Goins v. TitleMax of Va. Inc., 1:19CV489

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AARON GOINS, et al., Plaintiffs, v. TITLEMAX OF VIRGINIA, et al., Defendants.

No. 1:19CV489

United States District Court, M.D. North Carolina

April 28, 2023

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Katrina Campbell's Motion to Enforce Award and Enter Judgment, (ECF No. 235). The motion requests that the Court confirm a Final Award issued by Arbitrator Terrence Croft (“Final Award”) pursuant to 9 U.S.C. § 9 and enter judgment on behalf of Plaintiff against Defendant TitleMax of South Carolina, Inc. (“TitleMax”) consistent with the Final Award. (Id.) Plaintiff also requests attorneys' fees. (Id.) For the reasons stated herein, Plaintiff's motion will be granted.

I. BACKGROUND

The Plaintiffs in this action allegedly entered into “car title loan” transactions with Defendants at unlawful rates of interest.^[1] (See ECF No. 3.) Their Complaint alleged violations of the North Carolina Consumer Finance Act (“CFA”), North Carolina's usury statutes, and the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”). (ECF No. 3 at 7- 8 (citing N.C. Gen. Stat. §§ 24-1.1, 53-165, 75-1.1).) On April 22, 2020, this Court compelled arbitration related to all but a few of the numerous Plaintiffs' claims and ordered parties to notify the Court of any arbitration awards within seven days after arbitration concluded. (ECF No. 76 at 16.) The Plaintiff bringing this motion was a part of the claims ordered to arbitration.

Relevant to the present motion, in addition to considering liability, the Arbitrator considered, among other issues, whether application of North Carolina law to Plaintiff's loans violated the Commerce Clause of the United States Constitution and the proper measure of damages. (See ECF No. 235-1 at 2.) The Arbitrator determined that application of North Carolina law was proper and that TitleMax owed Plaintiff treble what Plaintiff had paid to TitleMax. (Id.) The Arbitrator therefore ordered TitleMax to pay to Plaintiff damages, which, after trebling, totaled $9,510. (ECF No. 235-2 at 1.) The Arbitrator also awarded pre-award interest from the date of the filing of the suit to accrue until the award was paid and granted Plaintiff's request for $6,755 in attorney's fees.^[2] (Id.)

Plaintiff then timely filed this motion to seeking an order confirming the Arbitrator's award and entering a judgment consistent with the award. (ECF No. 235.) As it has done with every other arbitration award against it related to its car title loans, TitleMax opposes the motion and has asked the Court to vacate the Final Award. (ECF No. 257 at 1.)

II. STANDARD OF REVIEW

Judicial review of an arbitration award “is among the narrowest known at law.” UBS Fin. Servs., Inc. v. Padussis, 842 F.3d 336, 339 (4th Cir. 2016) (quoting Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 (4th Cir. 1998)). Judicial review is “severely circumscribed.... [E]ven a mistake of fact or misinterpretation of law by an arbitrator provides insufficient grounds for the modification of an award.” Apex Plumbing, 142 F.3d at 193-94. The court does not sit to reevaluate evidence or review mistakes of law. Id. at 194. Instead, the reviewing court asks only “whether the arbitrators did the job they were told to do-not whether they did it well, or correctly, or reasonably, but simply whether they did it.” Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007) (quoting Remmey v. PaineWebber, Inc., 32 F.3d 143, 146 (4th Cir. 1994)).

Thus, courts may vacate or modify an arbitration award only under “limited circumstances.” Padussis, 842 F.3d at 339. The party opposing enforcement of the award bears the “heavy burden” of showing that grounds to vacate the award exist under either the Federal Arbitration Act (“FAA”) or common law. Three S Del., Inc., 492 F.3d at 527. Relevant to this case, an award is vacated at common law where “the award evidences a manifest disregard of the law.” Id. This high bar is reached only where (1) “the disputed legal principle is clearly defined and not subject to reasonable debate,” and (2) “the arbitrator refused to apply that legal principle.” Jones v. Dancel, 792 F.3d 395, 402 (4th Cir. 2015). Merely failing to explain a legal conclusion will not justify vacating an award where the legal reasoning can be inferred. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 598 (1960). Further, “proving manifest disregard require[s] something beyond showing that the arbitrators misconstrued the law.” Wachovia Sec., LLC v. Brand, 671 F.3d 472, 481 (4th Cir. 2012).

