Caldwell v. Jim Ray, Inc. et al
ORDER denying 37 Motion to Stay Ruling on Defendants' Motion to Sever Claims of Plaintiffs; granting 32 Motion to Sever Claims of Plaintiffs, with filing fees for 58 newly created cases waived; denying 30 Motion for Referral to Arbitration and Stay Judicial Proceedings, without prejudice to being renewed as to any discrete claim once severance is accomplished; terminating 34 Motion for Summary Judgment and 39 Motion to Treat Documents 34, 35 and 36 as Rule 12 Motion without prejud ice to their renewal on a case specific basis. Plaintiff(s)in each of the 59 cases are directed to file an amended complaint setting forth their specific allegations, within 30 days from the date of this Order. Answers to amended complaints shall be filed within 11 days of the filing of each amended complaint. July 31, 2006, trial setting is continued sine die. Signed by Judge Jimm Larry Hendren on June 29, 2006.
Caldwell v. Jim Ray, Inc. et al
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I N THE UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF ARKANSAS F O R T SMITH DIVISION B R A N D Y LINDY, v. et al. C i v i l No. 05-2171 P L AI N TI F FS
J I M RAY, INC., an Arkansas corporation, d/b/a JIM RAY NISSAN of Fort Smith, Arkansas, and these individuals: BILLY C O O P E R , MARK VANDERMOLEN, and JIM RAY ORDER
D E FE N DA N TS
N o w on this 29th day of June, 2006, come on for consideration t h e following motions: * d e f e n d a n t s ' Motion To Compel Arbitration And Stay Judicial P r o c e e d i n g s (document # 30); * d e f e n d a n t s ' Motion To Sever Claims Of Plaintiffs (document # 3 2 ) ; and * P l a i n t i f f s ' Motion To Stay Ruling On Defendants' Motion T o Sever Claims Of Plaintiffs (document #37); and from said motions, the supporting documentation, and the
r e s p o n s e s thereto, the Court finds and orders as follows: 1. P l a i n t i f f s are 80 1 individuals who allege that they were
c h e a t e d in the course of 59 different vehicle purchase transactions a t defendant Jim Ray Nissan of Fort Smith, Arkansas. The individual d e f e n d a n t s are the owner, manager, and sales manager at Jim Ray N i ss a n.
1 Most of the pleadings to date have claimed there are 79 plaintiffs. The Court has taken its count not from the style of the case, but from the allegations contained in the Third Amended Complaint, and believes there are 80 individual plaintiffs.
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T h e case was initially filed by plaintiff Brandy Lindy in the C i r c u i t Court of Sebastian County, Arkansas, on August 8, 2005. A f t e r it was twice amended, to add plaintiffs and several federal c l a i m s , defendants removed the matter to this Court. After removal, t h e Complaint was again amended, to add still more plaintiffs. 2. O n January 24, 2006, the Court issued a Scheduling Order At that point,
s e t t i n g the matter down for trial on July 31, 2006.
d e f e n d a n t s brought to the Court's attention their concerns that t r i a l of the case would be lengthy, given the multiplicity of, and d i s s i m i l a r i t y between, the claims of the plaintiffs. Upon review of the pleadings, and having concerns that the c l a i m s of the plaintiffs might not be properly joined, the Court d i r e c t e d the parties to brief the issue of severance. O n May 25, 2006, finding the briefs submitted by the parties l e s s than fully satisfactory in helping to resolve the severance i s s u e , the Court set the matter down for a status conference. B e f o r e that conference could take place, defendants filed their m o t i o n s now under consideration, as well as a motion for summary j u d g m e n t as to plaintiffs' RICO claim, one of the federal causes of a c ti o n.2
Plaintiffs suggest that the Court resolve the Motion For Summary Judgment before addressing the Motion To Compel Arbitration, contending that "[i]f the RICO count is dismissed, there will no longer be a basis for federal subject matter jurisdiction," and the Court "would lack jurisdiction to rule on the arbitration motion." This is not a correct statement of the law. The Court's jurisdiction in this case depends upon the federal claims (both RICO and the Magnuson-Moss Warranty Act), and if it were to dismiss those claims, it might decline to exercise jurisdiction over plaintiffs' state law claims, pursuant to 28 U.S.C. §1367(c)(3), but it would not be deprived of jurisdiction in such an instance.
