Opinion
CASE NO. 2:03-CV-81.
March 11, 2008
OPINION AND ORDER
Plaintiff Tracy Passa ("plaintiff"), acting on behalf of herself and a putative class of plaintiffs, alleges that defendants violated the Fair Debt Collection Practices Act ("FDCPA" or "the Act"), 15 U.S.C. § 1692 et seq., the Ohio Consumer Sales Practices Act ("OCSPA"), Ohio Revised Code ("O.R.C.") § 1345.01 et seq., 42 U.S.C. § 1983 ("Section 1983"), and engaged in fraudulent misrepresentation under Ohio law based on their participation in the City of Columbus' ("City") Check Resolution Program. On June 3, 2005, plaintiff filed the Amended Complaint, Doc. No. 33, naming as defendants the City, Buckeye Check-Cashing, Inc. and BCCI Management Co. dba Check$mart ("Check$mart"), Quick Cash Advance, Inc. dba Quick Cash USA ("Quick Cash") and Cash Till Payday, Ltd. dba Always Payday ("Always Payday"). Amended Complaint, ¶¶ 84-118.
With the consent of the parties, 28 U.S.C. § 636(c), this matter is before the Court on Plaintiff Tracy Passa's Motion Under 9 USC §§ 9- 12, Doc. No. 133 (" Plaintiff's First Motion"), and Plaintiff Tracy Passa's Motion to Confirm, Modify, Vacate and Correct the June 18, 2007 Award of the Arbitrator, Doc. No. 140 (" Plaintiff's Second Motion"). For the reasons that follow, Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
I. FACTS AND PROCEDURAL BACKGROUND
A. Factual background
Plaintiff, a resident of Noble County, Ohio, obtained several "pay day" loans from Check$mart, a business located in Zanesville, Ohio, and licensed to make such loans pursuant to O.R.C. § 1315.35 et seq. Amended Complaint, ¶¶ 18-22, 57. Plaintiff issued post-dated checks to serve as collateral for these loans. Id. ¶ 23, 59. For one of these loans, plaintiff and Check$mart executed a contract dated April 24, 2002 (" Contract") that provided that Check$mart would loan $400.00 to plaintiff and that plaintiff agreed to pay to Check$mart $460.00 on May 8, 2002. Id. ¶¶ 26, 63; Deferred Deposit, Early Deposit Clause and Disclosure Agreement, Doc. No. 146-16. Plaintiff informed Check$mart that she could not repay that loan and that the post-dated check that served as collateral would be dishonored if negotiated. Amended Complaint, ¶ 65. After plaintiff failed to repay the May 8, 2002, loan, Check$mart attempted to negotiate the post-dated check. Id. ¶¶ 29, 65. Plaintiff's checking account contained insufficient funds to cover the check. Id. ¶¶ 65, 66.
At the time, the City maintained a Check Resolution Program, through the Dispute Resolution Unit of the City Attorney's Office. Id. ¶ 26. Merchants eligible to participate in the Check Resolution Program would file a certified case submission application with the prosecutor's office in Columbus, Ohio. Id. ¶¶ 27-32. The case submission was automatically accepted and a hearing date was docketed. Id. ¶ 36. Notices were then mailed from the prosecutor's office to the alleged delinquent customers requesting that they appear at the Franklin County Municipal Court to resolve a complaint made against them. Id.
On July 11, 2002, the City sent plaintiff a letter indicating that Check$mart had scheduled a mediation through the Check Resolution Program, to be held on July 31, 2002, at 4:30 p.m., in an attempt to resolve the dispute related to the May 8, 2002, payday loan. Id. ¶¶ 76-78 and Exhibit 9 at 1 attached thereto. Plaintiff did not attend this mediation. Id. ¶ 80. On August 6, 2002, the City sent a second notice to plaintiff, indicating that another mediation would be held on August 14, 2002. Id. and Exhibit 9 at 3 attached thereto. Plaintiff alleges that, by sending these notices, the City violated the FDCPA, the OCSPA, § 1983 and Ohio's common law. Id. ¶¶ 84-118. Plaintiff alleges that the City illegally "lent Check$mart its official status and authority to assist Check$mart in collecting this consumer payday loan. . . ." Id. ¶ 76. Also, plaintiff alleges that Quick Cash and Always Payday engaged in similar misconduct with their customers. Id. ¶¶ 7, 8, 84-118. Plaintiff contends that the City made at least one communication to approximately 20,000 persons at the requests of Check$mart, Quick Cash and Always Payday. Id. ¶ 7.
B. Arbitration and post-award filings
This Court previously held that plaintiff's individual claims were subject to arbitration. Opinion and Order, Doc. No. 83. On November 15, 2006, the arbitrator denied by interim award Check$mart's motion to dismiss. Interim Award on Respondents' Motion to Dismiss ("November 15, 2006 Award"), attached as Exhibit 1 to Plaintiff's First Motion. After discovery, briefing, a hearing and supplemental submissions, the arbitrator issued a decision on June 18, 2007. Award of Arbitrator ("June 18, 2007 Award"), attached as Exhibit 4 to Plaintiff's First Motion. The arbitrator dismissed with prejudice all of plaintiff's claims but the OCSPA claims, which were granted only as to alleged violations of O.R.C. § 1315.41. Id. at 6. On July 1, 2007, the arbitrator denied plaintiff's motion to modify the June 18, 2007 Award. Award of Arbitrator on Motion to Modify ("July 1, 2007 Award"), attached as Exhibit 6 to Plaintiff's First Motion.
Through two motions, Plaintiff now seeks to confirm, modify, vacate and correct the arbitration awards. See Plaintiff's First Motion; Plaintiff's Second Motion.
1. Plaintiff's First Motion
In Plaintiff's First Motion, she seeks to confirm three parts of the June 18, 2007 Award: (1) "that Check$mart's failure to plead affirmative defenses in its arbitral answer waived any affirmative defenses"; (2) that Check$mart violated O.R.C. §§ 1315.40-1315.41 by charging certain fees; and (3) "that Check$mart had thereby violated R.C. 1345.02, finding that Ms. Passa entitled [sic] to R.C. 1345.09 relief and declaring the loan transaction rescinded." Plaintiff's First Motion, p. 6. Plaintiff's First Motion also seeks an order vacating, modifying and/or correcting all three of the arbitrator's awards for ten separate reasons. Id. at 6-7. In addition, plaintiff asks the Court to reconsider and vacate its March 28, 2006 Opinion and Order, which required arbitration of plaintiff's claims. Id. at 8.
Check$mart opposed Plaintiff's First Motion, first contending that the motion is deficient because it is not supported by a memorandum in support as required by S.D. Ohio L.R. 7.2(a)(1). Defendant Buckeye Check Cashing, Inc. and Defendant BCCI Management Co.'s Memorandum in Opposition to Plaintiff's Motions under 9 U.S.C. §§ 9- 12, Doc. No. 137 (" Check$mart's Opposition to First Motion"), pp. 6-8. Check$mart next argues that plaintiff had merely presented a conclusory list of judicially and statutorily created grounds for vacating an arbitration award and that the motion was for that reason insufficient to meet the high standard for vacating such an award. Id. at 9-11. Check$mart further contends that Plaintiff's First Motion improperly attempts to relitigate the issue of arbitrability and should be denied. Id. at 11-12. Finally, Check$mart asks this Court to dismiss it from this action because the arbitrator disposed of all of plaintiff's claims against Check$mart. Id. at 12-13.
On September 17, 2007, the Court held a status conference. Order, Doc. No. 139. The Court granted plaintiff leave to supplement her memorandum in support of Plaintiff's First Motion, but did not foreclose Check$mart's right to challenge the timeliness of the motion. Id.
2. Plaintiff's Second Motion
Following this status conference, Plaintiff's Second Motion was filed. Plaintiff argues that the June 18, 2007 Award should be vacated in part because the arbitrator exceeded his authority and/or disregarded the law in the following respects: (1) by granting Check$mart $400.00; (2) by failing to award attorney fees to plaintiff; (3) by determining remaining issues upon granting rescission of the Contract when he lacked jurisdiction; (4) by determining that Check$mart did not act as a "debt collector" and therefore did not violate the FDCPA; and (5) by determining that Check$mart is exempt from the OCSPA. Plaintiff's Second Motion, pp. 3-31. Plaintiff contends that the Court should confirm two parts of the June 18, 2007 Award finding that (1) Check$mart's failure to plead a statute of limitations defense to the FDCPA and OCSPA claims constitutes waiver; and (2) Check$mart violated the Check Cashing Business Act ["CCBA"]. Id. at 31-33.
