Arbitration has been a hot topic in legal circles and court opinions over the last decade. The U.S. Supreme Court and Federal Appeals courts have issued a number of high-profile decisions addressing issues of the enforceability of arbitration agreements, who gets to decide the threshold issue of arbitrability, and whether class claims can be decided in arbitration. Proponents of arbitration argue that it is quicker and less expensive than traditional litigation and provides greater confidentiality than the public court record. Opponents argue that it provides fewer avenues for discovery and allows unscrupulous defendants to shield their unsavory conduct or practices from the public eye.
Regardless of which side of the argument you fall on, the undeniable truth is that arbitration agreements are ubiquitous. Consumers find them in everything from cellphone contracts to gym membership agreements and everything in between. Many employers include them in employment contracts requiring employees to arbitrate claims of discrimination or harassment. And nearly all car dealerships include them in their sales contracts. In short, arbitration agreements are impossible to escape in modern life.
One customer of Hyline Auto Sales, a used car dealer, found this out the hard way. In April 2019, the plaintiff, Jason Taylor, purchased a vehicle from Hyline. Included in his sales contract was an agreement to submit disputes for arbitration by the Better Business Bureau (BBB).
Only weeks after his purchase, Taylor filed an arbitration demand with the BBB. After no response from the BBB for a week, Taylor wrote the BBB asking for a hearing date. He requested a hearing again on May 1, 2019. On May 27, 2019, Taylor again wrote the BBB and asked for the appointment of an arbitrator. Over the following several months, Taylor contacted the BBB dozens of times requesting the appointment of an arbitrator and to set an arbitration date, without success.
Finally, after nearly a year of failing to have an arbitrator appointed or nailing down an arbitration date, the plaintiff filed a declaratory judgment action seeking to have the arbitration agreement declared null and void. He argued that its purpose had been frustrated by the refusal of the BBB to set an arbitration date or even appoint an arbitrator. Taylor argued that the BBB’s actions of making him wait nearly 10 months without even having a hearing date set violated its own rules which provided that it would make efforts to have disputes resolved within 60 days. Hyline responded by seeking to have the lawsuit dismissed and instead requested that the judge enter an order compelling arbitration of Taylor’s claims per the parties’ arbitration agreement.
The trial court ultimately granted the defendant’s request and dismissed the case and compelled arbitration. The court found that the BBB had not promised to resolve the dispute in 60 days but rather had only promised to make reasonable efforts to resolve disputes within such a period. The court ruled that the parties must continue their efforts to arbitrate the dispute. Taylor appealed.
Taylor’s appeal did not get off to a great start. The Court began its opinion by noting that “the decision of whether to compel arbitration is not discretionary. Where there is a valid arbitration agreement and the parties’ dispute falls within the scope of that agreement, arbitration is mandatory and the trial court must compel it.” Accordingly, the Court noted, “the only issue for the circuit court is whether an agreement exists to arbitrate the dispute in question.” Since there was no question that an arbitration agreement between the parties existed, “the trial court had no discretion to deny the motion to compel arbitration,” the Court concluded. Taylor’s frustration with the length of time it was taking for the matter to be arbitrated by the BBB did not constitute a valid defense to enforcement of the arbitration agreement, the Court explained.
The lesson from this case is that arbitration agreements once executed are very difficult to avoid. Delay in the arbitration process, even as long as 10 months, does not provide a valid excuse not to enforce an arbitration agreement.
The Court’s full opinion is available here.
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