Additionally, an award will be vacated under the FAA where the arbitrator “exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). An imperfect execution of the agreement is not a sufficient cause to vacate: an award “even arguably construing or applying the contract must stand” under this provision of the FAA “regardless of a court's view of its (de)merits.” Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013). An award that disposes of all issues is “mutual, final, and definite” even where the award does not detail the arbitrator's full reasoning. See Remmey, 32 F.3d at 150. “Arbitrators have no obligation to the court to give their reasons for an award.” Enter. Wheel & Car Corp., 363 U.S. at 598.

III. DISCUSSION

A. The Arbitrator Did Not Manifestly Disregard the Dormant Commerce Clause

TitleMax first argues that the Final Award evidences a manifest disregard of the dormant Commerce Clause because it applies North Carolina law to loans that were executed outside of North Carolina. (ECF No. 257 at 5.) TitleMax claims that pursuant to the Fourth Circuit case Carolina Trucks & Equipment, Inc. v. Volvo Trucks of North America, Inc., 492 F.3d 484 (4th Cir. 2007), this application of North Carolina law to the loans violates the clearly defined principle of law that “one state may not project its legislation into another, as the Commerce Clause precludes the application of a state statute to conduct that takes place wholly outside of the State's borders, whether or not the commerce has effects within the State.” (ECF No. 257 at 5-6 (quoting Carolina Trucks, 492 F.3d at 489-90).)

However, as this Court explained the last time that TitleMax sought to vacate an arbitration award using this argument, “the law as applied to the facts in this case is not so ‘well-established.'” See Goins v. TitleMax of Va., Inc., No. 19-CV-489, 2021 WL 3856164, at *2 (M.D. N.C. Aug. 27, 2021) (quoting ECF No. 104 at 8).

A statute can violate the dormant Commerce Clause in two ways. See McBurney v. Young, 667 F.3d 454, 468 (4th Cir. 2012); Env't Tech. Council v. Sierra Club, 98 F.3d 774, 785 (4th Cir. 1996). First, a law is per se unconstitutional if it discriminates against out-of-state transactions. Sierra Club, 98 F.3d at 785. Second, where a law does not discriminate, it is constitutional “unless the burden imposed on interstate commerce is clearly excessive in relation to the putative local benefits.” McBurney, 667 F.3d at 468 (citing Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)). This second test “frequently requires judges to make highly subjective calls” in evaluating state interests. Colon Health Ctrs. of Am., LLC, v. Hazel, 813 F.3d 145, 156 (4th Cir. 2016). Because judges are “ill-equipped to second-guess the empirical judgments of lawmakers concerning the utility of legislation,” courts presume that nondiscriminatory statutes are constitutional and give “due deference to the body whose primary responsibility it is to judge the benefits and burdens of . . . legislation: the [state] legislature.” Id. (internal quotations omitted). Consequently, nondiscriminatory laws receive rational basis review under the dormant Commerce Clause. Id.

First, contrary to TitleMax's contentions here, Carolina Trucks does not plainly and definitively establish that the Commerce Clause prohibits North Carolina from regulating car title loans made outside its boundaries. As this Court previously noted, Carolina Trucks was decided on statutory and not constitutional grounds. Goins, No. 19-CV-489, 2021 WL 3856164, at *3 (“[T]he one Fourth Circuit case [that TitleMax] cited, Carolina Trucks . . . was decided on statutory and not constitutional grounds.”); Carolina Trucks, 492 F.3d at 489 (“By reaching this holding as a matter of statutory construction, we avoid constitutional problems inherent in a broader interpretation of South Carolina law.”). Additionally, as the Third Circuit recently observed in a case involving, among other things, car title loans made by TitleMax of Virginia, Inc., Carolina Trucks “involved transactions in goods that ended at the point of sale,” and such transactions are not analogous to TitleMax loans, which have “a longer lifespan,” and “involve[] later payments and permit[] a physical taking (repossession) from inside another state.” TitleMax of Del., Inc. v. Weissmann, 24 F.4th 230, 239 (3d Cir.), cert. denied sub nom. TitleMax of Del., Inc. v. Vague, 142 S.Ct. 2870 (2022). Accordingly, the Arbitrator's failure to reach TitleMax's preferred legal conclusion does not evidence a manifest disregard for the Commerce Clause as interpreted by the Fourth Circuit in Carolina Trucks.

Second as demonstrated by the Third Circuit case, there is ample room to reasonably argue that a state can regulate car title loans made to its residents while they were outside its borders. In Weissmann, the Third Circuit considered whether Pennsylvania's usury laws could be applied to TitleMax loans made outside of Pennsylvania, and, after conducting a full constitutional...