In response, Check$mart argues that Plaintiff's Second Motion fails to meet the high standard necessary to vacate an arbitration award. Defendants Buckeye Check Cashing, Inc. and BCCI Management Co.'s Memorandum in Opposition to Plaintiff's Motion to Confirm, Modify, Vacate and Correct, Doc. No. 142 (" Check$mart's Opposition to Second Motion"), pp. 7-16. Check$mart further argues that Plaintiff's Second Motion is time-barred under 9 U.S.C. § 12 because it was served more than three months after the June 18, 2007 Award. Id. at 16-18. More specifically, Check$mart contends that plaintiff should not be permitted to rely on her First Motion (filed August 30, 2007) as a "placeholder" motion because it violates S.D. Ohio L.R. 7.2. Id. at 17. According to Check$mart, Plaintiff's Second Motion does not even refer to the First Motion and raises additional issues and asks for more relief than does the First Motion. Id. Finally, Check$mart contends that the June 18, 2007 Award should be confirmed in its entirety and that Check$mart should be dismissed from this action because there is no live controversy between these parties. Id. at 18-19.
II. STANDARD OF REVIEW
The Federal Arbitration Act ("FAA"), 9 U.S.C.S. § 1 et seq., "establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution." Preston v. Ferrer, ___ U.S. ___, 128 S.Ct. 978, 981 (2008). The FAA presumes that courts will confirm arbitration awards. See, e.g., Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir. 2000). See also Uhl v. Komatsu Forklift Co., 512 F.3d 294, 305 (6th Cir. 2008). "'When courts are called on to review an arbitrator's decision, the review is very narrow; [it is] one of the narrowest standards of judicial review in all of American jurisprudence.'" Id. (quoting Nationwide Mut. Ins. Co. v. Home Ins. Co., 429 F.3d 640, 643 (6th Cir. 2005)). See also Shelby County Health Care Corp. v. AFSCME, Local 1733, 967 F.2d 1091, 1094 (6th Cir. 1992) ("It is well established that courts should play only a limited role in reviewing the decisions of arbitrators."). Accordingly, courts cannot "reverse simply because they disagree with the result of the interpretation of the arbitral award." Sterling China Co. v. Glass, Molders, Pottery, Plastics Allied Workers Local No. 24, 357 F.3d 546, 556 (6th Cir. 2004).
Federal courts may vacate an arbitrator's award in the following situations:
(1) where the award was procured by fraud,
(2) where the arbitrator [was] evidently partial or corrupt,
(3) where the arbitrator misbehaved so that a party's rights were prejudiced, or
(4) where the arbitrator exceeded [his] powers or executed them so that a final, definite award was not made.Dawahare, 210 F.3d at 669. See also Electronic Data Sys. Corp. v. Donelson, 473 F.3d 684, 688 (6th Cir. 2007) (quoting Dawahare, 210 F.3d at 669)). "Arbitrators exceed their power when they 'act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law.'" Electronic Data Sys. Corp., 473 F.3d at 688 (quoting Saveski v. Tiseo Architects, Inc., 261 Mich. App. 553, 682 N.W.2d 542, 544 (Mich.Ct.App. 2004)). See also Mich. Family Res., Inc. v. SEIU Local 517M, 475 F.3d 746, 756 (6th Cir. 2007) ("An arbitrator does not exceed his authority every time he makes an interpretive error; he exceeds that authority only when the collective bargaining agreement does not commit the dispute to arbitration."). Accordingly, "[t]he burden of proving that the arbitrators exceeded their authority is great. . . . If a dispute is even arguably within the scope of an arbitration clause, the dispute is arbitrable." Home Ins. Co., 429 F.3d at 650 (internal citations omitted).
In addition to the four bases for vacation of an arbitration award referred to supra, "a reviewing court may vacate an award where the arbitrators have manifestly disregarded the law." Id. "An arbitration decision 'must fly in the face of established legal precedent' for [a court] to find manifest disregard of the law." Dawahare, 210 F.3d at 669 (quoting Merrill Lynch, Pierce, Fenner Smith, Inc. v. Jaros, 70 F.3d 418, 421 (6th Cir. 1995)). Arbitrators manifestly disregard the law if "(1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrators refused to heed that legal principle." Jaros, 70 F.3d at 421. See also Dawahare, 210 F.3d at 669 ("Thus, to find manifest disregard a court must find two things: the relevant law must be clearly defined and the arbitrator must have consciously chosen not to apply it."). Therefore, "[a] mere error in interpretation or application of the law is insufficient" to constitute a manifest disregard of the law. Jaros, 70 F.3d at 421. See also Federated Dep't Stores, Inc. v. J.V.B. Indus., Inc., 894 F.2d 862, 866 (6th Cir. 1990) ("As long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision.") (quoting United Paperworkers Intern. Union v. Misco Inc., 484 U.S. 29, 38 (1987) (emphasis supplied)).
In addition, "[a]rbitrators are not required to explain their decisions. If they choose not to do so, it is all but impossible to determine whether they acted with manifest disregard for the law." Dawahare, 210 F.3d at 669. Accordingly, the standard for finding a manifest disregard of the law is very high: "If a court can find any line of argument that is legally plausible and supports the award then it must be confirmed. Only where no judge or group of judges could conceivably come to the same determination as the arbitrators must the award be set aside." Jaros, 70 F.3d at 421. See also Electronic Data Sys. Corp., 473 F.3d at 691 (quoting Jaros, 70 F.3d at 421).
III. DISCUSSION
A. Defendants' Request to Deny Plaintiff's First Motion and Plaintiff's Second Motion as Deficient and Untimely
On September 17, 2007, the Court granted plaintiff leave to supplement her First Motion, but did not foreclose Check$mart's right to challenge the timeliness of the motion. Order, Doc. No. 139. The parties have now fully briefed the timeliness issue. Check$mart argues that the Court should deny plaintiff's request to vacate the June 18, 2007 Award because (1) Plaintiff's First Motion violated S.D. Ohio L.R. 7.2(a) by failing to attach a memorandum in support; and (2) Plaintiff's Second Motion is time-barred under 9 U.S.C. § 12 because it was served more than three months after the June 18, 2007 Award and the conclusory allegations in Plaintiff's First Motion cannot serve as a "placeholder." Check$mart's Opposition to First Motion, pp. 6-11; Check$mart's Opposition to Second Motion, pp. 16-18. In response, plaintiff argues that Fed.R.Civ.P. 15 governs supplemental pleadings. Plaintiff Tracy Passa's Reply to Defendants Buckeye Check Cashing, Inc. and BCCI Management Co.'s Memorandum in Opposition to Plaintiff's Motion to Confirm, Modify, Vacate and Correct the June 18, 2007 Award of the Arbitrator, Doc. No. 147 (" Plaintiff's Reply"), pp. 1-4 (citing Bonar v. Dean Witter Reynolds, Inc., 835 F.2d 1378, 1383 (11th Cir. 1988)). Plaintiff argues that the Court should consider her First Motion, which is properly supplemented by Plaintiff's Second Motion, and contends that her Second Motion does not add additional claims. Id. Plaintiff further argues that Check$mart has not shown that it was denied due process or suffered prejudice as a result of Plaintiff's Second Motion. Id.
Section 12 of the FAA provides that "notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered." 9 U.S.C. § 12. The award at issue in this case was filed on June 18, 2007. Plaintiff's First Motion was filed on August 30, 2007 within the three-month statutory period and lists ten separate grounds for vacating the November 15, 2006 award, portions of the June 18, 2007 Award and the July 1, 2007 award. Plaintiff's First Motion, pp. 6-8. Plaintiff's Second Motion was not filed until October 16, 2007 and raises only two grounds for vacating the June 18, 2007 Award: i.e., the arbitrator exceeded his authority and/or manifestly disregarded the law. Plaintiff's Second Motion, pp. 3-31. Plaintiff's Second Motion also specifically asks, for the first time, for monetary damages and for an affirmative ruling that Check$mart violated the FDCPA and OCSPA. Id. at 33. Accordingly, the Court must decide whether Plaintiff's Second Motion is a timely "supplement" to Plaintiff's First Motion when the Second Motion was filed beyond the three-month statutory period, seeks additional relief beyond that in the First Motion and abandons grounds for relief raised in Plaintiff's First Motion.
Specifically, Plaintiff's First Motion lists the following ten grounds for vacating the June 18, 2007 Award: (1) "misbehavior prejudicing movant's rights"; (2) "the arbitrator exceeded his powers"; (3) "the arbitrator so imperfectly executed his powers that a mutual, final, and definitive award was not made, despite the award, the AAA's governing rules, and recognized exceptions to the rule of functus officio; (4) "the arbitrator made awards on matters properly not subject to and/or not submitted to his jurisdiction, including matters as to which an enforceable agreement to arbitrate did not legally exist"; (5) "the arbitrator made evident material mistakes in the descriptions of things determinative to the reasoning for these awards"; (6) "the challenged portions of these awards are arbitrary, capricious, irrational, and constitute an abuse of discretion"; (7) "the challenged portions of these awards resulted from unfair processes denying movant due process and a fundamentally fair procedure"; (8) "the arbitrator and the challenged portions of these awards prevented the effective vindication of statutory rights and violated well-defined and dominant public policies explicitly established and served by those statutes"; (9) "the arbitrator and the challenged portions of these awards strayed from and failed to adhere to the requirements of the arbitration agreement, was unlawful, did not apply the substantive law applicable, and shows a manifest disregard of the law"; and (10) "the challenged portions of these awards conflict with the express terms of the arbitration agreement, impose additional requirements not expressly provided for by the agreement, and are not rationally supported by or derived from the agreement." Plaintiff's First Motion, pp. 6-7.