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I n support their of Motion To Compel Arbitration And Stay
J u d i c i a l Proceedings, defendants assert that 41 of the contracts at i s s u e (encompassing the claims of all but 13 plaintiffs) contain a r b i t r a t i o n agreements subject to the Federal Arbitration Act. I n opposition, plaintiffs argue that defendants have waived t h e i r rights to arbitration by failing to assert them in the nine m o n t h s following the filing of their initial Answer - a period of t i m e during which substantial discovery took place and substantial s u m s were expended in preparing for trial. d i sc o ve r y would not have been They contend that this to defendants in
a r b i t r a t i o n , and that if arbitration is ordered, they would be p r e j u d i c e d by having to prepare for each arbitration, as well as for t r i a l of the claims as to which no arbitration provisions are a p pl i ca b le . Plaintiffs also argue that defendants are not parties to any of t h e arbitration agreements, and thus cannot enforce them. F i n a l l y , plaintiffs state that "there are numerous individual d e f e n s e s to the various arbitration claims," and ask for additional t i m e to raise those defenses. 4. T h e question of whether or not parties to a contract have
a g r e e d that a particular dispute is subject to arbitration is a g a t e w a y issue for determination by a court, unless the parties p r o v i d e otherwise, but the question of whether or not a party has w a i v e d its right to arbitration is presumptively a matter that the
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a r b i t r a t o r should decide. Howsam v. Dean Witter Reynolds, Inc., 537 U . S. 79 (2002). The Court must, therefore, defer the waiver
d e c i s i o n to the arbitrator as to any plaintiff's claim that is s u b j e c t to arbitration. 5. T h e question of whether any given plaintiff's claim is
s u b j e c t to arbitration (as well as the other arguments mounted by p l a i n t i f f s in opposition to arbitration) brings into focus the point a t which the arbitration issue arose, i.e., whether plaintiffs' c l a i m s are appropriately joined in one case. The Third Amended Complaint in this matter is 143 pages long, and contains 810 numbered paragraphs. Plaintiffs' claims are
i n i t i a l l y introduced by means of a chart categorizing the various f r a u d techniques alleged to have been perpetrated on them. Each
p l a i n t i f f (or pair of plaintiffs) alleges being cheated using from o n e - up to as many as four - of these categories. Several pages are r e q u i r e d to detail the specific allegations of each plaintiff or p a i r of plaintiffs. Some, but not all, plaintiffs also allege fraud i n the inducement of their contracts, violations of the MagnusonM o ss Warranty Act, violations of the Arkansas Deceptive Trade
P r a c t i c e s Act, invasion of privacy, and tortious interference with c o nt r ac t . One plaintiff even alleges battery. Different forms of
d a m a g e s are sought by the various plaintiffs. C o n s i d e r a t i o n of the foregoing has led the Court to conclude t h a t the claims of the plaintiffs are not properly joined in this
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c a se . r e le v an t
p l a i n t i f f s if they assert any right to relief . . . severally, . . . in respect of or arising out of the same transaction, occurrence, o r series of transactions or occurrences. . . ." In this case, each
p l a i n t i f f ' s (or pair of plaintiffs') claim to relief arises out of a separate transaction. While the transactions may be part of a
" s e r i e s of transactions," that is really only so because they are p a r t of the business being conducted by the defendants, i.e., s e l l i n g vehicles. It is not the "same" series of transactions. The
C o u r t has, therefore, concluded that the claims of the plaintiffs in t h i s matter are too dissimilar to merit their joinder. This conclusion is strengthened by plaintiffs' arguments with r e g a r d to the Motion To Compel Arbitration. Each transaction
i n v o l v e d a different contract, some of which had arbitration clauses a n d some of which did not. has allegedly varied so The subsequent course of those contracts greatly some being assigned, some
c a n c e l l e d - that the plaintiffs contend each must be allowed to a s s e r t his, her, or their own individual defenses to the issue of a r bi t ra t io n . Where parties are not properly joined in a case, F.R.C.P. 21 a u t h o r i z e s that party to "be severed and proceeded with separately." T h e Court finds that to be the appropriate method of handling this c a se , and will, therefore, grant defendants' Motion To Sever.
