Motion is fully
briefed. Having considered the Motion [2], related pleadings,
the record, and relevant legal authority, the Court is of the
opinion that Defendant's Motion [2] should be granted to
the extent it seeks to compel arbitration, and the parties
will be ordered to submit the disputed matter to arbitration.
This case will be dismissed.
I.
BACKGROUND
A.
Factual background
This
dispute arises out of Plaintiff Schlonda Donald's
(“Plaintiff” or “Donald”) rental of
certain trucks from Defendant National Truck Funding, LLC
(“Defendant” or “National Truck”).
Donald “signed four separate rental agreements to
purchase four different models of freightliners with National
Truck Funding: June 30, 2014; August 8, 2014; and August 12,
2014.” Pl.'s Aff. [6-1] at 1; see also
Rental Agreements [1-2] at 16-41. “In addition to the
written Commercial Truck Rental Agreements, Donald also
purchased contract upgrades to hold National Truck liable for
a percentage or the entirety for all covered repairs needed
within a designated time period.” Compl. [1-2] at
11.[1]
The
four Commercial Truck Rental Agreements between Plaintiff and
National Truck were each six pages long, and each Agreement
contained the following provisions on the sixth and final
page:
XII.
JURISDICTION AND RESOLUTION OF DISPUTES
Jurisdiction and Governing Law: Any legal dispute arising for
whatever reason as a result of this Rental Agreement will be
resolved in the Courts of Harrison County, Mississippi, if
not arbitrated as mandated below and will be governed by the
laws and legal rules of the courts of the State of
Mississippi. It is agreed that it shall be a bench trial
without a jury . . . .
Arbitration: This will apply to any claim, dispute, or
controversy (whether based upon contract or tort; intentional
or otherwise; arising out of state or federal constitution,
statute, common law, or equity, and whether preexisting,
present or future), including initial claims, counter-claims,
cross-claims, and third party claims, arising from or
relating to this Rental Agreement or the relationships which
result from this Rental Agreement, including the validity or
enforceability of this arbitration clause, any part thereof
or the entire Rental Agreement. All claims shall be resolved
by binding arbitration pursuant to this arbitration provision
and the applicable rates and procedures of the arbitration
administration selected at the time the claim is filed. The
party initiating the arbitration shall have the right to
select one of the following two arbitration administrators:
The National Arbitration Forum (“NAF”) or The
American Arbitration Association (“AAA”). The
arbitrator shall be a lawyer with more than ten years of
experience or a retired or former judge. We agree not to
invoke our right to arbitrate an individual claim you may
bring in small claims court in Harrison County, MS, so long
as the claim is pending only in that court. Our address for
service of process under this provision is: National Truck
Funding, LLC, 9140 Canal Rd., Gulfport, MS 39503. Any
arbitration hearing shall take place in the city of Gulfport,
Mississippi. National Truck Funding, LLC and the Customer
shall each pay an equal amount of any arbitration fees and
related charges. Each party, however, shall be responsible
for payment of their own respective legal counsel.
This arbitration provision shall survive termination of your
account as well as the repayment of all amounts due and owing
on your account, or your deposits. If any portion of this
arbitration provision is deemed invalid or unenforceable
under any state or federal law or statute, it shall not
invalidate the remaining portions of this arbitration
provision or the unaffected portions of the overall Rental
Agreement . . . .
Rental
Agreements [1-2] at 21, 28, 35, 41.
The
foregoing provisions of each Rental Agreement appear in the
same font as the other sections of the respective Rental
Agreements. See Id. Donald executed each page of
each Rental Agreement, including the last page containing the
arbitration provision, which was also signed by a
representative of National Truck. See Id.
Immediately above Donald's signature on the Rental
Agreements as the “Customer” is a provision
stating that “[t]he below-signed Customer does
acknowledge that he/she has read this Rental Agreement in its
entirety and agrees to all terms and conditions
herein.” Id.