The parties cite to no case from the United States Court of Appeals for the Sixth Circuit directly on point. However, at least two other courts have considered this issue. See Bonar v. Dean Witter Reynolds, Inc., 835 F.2d 1378 (11th Cir. 1988); Dealer Computer Servs., Inc. v. Dub Herring Ford, 489 F. Supp.2d 772 (E.D. Mich. 2007). In Bonar, the United States Court of Appeals for the Eleventh Circuit held that an amended motion to vacate an arbitration award filed beyond the three-month period was nevertheless timely because the initial motion was filed within the prescribed period. Bonar, 835 F.2d at 1381-82. Moreover, the moving party in Bonar raisee a new claim for fraud only in the second filing. Id. at 1381. The Bonar court observed that the Federal Rules of Civil Procedure govern FAA proceedings when there is no applicable FAA rule. Id. at 1382 (citing former Fed.R.Civ.P. 81(a)(3) ). Bonar determined that Fed.R.Civ.P. 15 applies to amendments to a motion to vacate, modify or correct an arbitration award because there is no FAA provision. Id. (citing 9 U.S.C. § 12). Noting that the defendant had not yet filed a responsive pleading when the second motion was filed, the Bonar court permitted the plaintiff to amend its motion to vacate. Id.
In support of its argument, Check$mart cites to Robinson v. Champaign Landmark, Inc., 326 F.3d 767, 771-72 (6th Cir. 2003), but that case is distinguishable from the instant case because Robinson considered whether an initial, not a supplemental, filing was timely.
Effective December 1, 2007, Fed.R.Civ.P. 81 was amended. The Committee Note to Fed.R.Civ.P. 81 explains that the changes were simply stylistic. Fed.R.Civ.P. 81 advisory committee's note (2007 amendments). The provision comparable to former 81(a)(3) is now 81(a)(6)(B).
Similarly, in Dealer, the plaintiff served an initial motion to vacate within the three-month period, but defendants challenged the initial motion as inconsistent with local rules. Id. at 776. The plaintiff subsequently filed a second motion to vacate that complied with the local rules, but which was filed beyond the three-month period. Id. The Dealer defendants argued that the plaintiff's second motion was therefore untimely and should be dismissed. Id.
Citing Bonar, the Dealer court rejected defendants' argument. Id. As in the instant case, the Dealer defendants had filed a pleading responsive to the initial motion to vacate prior to the filing of the second motion. Id. The Dealer court nevertheless permitted the amended motion. Id. at 776-77 (citing Fed.R.Civ.P. 15(a)). In so ruling, the Dealer court found no prejudice in allowing the second motion, particularly where defendants had waived service on the first motion and had responded to the amended motion. Id. at 777.
This Court finds the reasoning in Bonar and Dealer instructive. Accepting Bonar's reasoning that the Federal Rules of Civil Procedure apply to this issue, the Court notes that Fed.R.Civ.P. 15(a)(2) provides that "[t]he court should freely give leave [to amend] when justice so requires." Fed.R.Civ.P. 15(a)(2) (2007). The grant or denial of a request to amend is left to the broad discretion of the trial court. See, e.g., General Elec. Co. v. Sargent Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990). A court must find "some significant showing of prejudice to the opponent" in order to deny leave to amend. Moore v. Paducah, 790 F.2d 557, 562 (6th Cir. 1986). Here, Check$mart does not explain how it will be prejudiced if the Court permits Plaintiff's Second Motion to stand. Indeed, Check$mart was on notice when Plaintiff's First Motion was filed that plaintiff intended to challenge portions of the June 18, 2007 Award. See Plaintiff's First Motion, pp. 6-7. In addition, Check$mart has responded substantively to plaintiff's arguments raised in Plaintiff's Second Motion. See Check$mart's Opposition to Second Motion, pp. 6-16. Under these circumstances, the Court cannot conclude that permitting Plaintiff's Second Motion to stand works to the prejudice of Check$mart.
Check$mart further argues that allowing plaintiff to rely on her First Motion to save her untimely Second Motion "circumvent[s] 9 U.S.C. § 12 and Local Rule 7.2[.]" Id. at 17. The Court disagrees. First, "Section 12 is designed to ensure that a defendant is properly notified, thus avoiding the risk of surprise." Escobar v. Shearson Lehman Hutton, Inc., 762 F. Supp. 461, 463 (D. P.R. 1991). Courts construing the requirement of "[n]otice of a motion to vacate, modify, or correct an award" have accepted notice of such motion in various forms. See, e.g., ANR Coal Co., Inc. v. Cogentrix of North Carolina, 173 F.3d 493, 497 n. 1 (4th Cir. 1999) (permitting a complaint filed within the three-month window to serve as notice under the statute where no prejudice resulted); Smith, Breslin Assoc. v. Meridian Mortgage Corp., No. 96-424, 1997 U.S. Dist. LEXIS 3910, at *6, *8-9 (E.D. Pa. Mar. 31, 1997) (stating that a the motion to vacate must be in a form provided by Fed.R.Civ.P. 7(b) and permitting request to vacate award where timely motion "was mistaken in form and in a deficient manner", but "did alert the respondent that petitioner was attempting to vacate the award and apprised respondent of the gist of petitioner's challenge"); Humbert v. Zaner, Nos. 90 Civ. 843 (KC), 90 Civ. 1780 (KC), 1991 U.S. Dist. LEXIS 1491, at *11 n. 7 (S.D. N.Y. 1991) (concluding that a counterclaim seeking to vacate an award constitutes sufficient notice under the statute). As discussed supra, Plaintiff's First Motion alerted Check$mart of plaintiff's intention to seek vacation of part of the June 18, 2007 Award. Accordingly, in light of the purpose behind Section 12 and the willingness of federal courts to liberally construe the form of notice, the Court concludes that permitting Plaintiff's First Motion will not "circumvent" Section 12.
The parties do not point to a particular provision of the FAA, and the Court does not find such a provision, that specifically addresses the form to which the Section 12 notice must conform. Accordingly, Fed.R.Civ.P. 7(b) therefore applies to the extent that the FAA does not contain an applicable requirement. Fed.R.Civ.P. 81(a)(6)(B). The Sixth Circuit liberally interprets at least one provision of Rule 7(b)(1). See Intera Corp. v. Henderson, 428 F.3d 605, 613 (6th Cir. 2005) (liberally construing Rule 7(b)(1)'s particularity requirement). Accordingly, it is reasonable that the form required by Rule 7(b)(2) is likewise to be liberally construed.
Second, although Plaintiff's First Motion did not comply with the technical requirement of S.D. Ohio L.R. 7.2(a)(1) because it failed to include a memorandum in support, the Court concludes that it will nevertheless consider Plaintiff's First Motion under these circumstances. Cf. McGowan, Ltd., Inc. v. Soy Basics, LLC, No. 2:05-cv-405, 2006 U.S. Dist. LEXIS 63585, at *7 (S.D Ohio Sept. 6, 2006) (denying plaintiff's motion to strike defendant's motion, which failed to attach a memorandum in support in violation of S.D. Ohio L.R. 7.2(a)(1), because striking the non-compliant motion is "is too drastic a sanction"); Watson v. Online Computer Library Ctr., Inc., No. 2:05-cv-18, 2006 U.S. Dist. LEXIS 27443, at *3 n. 2 (S.D. Ohio May 9, 2006) (noting that plaintiff violated S.D. Ohio L.R. 7.2(a)(2) by failing to timely file an opposing memorandum, but "in the interest of judicial economy," proceeding to consider the untimely memorandum). But see, e.g., Marx v. Lt. Colonel Richard Janke, No. C-1-02-050, 2004 U.S. Dist. LEXIS 30104 (S.D. Ohio Sept. 4, 2004) (denying in part motion to dismiss where defendant failed, in violation of S.D. Ohio L.R. 7.2(a)(1), to cite to factual or legal grounds to support argument); Logan Farms v. HBH, Inc. DE, 282 F. Supp.2d 776 (S.D. Ohio 2003) (denying motion to transfer where defendants failed to support motion with argument or case law in violation of S.D. Ohio L.R. 7.2(a)(1)). This Court concludes that S.D. Ohio L.R. 7.2(a)(1) is not circumvented in this case if the Court considers Plaintiff's First Motion. Accordingly, Check$mart's request to deny Plaintiff's First Motion as deficient and Plaintiff's Second Motion as untimely is DENIED.
L.R. 7.2(a)(1) provides, in relevant part, that "[a]ll Motions and applications for filing shall be accompanied by a memorandum in support thereof which shall be a brief statement of the grounds, with citation of authorities relied upon").
