United States District Court, D. South Carolina, Florence Division
Jill L. Gibson, on behalf of herself and all others similarly situated, Plaintiff,
Toyota Motor Sales, U.S.A., Inc., Defendant,
ORDER AND OPINION
Richard Mark Gergel, United States District Court Judge.
matter is before the Court on Defendant's motion to
compel arbitration or in the alternative to dismiss the
complaint. For the reasons set forth below, the Court denies
alleges she jointly owned a 2009 Toyota Camry (the
"Vehicle") with her mother, Wanda Jeffers. (Dkt.
No. 1 ¶¶ 3-4.) Ms. Jeffers originally leased the
Vehicle on July 31, 2008 from Florence Toyota. (Dkt. No. 21
at 2.) The lease contains a binding arbitration clause and
class action waiver. (Dkt. No. 7-3.) Defendant Toyota Motor
Sales, Inc. provided the Vehicle a three-year express
warranty, beginning from the Vehicle's "in
service" date. (Dkt. No. 7-6 at 10.) The express
warranty requires owners to use a "Dispute Settlement
Program" administered by the National Center for Dispute
Settlement before bringing any court action regarding
warranty claims. (Id. at 7-8.) Ms. Jeffers later
purchased the Vehicle in July 2012, and Plaintiff allegedly
later acquired a joint ownership interest in the
Vehicle. The purchase agreement with the seller,
"VT INC TSTEE WOLT" (VT Inc. as trustee for World
Omni LT), provided for an "as is" sale in which the
seller disclaimed any express or implied warranties. (Dkt.
December 2014, Toyota unilaterally extended express warranty
coverage to May 31, 2017 for claims regarding dashboards
degraded by prolonged exposure to sunlight, under what it
called a "warranty enhancement." (Dkt. No. 14-1.).
That extension is subject to the "terms, conditions, and
limitations in" the original manufacturer's
warranty. (Id.) But Plaintiff alleges the original
warranty's arbitration provider, the National Center for
Dispute Settlement, "does not render services associated
with extended warranties provided by Defendants, including
the Program." (Dkt. No. 1 ¶ 89.)
alleges the dashboard of the Vehicle "is sticky with
holes appearing in it" yet Toyota has refused to honor
the warranty extension. (Id. ¶¶ 41-44.)
Plaintiff filed the present action on March 2, 2017,
asserting claims for breach of express warranty, breach of
implied warranty of merchantability, violation of the
Magnuson-Moss Warranty Act, and "failure to make
delivery" under S.C. Code §§ 36-2-711 &
36-2-712. Defendant moves to compel arbitration, or,
alternatively to dismiss for lack of subject-matter
jurisdiction or for failure to state a claim.
Motion to compel arbitration
Federal Arbitration Act ("FAA") reflects a liberal
policy toward arbitration. The Act provides that a written
agreement to arbitrate in any contract involving interstate
commerce or a maritime transaction "shall be valid,
irrevocable and enforceable" unless there exists grounds
for revocation in law or equity. 9 U.S.C. § 2; Moses
H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983). A litigant can compel arbitration under
the FAA if the litigant can demonstrate: '"(1) the
existence of a dispute between the parties; (2) a written
agreement that includes an arbitration provision which
purports to cover the dispute; (3) the relationship of the
transaction, which is evidenced by the agreement, to
interstate or foreign commerce; and (4) the failure, neglect
or refusal of the [party] to arbitrate the
dispute.'" Am. Gen. Life & Accident Ins. Co.
v. Wood, 429 F.3d 83, 87 (4th Cir. 2005) (quoting
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01
(4th Cir. 2002)). District courts have "no choice but to
grant a motion to compel arbitration where a valid
arbitration agreement exists and the issues in a case fall
within its purview." Adkins, 303 F.3d at 500.
the parties agreed to arbitrate a particular dispute is a
question of state law governing contract formation. First
Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944
(1995). And where the parties did so agree, there are
certainly limits on the enforceability of arbitration
agreements, particularly where the dispute resolution process
is "utterly lacking in the rudiments of
even-handedness" or is so "one-sided that. . .
[the] only possible purpose is to undermine the neutrality of
the proceeding." Hooters of Am., Inc. v.
Phillips, 173 F.3d 933, 935-38 (4th Cir. 1999). The
party resisting arbitration bears the burden of showing that
the issue is unsuitable for arbitration. Green Tree Fin.
Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000).
requires a court to stay "any suit or proceeding"
pending arbitration of "any issue referable to
arbitration under an agreement in writing for such
arbitration, and "[t]his stay-of-litigation provision is
mandatory." Adkins, 303 F.3d at 500; see
also 9 U.S.C. § 3; Hooters, 173 F.3d at
937. The Fourth Circuit has also held that if all of the
claims asserted in a complaint are subject to arbitration,
dismissal of the complaint is "an appropriate
remedy." Choice Hotels Int'l, Inc. v. BSR
Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir.
2001). The Fourth Circuit has noted the inconsistency between
its opinions on this issue. Aggarao v. MOL Ship Mgmt.
Co., 675 F.3d 355, 376 n.18 (4th Cir. 2012) ("There
may be some tension between our decision in
Hooters-indicating that a stay is required when the
arbitration agreement 'covers the matter in
dispute'-and Choice Hotels-sanctioning dismissal
'when all of the issues presented ... are
arbitrable.'"). It has also noted that the circuits
are divided on this question, which it has not resolved for
this Circuit. Id.
litigant wishing to compel arbitration without answering the
complaint should move under Rule 12 of the Federal Rules of
Civil Procedure. See Fed. R. Civ. P. 12(a). In this
Circuit, litigants seeking to should move under Rule 12(b)(3)
(improper venue). Aggarao, 675 F.3d at 365 n.9. When
considering a motion under Rule 12(b)(3), the Court may
consider evidence outside the pleadings, but the facts are
viewed light most favorable to the plaintiff because a
plaintiff need only make a prima facie showing of
proper venue to survive a motion to dismiss. Id. at
Motion to dismiss under Rule 12(b)(1)
motion to dismiss for lack of subject-matter jurisdiction
filed under Rule 12(b)(1) of the Federal Rules of Civil
Procedure challenges the jurisdiction of a court to
adjudicate the matter before it. Arbaugh v. Y& H
Corp.,546 U.S. 500, 514 (2006). A challenge to
subject-matter jurisdiction may contend either 1) that the
complaint fails to allege facts sufficient to establish
subject matter jurisdiction or 2) "that the
jurisdictional allegations of the complaint [are] not
true." Adams v. Bain,697 F.2d 1213, 1219 (4th
Cir. 1982). Where the sufficiency of the jurisdictional
allegations in the complaint is challenged facially,
"the facts alleged in the complaint are taken as true,
and the motion must be denied if the complaint alleges
sufficient facts to invoke subject matter jurisdiction."
Kerns v. United States,585 F.3d 187, 192 (2009).
If, however the defendant contends "that the
jurisdictional allegations of the complaint [are] not true,
" the plaintiff bears the burden to prove facts
establishing jurisdiction and the district court may
"decide disputed issues of fact." Id. In
that case, because the plaintiffs allegations are not
presumed true, "the court should resolve the relevant
factual disputes only after appropriate discovery."
24th Senatorial Dist. Republican Comm. v. Alcorn,820 F.3d 624, 629 (4th Cir. 2016). And where "the
jurisdictional facts and the facts central to a tort ...