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Jones v. Titlemax of Missouri, Inc.

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

June 12, 2017

TIMOTHY H. JONES, Plaintiff,
v.
TITLEMAX OF MISSOURI, INC., Defendant.

          MEMORANDUM AND ORDER

          JOHN A. ROSS, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendant TitleMax of Missouri, Inc.'s ("TitleMax") Motion for Order Confirming Arbitration Clause Construction Award (Doc. 26). Pursuant to the Court's August 5, 2016 Order (Doc. 21), the case has been stayed pending arbitration. TitleMax is seeking an order from the Court confirming the arbitrator's partial award, which dismissed Plaintiffs class action claims. On April 26, 2017, the Court granted in part TitleMax's motion and lifted the stay for the sole purpose of considering TitleMax's motion (Doc. 27). For the reasons set forth below, TitleMax's motion shall be denied.

         BACKGROUND

         In this action, Plaintiff asserts that TitleMax engaged in an unlawful and deceptive pattern of wrongdoing in connection with "the formation, collection, and enforcement of its title loan agreements and its disposition of the consumer property secured by the title loan agreements. (Doc. 26-1 at 1). Plaintiff sought to bring the case both individually and as a class action. (Id.). TitleMax filed a motion to dismiss Plaintiffs class action claims, and the arbitrator heard oral arguments by the parties on April 7, 2017. (Id.). On April 12, 2017, the arbitrator ruled in favor of TitleMax and dismissed Plaintiffs class action claims. He identified the following portions of the title loan agreement pertinent to the motion:

         2. You acknowledge and agree that by entering into this Arbitration Provision:

(a) YOU ARE WAIVING YOUR RIGHT TO HAVE A TRIAL BY JURY TO RESOLVE ANY DISPUTE ALLEGED AGAINST U.S. OR RELATED THIRD PARTIES;
(b) YOU ARE WAIVING YOUR RIGHT TO HAVE A COURT, OTHER THAN A SMALL CLAIMS TRIBUNAL, RESOLVE ANY DISPUTE ALLEGED AGAINST U.S. OR RELATED THIRD PARTIES; and
(c) YOU ARE WAIVING YOUR RIGHT TO SERVE AS A REPRESENTATIVE, A PRIVATE ATTORNEY GENERAL, OR IN ANY OTHER REPRESENTATIVE CAPACITY, AND/OR TO PARTICIPATE AS A MEMBER OF A CLASS OF CLAIMANTS, IN ANY LAWSUIT FILED AGAINST U.S. AND/OR RELATED THIRD PARTIES.
3. Except as provided in Paragraph 6 below, all disputes including any Representative Claims against us and/or related third parties shall be resolved by binding arbitration only on an individual basis with you. THEREFORE, THE ARBITRATOR SHALL NOT CONDUCT CLASS ARBITRATION; THAT IS, THE ARBITRATOR SHALL NOT ALLOW YOU TO SERVE AS A REPRESENTATIVE, AS A PRIVATE ATTORNEY GENERAL, OR IN ANY OTHER REPRESENTATIVE CAPACITY FOR OTHERS IN THE ARBITRATION.

(Id. at 3-4). The arbitrator found that the title loan agreement expressly provides, in more than one place, that class arbitration is not permitted. (Id. at 4). He found that the intent of the parties is clear that arbitration under the title loan agreement could not proceed on a class basis and that he was bound to give effect to that intent. (Id.). He also found that a certain provision in the title loan agreement did not authorize a party to bring a class action for equitable relief; that the loan agreement was not rescinded after TitleMax repossessed Plaintiffs motor vehicle; and that because arbitration provisions are severable, they are enforceable, even if the remainder of the agreement is unenforceable. (Id. at 4-5). As a result, he granted TitleMax's motion to dismiss Plaintiffs class action claims, commenting that "[n]othing in this partial award should suggest that I believe the result is fair. I am well aware of the practical effect of denying [Plaintiff] the ability to pursue his claims in this case on a class basis. I am, however, constrained by the law in this area as it currently stands." (Id. at 6-7). The arbitrator then stayed the arbitration proceedings for 30 days to permit any party to move a court of competent jurisdiction to confirm or vacate the award, in accordance with American Arbitration Association Supplementary Rule for Class Arbitration ("AAA Rule") 3.

         TitleMax filed the instant motion requesting that the Court confirm the arbitrator's partial award with regard to the dismissal of Plaintiff s class action claims. Plaintiff opposes the motion and argues that TitleMax's request is not ripe for judicial review because it seeks confirmation of a non-final arbitration award.

         DISCUSSION

         An arbitrator's decision is subject to limited judicial review. Med. Shoppe Int'l, Inc. v. Turner Investments, Inc., 614 F.3d 485, 488 (8th Cir. 2010). The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 9-11, provides judicial review to confirm, vacate, or modify arbitration awards. Id. (citing Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008)). The courts have recognized a general rule that, for federal jurisdiction to be proper, the award must finally determine all of the claims and defenses submitted for arbitration. See Local 36, Sheet Metal Workers Int'l Assoc, AFL-CIO v. Pevefy Sheet Metal Co., 951 F.2d 947, 949-50 (8th Cir. 1992); Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980) (under the FAA, district courts do not have the power to review an interlocutory ruling by an arbitrator). In other words, "courts generally should not entertain interlocutory appeals from ongoing arbitration proceedings." Quixtar, Inc. v. Brady, 328 F.App'x 317, 320 (6th Cir. 2009) (citing Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980) ("[A] district court should not hold itself open as an appellate tribunal during an ongoing arbitration proceeding, since applications for interlocutory relief result only in a waste of time, the interruption of the arbitration proceeding, and ... delaying tactics in a proceeding that is supposed to produce a speedy decision."); LaPrade v. Kidder Peabody & Co., Inc., 146 F.3d 899, 903 (D.C. Cir. 1998) ("The Arbitration Act contemplates that courts should not interfere with arbitrations by making interlocutory rulings....")).

         However, various federal courts have recognized exceptions to the finality rule. See, e.g., Hart Surgical, Inc. v. Ultracision, Inc.,244 F.3d 231, 235 (1st Cir. 2001) (where parties agreed to bifurcate the issues of liability and damages, the arbitrator's ruling on liability was a "final" partial award that was subject to district court review); Pac. Reins. Mgmt. Corp. v. Ohio Reins. Corp.,935 F.2d 1019, 1022-23 (9th Cir. 1991) (interlocutory order in the nature of a preliminary injunction was subject to district court review); Metallgesellschaft A.G. v. M/VCapitan Constante, 790 F.2d 280, 283 (2d Cir. 1986) (award that finally and definitely disposed of a separate, independent claim could be confirmed even though it did not dispose of all claims that were submitted to arbitration). The Eighth Circuit has held that ...


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