Williams v. Santander Consumer Inc.

1

BENTON WILLIAMS, JR., Plaintiff, v. SANTANDER CONSUMER USA INC., et al., Defendants.

No. 1:23-cv-513

United States District Court, S.D. Ohio, Western Division

March 11, 2024

Barrett, J.

REPORT AND RECOMMENDATION

KAREN L. LITKOVITZ, UNITED STATES MAGISTRATE JUDGE

Pro se plaintiff Benton Williams, Jr., brings this action alleging various claims related to his purchase of a 2014 Volkswagen Passat (Vehicle) from NCAMN LLC d/b/a/ Nissan of Streetsboro (Dealer) pursuant to a Retail Installment Sale Contract (Contract) (see Doc. 1 at PAGEID 25). Plaintiff's claims are premised on his position that defendants Santander Consumer USA Inc. (SC USA), Santander Drive Auto Receivables LLC, and Santander Drive Auto Receivables Trust 2022-1 may not legally attempt to collect plaintiff's debt under the Contract. (See Doc. 1 at PAGEID 10, ¶ 2). This matter is before the Court on defendants' motion to compel arbitration (Doc. 14) plaintiff's opposition (Doc. 17),^[1]and defendants' reply (Doc. 19).

I. Background^[2]

According to the partial copies of the Contract attached to his complaint, plaintiff financed his October 19, 2021 purchase of a 2014 Volkswagen Passat from the Dealer. (See Doc. 1 at PAGEID 25-27, 63-65). Defendants attach a complete copy of the Contract to their motion, and the corresponding pages appear identical to the copies proffered by plaintiff. (See Doc. 14-1 at PAGEID 120-24). The Contract provides that plaintiff was to make 72 monthly payments of $426.82 beginning on December 3, 2021. (Id. at PAGEID 120). The Contract also includes an arbitration provision,^[3]which states as follows:

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN U.S. DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST U.S. INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us or our employees, agents, successors or assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral binding arbitration and not by a court action.

(Id. at PAGEID 124).

The Dealer assigned the contract to S.C. USA. (Id. at PAGEID 124).^[4] According to plaintiff's complaint, SC USA commenced collection activities on January 13, 2022. (See Doc. 1 at PAGEID 12, ¶ 11; PAGEID 67-68). Plaintiff's lawsuit followed, alleging a series of federal- and state-law claims related to the fact that the Contract was subsequently sold from SC USA to Santander Drive Auto Receivables LLC, and then to Santander Drive Auto Receivables Trust 2022-1. (See id. at PAGEID 5, ¶ 1; Doc. 17 at PAGEID 150).

Defendants argue that all of plaintiff's claims are subject to arbitration pursuant to the arbitration provision as well as the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq. Defendants argue that the issue of arbitrability itself is delegated to the arbitrator under the Contract. Defendants assert that the arbitration provision in the Contract is valid and enforceable, and plaintiff's claims fall within its scope. Finally, defendants argue that dismissal is the appropriate disposition under the circumstances.

In response, plaintiff argues that defendants do not have standing to enforce the Contract's arbitration provision. While not entirely clear, plaintiff seems to argue that defendants forged the proffered copy of the Contract, and the Contract is otherwise not enforceable because it was securitized.

In reply, defendants contest both of plaintiff's arguments but rest on their position that the question of arbitrability itself was designated to the arbitrator under the Contract. Defendants emphasize that plaintiff does not challenge the overall enforceability of the Contract's arbitration provision.

II. Law

The FAA reflects a “liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (citing 9 U.S.C. § 2). See also Epic Sys. Corp. v. Lewis, 584 U.S. 497, 505-06 (2018). The primary goal of the FAA is to “ensur[e] that private agreements to arbitrate are enforced according to their terms.” Volt Info Scis., Inc v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 479 (1989). The Supreme Court has emphasized that the FAA “requires courts ‘rigorously' to ‘enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes and the rules under which that arbitration will be conducted.'” Epic Sys. Corp., 584 U.S. at 506 (emphasis deleted) (quoting American Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013)).

