Donald v. National Truck Funding, LLC

          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 ...