B.
Procedural history
On
October 5, 2016, Donald filed a Complaint against National
Truck in the County Court of Harrison County, Mississippi,
First Judicial District, Compl. [1-2] at 9, alleging that
“[s]hortly after taking possession of the trucks,
Donald suffered serious mechanical breakdowns, by no fault of
Donald's, making the use of the trucks for their intended
purposes impossible, ” id. at 12. According to
the Complaint, “[p]er the language of the contracts,
Donald's necessary repairs were covered under the
additional purchased contract upgrades; however, National
Truck failed to properly remedy the problems.”
Id. In February 2014, “National Truck
repossessed all trucks that were in possession of
Donald.” Id. The Complaint asserts claims for
breach of contract, breach of the implied warranty of
merchantability, breach of the implied warranty of fitness
for a particular purpose, and conversion. Id. at
12-14.
On
November 8, 2016, National Truck removed the case to this
Court on the basis of diversity jurisdiction. Notice of
Removal [1] at 1-2. On November 10, 2016, National Truck
filed the present Motion [2] to Compel Arbitration or,
Alternatively, Rule 12(b)(6) Motion to Dismiss for Failure to
State a Claim upon Which Relief Can Be Granted. National
Truck “seeks to compel contractually agreed-to
arbitration between the parties, ” and alternatively
asks that Donald's Complaint be dismissed for failure to
state a claim upon which relief can be granted pursuant to
Federal Rule of Civil Procedure 12(b)(6). Def.'s Mot. [2]
at 1-2.
Plaintiff
responds that the arbitration agreements are invalid and
unenforceable because they are procedurally and substantively
unconscionable under Mississippi law. Pl.'s Mem. [7] at
4-8. Plaintiff contends that the arbitration provisions are
procedurally unconscionable because “[n]ot only did
none of the Defendant's employees explain or mention the
Arbitration Provision to Mrs. Donald, she also did not even
have an opportunity to examine the Arbitration Provision
herself.” Id. at 5. Plaintiff maintains that
the arbitration agreements appear on a standard, preprinted
form drafted by Defendant which is in the same style and
print as the remainder of the Rental Agreements, which
supports a finding of procedural unconscionability.
Id. at 5-6. Plaintiff argues that Donald has no
legal training or knowledge of arbitration and was unaware of
the constitutional rights that she was waiving. Id.
at 5.
Plaintiff
next asserts that the arbitration provisions are
substantively unconscionable because the Rental Agreements
constitute contracts of adhesion and because Donald did not
knowingly, intelligently, and voluntarily waive her
constitutional right to a jury trial. Id. at 6-8.
According to Plaintiff,
Defendants have made no showing that Mrs. Donald was fully
aware of the significance and consequences of the language of
the Arbitration Provision. Furthermore, the Arbitration
Provision was pre-printed on a form contract which was a
necessary condition of the sale, and there was a great
disparity in the bargaining power between the parties. Mrs.
Donald was an individual with little to no resources and the
Defendant was a corporation with businesses in multiple
states.
Id. at 8. Plaintiff further maintains that she
“cannot afford to pay the fees required to arbitrate
this dispute that is before this Court and thus her access to
justice would be denied, ” id. at 9, and that
“to submit her case to arbitration, she would have to
front at the minimum, roughly $750, ” id. at
8.
II.
DISCUSSION
A.
Relevant legal standards
“Congress
enacted the FAA [Federal Arbitration Act] to overcome
judicial resistance to arbitration, and to declare a national
policy favoring arbitration of claims that parties contract
to settle in that manner.” Vaden v. Discover
Bank, 556 U.S. 49, 58 (2009) (quotations omitted).
“To that end, § 2 [of the FAA] provides that
arbitration agreements in contracts ‘involving
commerce' are ‘valid, irrevocable, and
enforceable.'” Id. (quoting 9 U.S.C.
§ 2). “[A]ll doubts concerning the ...