B. Plaintiff Abandons Certain Requests and Arguments
Having determined that it will consider Plaintiff's First Motion and Plaintiff's Second Motion, the Court observes that the latter motion abandons several arguments raised in Plaintiff's First Motion. First, plaintiff initially asked the Court to vacate and reconsider its prior Opinion and Order, Doc. No. 83, dated March 28, 2006, which ordered arbitration. Plaintiff's First Motion, p. 8. However, plaintiff did not reiterate this request or otherwise address this issue in her Second Motion, apparently abandoning this request. Therefore, to the extent that plaintiff seeks reconsideration of the Opinion and Order, Doc. No. 83, that request is DENIED.
Next, plaintiff initially requested an order vacating, modifying and/or correcting the November 15, 2006 Award and the July 1, 2007 Award. Plaintiff's First Motion, p. 6. However, Plaintiff's Second Motion seeks to vacate, modify and correct only the June 18, 2007 Award. See, e.g., Plaintiff's Second Motion, pp. 1, 3, 9-10. As plaintiff has apparently abandoned her prior request, the initial request to vacate, modify and/or correct the awards of November 15, 2006 and July 1, 2007 is DENIED.
Finally, as discussed supra, plaintiff originally challenged the June 18, 2007 Award on ten grounds. See Plaintiff's First Motion, pp. 6-7. However, Plaintiff's Second Motion raises only two grounds for challenging the June 18, 2007 Award: i.e., that the arbitrator (1) exceeded his authority, and/or (2) manifestly disregarded the law. See, e.g., Plaintiff's Second Motion, pp. 3, 7-10, 13, 25. Therefore, to the extent that plaintiff seeks to vacate, modify and/or correct the June 18, 2007 Award on grounds other than that the arbitrator exceeded his authority, and/or manifestly disregarded the law, that request is DENIED.
C. Plaintiff's Request That the District Court Vacate the June 18, 2007 Award, in Part
Plaintiff requests that the Court vacate five parts of the June 18, 2007 Award. Plaintiff's Second Motion, pp. 3-31. The Court will address each in turn.
1. The arbitrator's award of $400.00 to Check$mart
On June 18, 2007, the arbitrator granted plaintiff's request for rescission "upon the return to Respondent, Buckeye Check Cashing, Inc. d/b/a Check$mart the sum of $400.00 advanced" to plaintiff. Award of Arbitrator, p. 6, attached as Exhibit 4 to Plaintiff's First Motion. In doing so, plaintiff argues that the arbitrator exceeded his authority in awarding Check$mart $400.00 because Check$mart waived its claim to reimbursement from plaintiff by failing to file a counterclaim for $400.00. Plaintiff's First Motion, pp. 3-7. Plaintiff contends that a claim for reimbursement from a consumer who elects rescission under the OCSPA is a Fed.R.Civ.P. 8(c) affirmative defense, which must be pleaded and proven. Id. at 4-7. Plaintiff argues that Check$mart asserted no such affirmative defense and that the arbitrator therefore exceeded his authority and manifestly disregarded the law by deciding an issue not submitted to him. Id. at 7. Plaintiff asks that the Court vacate this portion of the June 18, 2007 Award pursuant to 9 U.S.C. § 10(a)(4). Id.
9 U.S.C. § 10(a)(4) provides that a United States court "may make an order vacating the [arbitration] award upon the application of any party to the arbitration . . . where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made."
In response, Check$mart contends that plaintiff's reimbursement of the $400.00 that she originally borrowed from Check$mart is a natural consequence of rescission, which plaintiff requested and the arbitrator granted. Check$mart's Opposition to Second Motion, pp. 8-10. Specifically, Check$mart argues that Ohio law of rescission requires that the status quo be restored, therefore obligating plaintiff to return the $400.00 advanced to her by Check$mart and to restore the parties to their original positions. Id. Plaintiff acknowledges that the general rule in Ohio requires the person seeking rescission to return the money received, but contends for the first time in her reply that there are exceptions to this general rule. Plaintiff's Reply, p. 4.
Check$mart's argument is well-taken. The parties agree that, pursuant to the Contract dated April 24, 2002, Check$mart gave plaintiff $400.00. Stipulated Facts, Doc. No. 140-3, at ¶¶ 4-6, attached to Plaintiff's Second Motion as Exhibit 1. The parties further agree that plaintiff did not repay this amount to Check$mart. Id. at ¶ 22. During the arbitration proceedings, plaintiff requested an award of rescission. See, e.g., Claimant Tracy Passa's Post-Hearing Brief, p. 24, Doc. No. 142-3 (" Plaintiff's Post-Hearing Brief"), attached to Check$mart's Opposition to Second Motion. The arbitrator granted this request upon plaintiff's $400.00 reimbursement to Check$mart. See Award of Arbitrator, p. 6.
"The general rule [under Ohio law] is that a party seeking to rescind a contract or other instrument . . . must first place the other in statu quo, by returning all money, property, or other benefits received by him under the contract which is sought to be rescinded, or by making a tender thereof to the other party." Miller v. Bieghler, 123 Ohio St. 227, 233 (1931). See also Bell v. Turner, 172 Ohio App. 3d 238, 248 (4th Dist.Ct.App. 2007) ("The primary purpose of rescission is to restore the status quo and to return the parties to the position they would have been in had the contract not been formed."); Ady v. Miller Day Iseli Energy Co., No. 624, 1987 Ohio App. LEXIS 7242, at *5-6 (7th Dist.Ct.App. May 28, 1987) ("It is a well established general rule that a party who seeks the rescission or cancellation of a contract must first place the other party in statu quo by returning or offering to return all money, property or other benefits received under the instrument."). Accordingly, under Ohio law, plaintiff must return the $400.00 to Check$mart as a component of the grant of rescission sought by her. Id. Otherwise, "[i]t would be inequitable to grant to plaintiff that which she now claims and at the same time leave her in possession of that which she received[.]" Miller, 123 Ohio St. at 233. Therefore, plaintiff's argument that Check$mart may recover this amount only if it had asserted a counterclaim or an affirmative defense is without merit.
In her reply, plaintiff states in conclusory fashion that there are exceptions to the general rule that the party seeking rescission must return the benefit received. Plaintiff's Reply, p. 4. However, plaintiff fails to explain why this case qualifies as an exception to the general rule. Therefore, plaintiff's conclusory contention that she need not reimburse the $400.00 is unpersuasive. See, e.g., Miller, 123 Ohio St. at 233 ("Of course, there are exceptions to this rule [that the one seeking reimbursement return money or property received], but to bring a case within such exceptions, there should be averments of facts sufficient to show that the general rule does not apply.") (emphasis supplied). Accordingly, plaintiff has failed to meet the high burden of proving that the arbitrator exceeded his authority in requiring plaintiff to return $400.00 to Check$mart. See, e.g., Electronic Data Sys. Corp. v. Donelson, 473 F.3d at 688; Nationwide Mut. Ins. Co. v. Home Ins. Co., 429 F.3d at 643. Therefore, to the extent that plaintiff seeks to vacate the June 18, 2007 Award requiring plaintiff to return the sum of $400.00 to Check$mart, Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
2. The arbitrator's failure to award attorney's fees to plaintiff
Plaintiff next argues that the arbitrator exceeded his authority and manifestly disregarded the law in failing to award attorney's fees to her. Plaintiff's Second Motion, p. 8; Plaintiff's Reply, pp. 10 — 11. Plaintiff first contends that she "has a right to recover attorneys fees expended in proving knowing violations of the CSPA." Id. (citing O.R.C. § 1345.09(F)). Plaintiff later concedes that award of such fees is discretionary, but argues that Ohio law requires trial courts to explain a refusal to grant attorney fees. Id.
O.R.C. § 1345.09(F) provides:
The court may award to the prevailing party a reasonable attorney's fee limited to the work reasonably performed, if either of the following apply:
(1) The consumer complaining of the act or practice that violated this chapter has brought or maintained an action that is groundless, and the consumer filed or maintained the action in bad faith;
(2) The supplier has knowingly committed an act or practice that violates this chapter.
In response, Check$mart contends that fees under O.R.C. 1345.09(F) are discretionary. Check$mart's Opposition to Second Motion, pp. 10-11. Check$mart points out that the arbitrator never discussed the issue of attorney fees and that plaintiff never presented evidence to the arbitrator on this issue. Id. at 10. Check$mart further argues that the arbitrator was not required to explain his decision and that, absent an explanation, it is all but impossible to determine whether he manifestly disregarded the law. Id. at 11. In reply, plaintiff argues for the first time that the parties previously agreed that the issue of attorney's fees would be bifurcated. Plaintiff's Reply, p. 12. Plaintiff contends that the arbitrator did not deny her request for attorney's fees, but rather refused to hear evidence on the issue. Id.