Notwithstanding this preference for arbitration, before an unwilling party can be compelled to arbitrate, a determination must be made on the “gateway issues” of (1) “whether the dispute is arbitrable, meaning that a valid agreement to arbitrate exists between the parties,” and (2) the arbitrability of specific claims, that is, whether “the specific [claim] falls within the substantive scope of that agreement.” Jefferis v. Hallrich Inc., No. 1:18-cv-687, 2019 WL 3462590, at *3 (quoting Javitch v. First Union Securities, Inc., 315 F.3d 619, 624 (6th Cir. 2003)) (report and recommendation), adopted, 2019 WL 3975774 (S.D. Ohio Aug. 22, 2019). Although courts ordinarily determine arbitrability, the FAA allows parties to an arbitration agreement to include a “delegation provision” in their agreement by which they agree that an arbitrator, rather than a court, will resolve “‘gateway' questions of ‘arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular dispute,'” as well as the merits of the dispute. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S.Ct. 524, 529 (2019) (quoting Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)). See also De Angelis v. Icon Ent. Group Inc., 364 F.Supp.3d 787, 79293 (S.D. Ohio 2019). “[T]he question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator,” except if by their agreement “the parties clearly and unmistakably provide otherwise.” AT&T Techs., In. v. Commc'ns Workers of Am., 475 U.S. 643, 649 (1986).

A “delegation provision” under which the parties agree to arbitrate “gateway questions of arbitrability” is governed by the FAA. De Angelis, 364 F.Supp.3d at 793 (quoting Rent-A-Center, 561 U.S. at 68-69). Courts apply principles of contract interpretation to determine the parties' agreement. Manlove v. Volkswagen Aktiengesellschaft, No. 1:18-cv-145, 2019 WL 2291890, at *2 (E.D. Tenn. Jan. 11, 2019) (quoting Rent-A-Center, 561 U.S. at 70). Courts are bound to respect the parties' agreement on delegation of the arbitrability question as embodied in their contract. Henry Schein, 139 S.Ct. at 531. See also De Angelis, 364 F.Supp.3d at 794. If the parties have agreed “to let the arbitrator rule on his or her own jurisdiction, any other threshold questions about arbitrability must be submitted to the arbitrator, not this Court.” FCCI Ins. Co. v. Nicholas County Lib., No. 5:18-cv-038, 2019 WL 1234319, at *9-10 (E.D. Ky. Mar. 15, 2019). If the parties have contractually delegated the arbitrability question to the arbitrator, a court “may not decide” that question, “even if the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless.” Henry Schein, 139 S.Ct. at 529, 530.

Courts considering a motion to compel arbitration should “treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in a light most favorable to the nonmoving party.” Great Am. Ins. Co., 2018 WL 6003968, at *2 (quoting Raasch, 254 F.Supp.2d at 851). To defeat the motion, the nonmovant has the burden to “show a genuine [dispute] of material fact as to the validity of the agreement to arbitrate.” Danley v. Encore Capital Grp., Inc., 680 Fed.Appx. 394, 397 (6th Cir. 2017) (quoting Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002)).

III. Analysis

A. Delegation provision

The Contract includes a delegation clause, which provides:

Any claim or dispute, . . . (including . . . the arbitrability of the claim or dispute), between you and . . . our . . . assigns, which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship (including any such relationship with third parties who do not sign this contract) shall, at your or our election, be resolved by neutral binding arbitration and not by a court action.

(Doc. 14-1 at PAGEID 124 (emphasis added)). The plain language of the Contract leaves arbitrability of plaintiff's claims to the arbitrator. As such, any threshold question regarding the enforceability or applicability of the Contract's arbitration provision should be left to the arbitrator.

B. Gateway issues

Even if these gateway issues were for this Court to decide, however it would conclude that the Contract's...