Plaintiff's arguments are unpersuasive. First, as plaintiff concedes, attorney's fees are discretionary under the statute. See O.R.C. § 1345.09(F) (providing that attorney's fees "may" be awarded). See also Charvat v. Ryan, 116 Ohio St. 3d 394, *P27 (2007) ("The trial court has the discretion to determine whether [O.R.C. § 1345.09(F)] attorney fees are warranted under the facts of each case."). Therefore, the arbitrator was not required to award attorney's fees to plaintiff under O.R.C. § 1345.09(F).
Second, the cases cited by plaintiff to support an award of attorney's fees are inapplicable or distinguishable from the instant action. See Plaintiff's Second Motion, p. 8. For example, plaintiff's reliance on authority applying a mandatory damages provision under a different state's statute is misplaced. Id. (citing Ainsworth v. Skurnick, 960 F.2d 939, 939 (11th Cir. 1992) (involving violation of Florida state statute, Fla. Stat. § 517.211, which contains a mandatory damages provision). Similarly, plaintiff's reliance on authority requiring trial courts to explain their refusal to award attorney's fees under O.R.C. § 1345.09(F) is misplaced. Plaintiff's Second Motion, p. 8 (citing Snider v. Conley's Service, No. 1999CA00153, 2000 Ohio App. LEXIS 2601, at *11 (5th Dist.Ct.App. June 12, 2000) (requiring trial court to state the basis when making a fee determination under O.R.C. § 1345.09(F)). Instead, as previously noted, arbitrators are not required to explain their decisions and "it is all but impossible to determine whether they acted with manifest disregard for the law" if they choose not to explain a decision. See Dawahare v. Spencer, 210 F.3d at 669. The other cases cited by plaintiff establish nothing in her favor on this issue. Plaintiff's Second Motion, p. 8 (citing Cyrus v. Journey, No. 94CA2213, 1994 Ohio App. LEXIS 5454, at *12 (4th Dist. Ct. App. Nov. 30, 1994) (finding no abuse of discretion in discretionary award of fees); Smith v. Palm Harbor Homes, Inc., No. 05 CA 31, 2006-Ohio-5863, at **14 (5th Dist.Ct.App. Nov. 6, 2006) (finding "trial court erred in accepting the arbitrator's application of an erroneous legal standard for the award of CSPA attorney fees under R.C. 1345.09(F)(2)")).
Finally, plaintiff fails to support her contention that the parties previously agreed that the issue of attorney's fees would be bifurcated and that the arbitrator refused to hear evidence on this issue. Plaintiff's Reply, p. 12. She cites to her Post-Hearing Brief for this proposition, which contains only a conclusory statement with no citation to the record. See Plaintiff's Post-Hearing Brief, p. 24 n. 89 ("The arbitrator has bifurcated for separate determination Ms. Passa's demand for an award of her costs, expenses, and attorney fees."). Other than plaintiff's own unsubstantiated assertion, plaintiff cites nothing to establish that the arbitrator bifurcated the issue of attorney's fees or otherwise refused to hear evidence on this matter. Under these circumstances, plaintiff has not met her burden and the Court cannot conclude that the arbitrator exceeded his authority or manifestly disregarded the law in failing to award attorney's fees. See Home Ins. Co., 429 F.3d at 650; Dawahare, 210 F.3d at 669. Accordingly, to the extent that plaintiff seeks to vacate the June 18, 2007 Award because it failed to award plaintiff attorney's fees pursuant to O.R.C. § 1345.09(F), Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
3. The arbitrator's jurisdiction to determine remaining issues upon grant of rescission
Plaintiff argues that the arbitrator was without jurisdiction to determine the "remaining issues" upon his grant of rescission of the Contract between the parties. Plaintiff's Second Motion, pp. 8-9. More specifically, she contends that when the arbitrator granted rescission for Check$mart's violation of the OCSPA and the Ohio Check Cashing Business Act ("CCBA"), O.R.C. § 1315, et seq., the Contract between the parties was void ab initio and neither party had any rights or obligations under the rescinded Contract. Id. at 9. Therefore, according to plaintiff, "there never legally was a contract" and the arbitrator "should have declined to make an award on the FDCPA and OCPA claims due to the lack of a lawful agreement to arbitrate." Id.
In response, Check$mart contends that plaintiff's argument is new, and was never raised before the arbitrator. Check$mart's Opposition to Second Motion, pp. 11-12. Check$mart contends that the argument is inconsistent with Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), which held that allegations that an underlying contract is void cannot defeat arbitration. Check$mart's Opposition to Second Motion, at 12. Check$mart also points to other courts that enforced arbitration notwithstanding a rescission claim. Id. (citing Emcasco Ins. Co. v. Nasuti, 1992 U.S. Dist. LEXIS 1481 (E.D. Pa. Jan. 30, 1992); Unionmutual Stock Life Ins. Co. v. Beneficial Life Ins. Co., 774 F.2d 524, 528-29 (1st Cir. 1985)). Check$mart further argues that plaintiff's argument is illogical: Plaintiff first contends that the arbitrator lacked authority to decide the FDCPA and OCSPA claims, but later she asks the Court to confirm other parts of the June 18, 2007 Award decided in her favor. Id. at 13.
Plaintiff insists in reply that an arbitration clause is cancelled if a contract is rescinded. Plaintiff's Reply, pp. 6-7. Plaintiff contends that Buckeye Check Cashing "simply confirms that the merits of such arguments must be argued to the arbitrator, as was done here." Id. at 7.
Plaintiff's arguments are not well-taken. Plaintiff previously contested the validity of the Contract's arbitration provision when Check$mart moved to compel arbitration. See Plaintiff's Memorandum Opposing Motion by Buckeye Check Cashing, Inc. and BCCI Management Co., D/B/A/Check$mart, to Stay Proceedings and Compel Arbitration, Doc. No. 68. Challenges to an arbitration clause, as opposed to challenges to an entire contract, are decided by the district court. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 445-46; Prima Paint Corp. v. Flood Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967); Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Kean-Argovitz Resorts, 383 F.3d 512, 515 (6th Cir. 2004) ("[D]istrict courts may consider only claims concerning the validity of the arbitration clause itself, as opposed to challenges to the validity of the contract as a whole[.]"). Cf. Preston v. Ferrer, ___ U.S. ___, 128 S.Ct. 981.
The Contract contains an arbitration provision. The front page of the Contract reads:
SEE REVERSE FOR ARBITRATION PROVISION AND PRIVACY POLICY
The reverse side of the Contract includes the following language:
Agreement to Arbitrate and Disclosures: BY SIGNING THIS AGREEMENT, YOU AGREE THAT FOR ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY PRIOR AGREEMENT BETWEEN YOU AND US (COLLECTIVELY REFERRED TO AS "AGREEMENTS"), YOUR APPLICATIONS FOR SUCH AGREEMENTS, OR ANY INSTRUMENT RELATING TO THOSE AGREEMENTS, EITHER YOU OR WE OR THIRD-PARTIES INVOLVED CAN CHOOSE TO HAVE THE DISPUTE RESOLVED BY BINDING ARBITRATION AS SET FORTH IN THE PARAGRAPHS BELOW. BECAUSE THIS IS A WAIVER OF CERTAIN RIGHTS IT IS IMPORTANT THAT YOU READ THE ENTIRE ARBITRATION PROVISION CAREFULLY BEFORE SIGNING THIS AGREEMENT.Contract, p. 2, ¶ 1. The Contract further provides:
Scope: Any claim, dispute, controversy (whether in contract, tort, or otherwise, whether pre-existing, present, or future, and including statutory, common law, intentional tort and equitable claims) arising out of or relating to (I) this Agreement; (ii) any prior Agreements between you and us (iii) your application for this or any prior transaction with us; (iv) advertisements, promotions or oral or written statements relating to your Agreement with us or the relationships which result therefrom (including, th the full extent permitted by applicable law, relationships with third-parties who are not signatories to the Agreements or this Arbitration Provision); or (v) the validity, enforceability, or scope of this Arbitration Provision or the Agreements (collectively, "Claim") shall be resolved, upon the election of you or us or said third-parties, by binding arbitration pursuant to this Arbitration Provision.Id. at ¶ 2.
After construing the Contract provisions and the applicable case law, this Court previously determined that a valid agreement to arbitrate existed and referred all plaintiff's claims against Check$mart to arbitration. See Opinion and Order, Doc. No. 83. "Once the district court determines that a valid agreement to arbitrate exists, challenges to other distinct parts of the contract are to be resolved by the arbitrator." Kean-Argovitz Resorts, 383 F.3d at 515 (citing Prima Paint, 388 U.S. at 403-04). Accordingly, the arbitrator had authority to rule on all plaintiff's claims, including her claims arising under the FDCPA and the OCSPA.
The arbitrator's award of rescission does not change this result. "[A]s a matter of substantive federal arbitration, an arbitration provision is severable from the remainder of the contract." Buckeye Check Cashing, Inc., 546 U.S. at 445. See also Prima Paint, 388 U.S. at 403-04. Therefore, plaintiff's argument that the award of rescission vitiates the arbitration clause and the arbitrator's authority is without merit. See, e.g., Glazer v. Lehman Bros., Inc., 394 F.3d 444, 453 (6th Cir. 2005) (" Prima Paint merely 'indicated only that arbitration clauses are 'separable' from void or voidable provisions of a contract — not that they are independent contracts.'") (quoting Doctor's Assoc., Inc. v. Distajo, 66 F.3d 438, 452 (2nd Cir. 1995) (emphasis supplied); Wilharm v. M.J. Constr. Co., 118 Ohio App.3d 531, 534 (8th Dist.Ct.App. 1997) (citing Prima Paint, 388 U.S. 395) ("Where rescission of an entire contract containing an arbitration clause is sought, the traditional argument against having the arbitrator decide the matter '***is that rescission, if awarded by the arbitrator, vitiates the entire contract, including the arbitration agreement, thus removing the basis for the arbitrator's authority.' Domke on Commercial Arbitration (Rev. Ed. 1993), 99-100, Section 8:05. Courts, including the United States Supreme Court, '***have dealt with this problem by adopting the doctrine of separability from the principal agreement.'"). Cf. Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co., 774 F.2d 524, 528-29 (1st Cir. 1985) ("In this case, the arbitration clause is separable from the contract and is not rescinded by Beneficial's attempt to rescind the entire contract[.]").
Plaintiff's own inconsistent arguments further undermine her position that the arbitrator lacked authority upon grant of plaintiff's claim of rescission. As Check$mart points out, plaintiff first argues that the arbitrator lacked authority to decide the FDCPA and OCSPA claims. Plaintiff's Second Motion, pp. 8-9. However, plaintiff also contends that other portions of the June 18, 2007 Award should be confirmed, essentially conceding the arbitrator's authority despite the grant of rescission. Id. at 31-32. Thus, plaintiff has failed to meet the high burden of establishing that the arbitrator exceeded his authority in this issue. See, e.g., Electronic Data Sys. Corp., 473 F.3d at 688; Home Ins. Co., 429 F.3d at 650. Accordingly, to the extent that plaintiff seeks to vacate the June 18, 2007 Award because the arbitrator lacked jurisdiction to determine the plaintiff's FDCPA and OCSPA claims, Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
4. The arbitrator's determination that Check$mart did not act as a "debt collector" and that Check$mart did not violate the FDCPA
The FDCPA aims to "eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). The arbitrator determined that Check$mart was not a "debt collector" within the meaning of the Act. June 18, 2007 Award, pp. 3-4 (citing 15 U.S.C. § 1692a(6)).
With some exceptions not listed here, 15 U.S.C. § 1692a(6) defines "debt collector" as
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6) [ 15 USCS § 1692f(6)], such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests.
Plaintiff contends that the arbitrator manifestly disregarded the law in determining that Check$mart did not act as a "debt collector" and, therefore, did not violate the FDCPA. Plaintiff's Second Motion, pp. 9-25. Each of plaintiff's arguments will be addressed in turn.
a. Alleged FDCPA violation based on loan collection from Check$mart's Dublin, Ohio office
Plaintiff first asserts that the only legal creditor was Check$mart's location in Zanesville, Ohio, because it was that location that loaned money to plaintiff. Id. at 10-11. Plaintiff argues that it was Check$mart's "centralized corporate office" located in Dublin, Ohio, however, that actually attempted to collect on the loan. Id. at 11. Plaintiff concludes that Check$mart's collection activity from the Dublin office "constituted collection work by a third party to collect for the lawful creditor, not by the lawful creditor." Id. at 12 (emphasis in original). Plaintiff therefore argues that the arbitrator "ignored" the law and "presented no fact finding or legal analysis" when reaching his conclusion that Check$mart was not a debt collector within the meaning of the FDCPA. Id. at 10.
In response, Check$mart contends that the arbitrator properly found that its collection activities are exempt under 15 U.S.C. § 1692a(6)(B). Check$mart's Opposition to Second Motion, p. 14. Check$mart argues that plaintiff cites no authority to support her position that the application of 15 U.S.C. § 1692a(6)(B) turns on the related corporate entities sharing the same physical location. Id. Plaintiff insists in reply that the exception under 15 U.S.C. § 1692a(6)(B) is inapplicable because such exception applies only "if the principal business of such person is not the collection of debts." Plaintiff's Reply, pp. 8-9 (quoting 15 U.S.C. § 1692a(6)(B)). Plaintiff concludes that because the Dublin, Ohio location is principally a debt collector, it is subject to the FDCPA. Id.
This provision provides that the term "debt collector" does not include "any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts[.]" 15 U.S.C. § 1692a(6)(B).
The arbitrator specifically considered plaintiff's argument that the CCBA licensing structure "does not apply to action conducted other than by the particular licensed facility" and that "each license unit has to be looked at as a separate entity, and any activity conducted by another licensed unit or the parent company must be considered as if it were a third party." June 18, 2007 Award, p. 3. In rejecting the plaintiff's argument, the arbitrator stated:
The CCBA is specific in outlining the duties and prohibitions of a check cashing business and under the Statute, the Superintendent of Financial Institutions is given broad powers under Section 1315.42 to suspend or revoke the license of a particular facility if it violates its obligations under the law. In light of the extensive and open activity of Respondents in the collection procedure, if the law were to be read as suggested by Claimant, then one would expect the Superintendent would take regulatory action to end these activities. Since there is no evidence that the Superintendent has taken regulatory action against this type of collection procedure, one must assume that the activity is within Buckeye's statutory authority. . . . In addition, it would seem that Respondents' collection activities are specifically exempt by reason of the exclusion set forth in 15 USCA, Sec. 1692(a)(6)(B) [sic].
O.R.C. § 1315.42 provides, in pertinent part, that
[t]he superintendent of financial institutions shall, in accordance with Chapter 119. of the Revised Code, suspend or revoke a license issued pursuant to sections 1315.35 to 1315.44 of the Revised Code, if the superintendent determines that any of the following applies:
(1) The check-cashing business has failed to comply with any order issued by the superintendent pursuant to section 1315.43 of the Revised Code.
(2) The check-cashing business has continued to violate any provision of sections 1315.35 to 1315.44 of the Revised Code or any rule adopted under section 1315.43 of the Revised Code after receiving notice of such violation or violations from the superintendent.
(3) Any fact or condition exists that if it had existed or had been known to exist at the time of original or renewal licensure pursuant to sections 1315.35 to 1315.44 of the Revised Code, the fact or condition clearly would have warranted the superintendent to refuse to issue a license pursuant to those sections.
O.R.C. § 1315.42(A).
June 18, 2007 Award, pp. 3-4.
Plaintiff cites no case law interpreting the statutory language in 15 U.S.C. § 1692a(6)(B) holding that this exception to the definition of "debt collector" is inapplicable to related corporate entities located in different physical offices. Plaintiff's argument therefore amounts to nothing more than a mere disagreement with the arbitrator's statutory interpretation or an allegation that the arbitrator erred when interpreted 15 U.S.C. § 1692a(6)(B). As discussed supra, this Court's review of the June 18, 2007 Award is very narrow. See, e.g., Uhl v. Komatsu Forklift Co., 512 F.3d at 305. The June 18 2007 Award cannot be reversed simply because of a disagreement with the arbitrator's interpretation or because of a claimed error in interpretation. See, e.g., Sterling China Co., 357 F.3d at 556 ; Jaros, 70 F.3d at 421. Cf. Jack B. Blake and Cleveland Co., Inc. v. Transcommunications Inc., No. 01-2073-CM, 2004 U.S. Dist. LEXIS 7864, at *15-17 (D. Kan. Feb. 4, 2004) ("The fact that defendant disagrees with the arbitrator's interpretation and application of Tennessee's securities law does not mean the arbitrator displayed a manifest disregard of the law."); Arizona Premium Finance Co., Inc. v. Personal Surplus Lines, Inc., No. 97-3622, 2003 U.S. Dist. LEXIS 24000, at *2 (E.D. Pa. Aug. 28, 2003) (rejecting parties' statutory argument and finding no manifest disregard of the law where arbitrator specifically considered statute). Accordingly, plaintiff has failed to establish a manifest disregard of the law on the part of the arbitrator. Id. See also Sterling China Co., 357 F.3d at 556; Jaros, 70 F.3d at 421.
Plaintiff further complains that "[t]he arbitrator presented no fact finding or legal analysis as to why the Superintendent's failure to take steps against Respondent caused Respondent to fall outside of the mandates of the FDCPA." Plaintiff's Second Motion, p. 10. This argument is likewise insufficient to establish that the arbitrator manifestly disregarded the law. As previously discussed supra, the arbitrator need not explain his determination and his decision not to do so makes it "all but impossible to determine" whether he manifestly disregarded the law. See, e.g., Dawahare v. Spencer, 210 F.3d at 669. Moreover, the arbitrator's conclusion is legally plausible in light of the statutory framework cited by him and one cannot say that no judge or group of judges could conceivably come to the same determination. Jaros, 70 F.3d at 421. See also Electronic Data Sys. Corp., 473 F.3d at 691 (quoting Jaros, 70 F.3d at 421). Accordingly, plaintiff fails to establish that the arbitrator manifestly disregarded the law in this regard.
b. Alleged FDCPA violation based on Check$mart's use of the Check Resolution Program and a pseudonym
Plaintiff argues that Check$mart sent collection correspondence to plaintiff under the name BCCI Recovery, a Division of Check$mart, and through the City Prosecutor. Plaintiff's Second Motion, pp. 12-15. Plaintiff contends that such communication subjects Check$mart to the FDCPA because Check$mart used a different name to collect a debt, unlawfully suggesting that a third person attempted debt collection. Id. at 12-13 (citing 15 U.S.C. § 1692a(6) (subjecting entity to the FDCPA if "in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts"). In support, plaintiff first asserts that the arbitrator purposely refused to apply the correct standard, i.e., "the least sophisticated consumer standard," and instead considered only plaintiff's point of view. Id. at 13. Second, plaintiff contends that the arbitrator failed to consider certain evidence, namely two letters from the City Prosecutor's Check Resolution Program identified as exhibit J-4 and J-5. Id. at 13-16. Finally, plaintiff argues that the evidence and the applicable law establish that Check$mart violated the FDCPA. She requests an award for such violations. Id. at 16-25.
In response, Check$mart contends that the arbitrator correctly found that the use of a pseudonym would confuse no one, which necessarily includes the least sophisticated consumer. Check$mart's Opposition to Second Motion, pp. 14-15. Check$mart further contends that plaintiff's arguments that Check$mart violated the FDCPA, which were previously considered and rejected by the arbitrator, constitute mere disagreement with the arbitrator, insufficient to overturn the arbitrator's award. Id. at 15. If the arbitrator did not specifically address or reject these arguments in the award, Check$mart argues, it is all but impossible to determine that the arbitrator manifestly disregarded the law. Id. at 15-16. Check$mart concludes that the arbitrator correctly determined that the Check Resolution Program was a function of the Franklin County Municipal Court and not Check$mart's agent. Id. at 15. However, plaintiff insists in reply that, had the arbitrator applied the correct standard, he would have found that the letters sent by the City Prosecutor were misleading. Plaintiff's Reply, pp. 9-10.
Check$mart's arguments are well-taken. The arbitrator specifically considered the evidence and plaintiff's arguments regarding the Check Resolution Program and Check$mart's use of the pseudonym "BCCI Recovery, A Division of Check$mart":
Here the question is whether the City Prosecutor was acting as a Debt Collector on behalf of the Respondents.
The Check Resolution Program is a mediation program set up by the Franklin County Court System, under the encouragement of the Ohio Supreme Court, to facilitate the resolution of claims relating to "bad checks." The Program was not designed or established for Respondents or like businesses but to assist merchants in collecting checks that have been dishonored. The Program cannot be considered an agent of Respondents. It is simply a function of the Franklin County Municipal Court open to all citizens. The utilization of the Municipal Court System is within the exception written into the Agreement between the Parties. See Interim Award dated November 15, 2006.
Claimant also asserts jurisdiction based on Respondents' use in its collection process of a pseudonym "BCCI Recovery, A Division of Check$mart" when the evidence shows the "pay day" loan was made to Claimant by "Buckeye Check Cashing, Inc., d/b/a Check$mart. (Exhibits J 3, J 4, and J 5)
The FDCPA provides that a party will be subject to the requirements of the act if ". . . in the process of collecting its own debt, [the party] uses any name other than his own which would indicate that a third party is collecting or attempting to collect such debts." ( 15 USCA 1692(a)(6)) [sic]
Respondents sent correspondence under the name "BCCI Recovery, A Division of Check$mart." (J-3) In addition, it caused the Program to send at least two letters to Claimant identifying Check$mart. (J-4, J-5 and C-2) Claimant testified she knew the collection activity was being made by the company that made her the payday loan, i.e. Buckeye Check Cashing Inc., d/b/a Check$mart. Under these circumstances, it seems highly unlikely that anyone would be confused that someone other than Buckeye was attempting to collect the dishonored check.
In addition, it would seem that Respondents' collection activities are specifically exempt by reason of the exclusion set forth in 15 USCA, Sec. 1692(a)(6)(B) [sic].
Under these circumstances, I can not find any basis for the application of the FDCPA to Respondents or their activities and therefore Claimant's causes of action under FDCPA must be denied and dismissed with prejudice.
"J 3" is a collection notice dated June 21, 2002 from "BCCI Recovery, A Division of Check$mart" addressed to plaintiff's attention. Plaintiff Tracy Passa's Notice of Filing Arbitration Exhibits Pertinent to Plaintiff's 9 U.S.C. § 12 Notice of Motion to Confirm, Modify, Vacate and Correct the June 18, 2007 Award of the Arbitrator, Doc. No. 146-18. "J 4" and "J 5" are letters from the Check Resolution Program of the Columbus City Prosecutor's Office addressed to plaintiff's attention. Doc. Nos. 146-18 and 146-19.
"C-2" is a letter from the Check Resolution Program of the Columbus City Prosecutor's Office addressed to plaintiff's attention. Doc. No. 146-25.
June 18, 2007 Award, p. 4.
First, although the arbitrator did not use the specific phrase "least sophisticated consumer," the Court cannot conclude that the arbitrator disregarded and refused to apply that legal standard. By reasoning that "it seems highly unlikely that anyone would be confused" by Check$mart's use of a pseudonym, the arbitrator concluded that it is very likely that no one — even the least sophisticated consumer — would be confused by "BCCI Recovery, A Division of Check$mart." Thus, the arbitrator's award meets the purpose of the least sophisticated consumer standard to ensure that "all consumers, the gullible as well as the shrewd[,]" are protected under the FDCPA. See Fed. Home Loan Mortg. Corp. v. Lamar, 503 F.3d 504, 509 (6th Cir. 2007) (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993)). To vacate this portion of the award merely because the arbitrator failed to use the specific words "least sophisticated consumer" "would exalt form over substance, and serve no useful purpose." D.E.I., Inc. v. Ohio Vicinity Reg'l, 296 F. Supp. 2d 881, 885 (N.D. Ohio 2003) (stating that arbitrators would have been well-advised to include particular language in their findings, but that the absence of such specificity did not require the court to vacate or remand the case to the arbitrators). Accordingly, plaintiff cannot meet the high standard of establishing that the arbitrator consciously refused to apply the least sophisticated consumer standard. See Dawahare, 210 F.3d 666 at 669.
Second, contrary to plaintiff's contention, the arbitrator considered the letters from the City Prosecutor, J-4 and J-5. Id. Applying the "least sophisticated consumer" standard, the arbitrator rejected the argument that the letters constituted a FDCPA violation and determined that the Check Resolution Program "cannot be considered an agent of" Check$mart. Id. Therefore, plaintiff's contention that the arbitrator would necessarily have found that the letters sent through the Check Resolution Program violated the FDCPA had he applied the "correct legal standard" is without foundation. Plaintiff's Reply, p. 10.
Finally, plaintiff argues at length that the evidence and law prove that Check$mart violated the FDCPA. Plaintiff's Second Motion, pp. 16-25. These arguments are taken, word for word, directly from plaintiff's post-hearing brief, Plaintiff's Post-Hearing Brief, Doc. 142-3, pp. 9-15, and were implicitly rejected by the arbitrator. June 18, 2007 Award, p. 4. Plaintiff acknowledges this determination, but nevertheless persists in her contention that Check$mart violated the FDCPA. Plaintiff's Second Motion, pp. 16-25. Plaintiff's argument therefore amounts to nothing more than a disagreement with the arbitrator's decision, which is an insufficient basis for vacating the June 18, 2007 Award. See, e.g., Sterling China Co., 357 F.3d at 556.
Finally, to the extent that plaintiff complains that the arbitrator did not explain a part of the June 18, 2007 Award, this argument likewise fails to meet the high standard for vacating an arbitration award. As discussed supra, it is nearly impossible to conclude that an arbitrator manifestly disregarded the law when he or she chooses not to explain a decision. See, e.g., Dawahare, 210 F.3d at 669. Accordingly, to the extent that plaintiff seeks to vacate the June 18, 2007 Award because the arbitrator manifestly disregarded the law when determining that Check$mart was not a "debt collector" and therefore did not violate the FDCPA, Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
Plaintiff argues in reply that the arbitrator did not have jurisdiction to find that Check$mart was exempt from the FDCPA because Check$mart failed to plead this exemption as an affirmative defense. Plaintiff's Reply, p. 9. For the reasons stated supra, this argument is without merit.
5. The arbitrator's determination that Check$mart is exempt from the OCSPA
The OCSPA prohibits unfair, deceptive or unconscionable acts or practices "in connection with a consumer transaction." O.R.C. §§ 1345.02(A); 1345.03(A). With some exceptions not relevant here, a "consumer transaction" "does not include transactions between persons, defined in sections 4905.03 and 5725.01 of the Revised Code, and their customers[.]" O.R.C. § 1345.01(A) (emphasis supplied). A "person" includes a "dealer in intangibles." O.R.C. § 5725.01(B)(1). A "dealer in intangibles" "includes every person who keeps an office or other place of business in this state and engages at such office or other place in a business that consists primarily of lending money[.]" Id.
Construing these provisions and Ohio precedent, the arbitrator determined that Check$mart was exempt from the application of the OCSPA. June 18, 2007 Award, pp. 4-5 (citing King v. Cashland, Inc., No. 18208, 2000 Ohio App. LEXIS 3943 (2nd Dist.Ct.App. Sept. 1, 2000) (finding that defendant, which provided small unsecured loans to its customers, was a dealer in intangibles under O.R.C. § 5725.01 and therefore exempt from the OCSPA)). Plaintiff argues that the arbitrator manifestly disregarded the law when it relied on King to reach this determination. Plaintiff's Second Motion, pp. 25-31. Relying on the CCBA, O.R.C. § 1315.38, plaintiff contends that King is distinguishable from the instant case. Id. at 25-27. Plaintiff notes that the only relationship that she had with Check$mart was through its licensed Zanesville, Ohio, office and not the Dublin, Ohio, office that attempted collection. Id. at 26. Plaintiff contends that because she was not a "customer" of the Dublin office, Check$mart falls under the OCSPA. Id. Plaintiff further argues that Check$mart violated the OCSPA by engaging in unfair, deceptive or unconscionable collection activities. Id. at 27-31.
In response, Check$mart contends that the arbitrator properly relied on King to determine that it was exempt from the OCSPA. Check$mart's Opposition to Second Motion, p. 16. Check$mart also argues that plaintiff cites to no authority to support her position in this regard. Id. Check$mart further contends that, even if the arbitrator misapplied King, that misapplication is insufficient to show manifest disregard of the law. Id. In reply, plaintiff insists that King is inapplicable. Plaintiff's Reply, pp. 10-11. Specifically, plaintiff argues that Check$mart is a "check-cashing business" and not a "dealer in intangibles." Id.
Plaintiff's arguments are not well-taken. These arguments were previously raised in arbitration, Plaintiff's Post-Hearing Brief, pp. 15-21, and were considered and rejected by the arbitrator:
Claimant again relies on the licensing structure of the CCBA to support its allegation of violation of the OCSPA. Claimant alleges that any relationship between the Parties could only be between Claimant and the specific licensed location in Zanesville, Ohio. Since all of the actions of which Claimant complains were conducted out of Respondents' Dublin Collection Department, Claimant asserts, they come with [sic] the conscripts of the OCSPA.
Respondents argued they are exempt from the conscripts of the OCSPA as they are an organization exempt pursuant to Section 1345.01(A) which includes "dealers in intangibles." Respondents rely on King vs. Cashland, Inc., 2000 Ohio App Lexis 3943 (Ohio Court of Appeals 9/1/2000). The Court in Cashland found Cashland's payday advance transactions were exempt from the OCSPA as Cashland was a "dealer in intangible". [sic] I am bound by precedent and must conclude that Buckeye is similarly exempt from the OCSPA.
The Courts [sic] analysis is consistent with OCSPA, which specifically provides in Section 1345.08, that if the Attorney General receives information which indicates noncompliance with Chapter 1345 (The Consumer Sales Practice Act) by a "supplier" subject to the supervision of another State administrative office, the Attorney General is to notify the other state office of the information so that appropriate action can be taken.
June 18, 2007 Award, pp. 4-5.
Plaintiff's attempts to distinguish King are unavailing. Like Check$mart, the defendant in King was "engaged in the business of providing small unsecured loans to its customers." King, 2000 Ohio App. LEXIS 3943, at *2. For the reasons discussed supra, the Court does not accept plaintiff's argument that the Dublin office is not a separate licensed location. Therefore, plaintiff's contention that she cannot be a customer of the Dublin office must necessarily fail.
Equally unavailing is plaintiff's argument that Check$mart is not a dealer in intangibles. Plaintiff's Second Motion, pp. 26-27; Plaintiff's Reply, pp. 10-11. Other than plaintiff's own statutory interpretation, she offers no other authority that the arbitrator erred in relying on King. Under these circumstances, the Court concludes that it was legally plausible for the arbitrator to rely on King when determining that Check$mart was exempt from the OCSPA. See Jaros, 70 F.3d at 421. As previously discussed, plaintiff's disagreement with the arbitrator's interpretation and application of King is insufficient to constitute manifest disregard of the law. See, e.g., Sterling China Co., 357 F.3d at 556. Accordingly, to the extent that plaintiff seeks to vacate the June 18, 2007 Award because the arbitrator manifestly disregarded the law when determining that Check$mart was exempt from the operation of the OCSPA, Plaintiff's First Motion and Plaintiff's Second Motion are DENIED.
Plaintiff also argues in reply that the arbitrator lacked jurisdiction to find that Check$mart was exempt from the OCSPA because Check$mart failed to plead this exemption as an affirmative defense. Plaintiff's Reply, p. 11. For the reasons stated supra, this argument is without merit.
D. Plaintiff's Request That the District Court Confirm the June 18, 2007 Award, in Part, and Check$mart's Request That It Be Confirmed in Its Entirety
Plaintiff seeks to confirm two portions of the June 18, 2007 Award. Plaintiff's Second Motion, pp. 31-32. First, plaintiff contends that the arbitrator's decision finding that Check$mart's failure to plead a statute of limitations defense to plaintiff's FDCPA and OCSPA claims constitutes waiver. Id. See also June 18, 2007 Award, p. 2. Plaintiff next asks the Court to confirm the arbitrator's decision finding that Check$mart violated the CCBA. Plaintiff's Second Motion, p. 32. See also June 18, 2007 Award, p. 5.
In response, Check$mart states that, although it disagrees with portions of the June 18, 2007 Award, it believes that the Award should be confirmed in its entirety. Check$mart's Opposition to Second Motion, pp. 18-19.
As noted supra, the FAA presumes that courts will confirm arbitration awards. Dawahare v. Spencer, 210 F.3d at 669. Section 9 of the FAA provides:
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.9 U.S.C. § 9. See also Wachovia Sec., Inc. v. Gangale, Nos. 03-4441/4462/4625/4628, 125 Fed. Appx. 671, 676 (6th Cir. Mar. 16, 2005).
The Court has not vacated, modified or corrected the June 18, 2007 Award. See supra. The Contract specifically provides that arbitration shall be "binding." Contract, p. 2, ¶¶ 1 and 2. By asking the Court to confirm portions of or the entire June 18, 2007 Award, the parties implicitly agree that the Contract provides consent to this Court's confirmation of that Award. Cf. J.L. Forti Constr. Co., Inc. v. Laborers' Int'l Union of North Am., Bldg. and Constr., 742 F.2d 994, 999 n. 1 (6th Cir. 1984) (Kennedy, J., concurring) (noting that courts have held that contract language stating that an arbitrator's award shall be "final and binding" is sufficient to permit enforcement); Nationwide Mut. Ins. Co. v. Randall Quilter Reinsurance Co., No. C2-07-120, 2007 U.S. Dist. LEXIS 95953, at *11 (S.D. Ohio Jan. 24, 2008) (holding that the "final and binding" language in reinsurance contracts "was sufficient to constitute consent to judicial confirmation of the arbitration award"). Therefore, the June 18, 2007 Award is CONFIRMED in its entirety. Accordingly, to the extent that plaintiff seeks to confirm only two parts of the award, Plaintiff's First Motion and Plaintiff's Second Motion is DENIED.
E. Check$mart's Request That It Be Dismissed From This Action
Check$mart requests that the Court dismiss it from this action because, in light of the arbitration, there remains no actual case or controversy between it and plaintiff. Check$mart's Opposition to Second Motion, p. 19. Plaintiff notes in response that there is no pending motion to dismiss and argues that Check$mart must await confirmation of the June 18, 2007 Award before filing such a motion. Plaintiff's Reply, p. 13 n. 2.
The dismissal of Check$mart may have broad implications in this action, including impact on class issues to be considered by all parties. Therefore, the Court concludes that Check$mart's request for dismissal is not appropriate for resolution at this time.
WHEREUPON, in light of the foregoing analysis, Plaintiff Tracy Passa's Motions Under 9 USC §§ 9- 12, Doc. No. 133, and Plaintiff Tracy Passa's Motion to Confirm, Modify, Vacate and Correct the June 18, 2007 Award of the Arbitrator, Doc. No. 140, are DENIED. The June 18, 2007 Award is CONFIRMED in its entirety. Furthermore, Check$mart's request that it be dismissed is DENIED at this time. As previously ordered by this Court, Order, Doc. No. 139, plaintiff, if she wishes to do so, has twenty-one days from the date of this Order to file a supplemental motion to certify.