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B e c a u s e the Court has concluded that there is no need to hear oral a r gu m en t s on the issue, To Plaintiff's Sever Claims Motion Of To Stay Ruling which On is
D e fe n da n ts '
e s s e n t i a l l y a request that the Court defer ruling on the Motion To S e v e r until a status conference is held, will be denied. 6. T h e following guidelines will be observed with regard to
t h e severance: * T h e Clerk of Court is to sever from Brandy Lindy's case
e a c h of the following numbered discrete claims, placing each into a s e p a r a t e newly-created case: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. J e n n i f e r Dumond D o r i s Reynolds T a b a t h a Caldwell M e l a n i e Taylor and Michael Nixon D e n n i s and Connie Meadors J a s o n Runyon G a r y Whittington H a r o l d Slusher S h e r r y Cobb S a m Cross G a r y Graver S u z e l l Gillooley H a n h Van Nguyen M a r y Gattis S h i r l e y Ann Nichols L i s a McGee H e a t h e r Shelby M a r y Wilson J i m m y West A a r o n and Lanna Rice L a D o n n a Brown and Haven Plaster W e n d y Jo Baxter J . D . Swafford and Pam Wisdom A r n u l f o and Maria Manjarrez C h e r r y and Breanna Wibbing J e n n i f e r McDaniel and Timmy Adams M e l i s s a Pittman C h r i s t i n e Redford
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29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. *
B i l l and Laura Franklin C l a y t o n and Lisa Matthews L e A n n e t t e Simpson P o n c i a n o Flores R e b e c c a Harris D o n n i e Kendrick P h i l l i p and Donnie Jo Sanders D a n i e l Bahr V i c k e y Simmons R o y (Chris) Burkhart K e l l y Ann Ray T i n a McNeil F o n d a Caldwell A l i s h a Shepard and Rosie Cravens D a n i e l and Trina Garnes B i l l and Mary Warren F l o y d Everly K a r a Belt J a m e s Darrohn B r a n d o n and Jacqueline Piercy S t e p h e n Cross J o h n and Lori Greer K e v i n and Delta Jacobs D e A n n a Brewer and Betty Kerschner M a n u e l Hinojosa and Joe Fisher T e r r i and Michael Arredondo P a t r i c k McGuire S a r a Norton C h e r y l Gwaltney E . B . "Chad" Lowe, III and Sharon Lowe T h e pleadings from the instant case are to be copied to
e a c h of the newly created cases, so that the docket and file of each w i l l fully reflect the history of that case. * * For F i l i n g fees for the 58 newly created cases will be waived. A l l pending motions except for plaintiff Lindy's Motion Summary Judgment (document #9) and those motions
r e s o l v e d by this Order will be terminated, without prejudice to t h e i r renewal on a case-specific basis. * T h e plaintiff or plaintiffs in each of the resulting 59
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c a s e s (including the instant case, which will be retained with only B r a n d y Lindy as plaintiff) are directed to file an amended complaint s e t t i n g forth his, her, or their specific allegations, within thirty ( 3 0 ) days of this Order. * A n s w e r s to such amended complaints will be due within
e l e v e n (11) days of the filing of each such amended complaint. * A copy of this Order is to be made a part of each newly-
c r e a t e d case. I T IS THEREFORE ORDERED that defendants' Motion To Compel A r b i t r a t i o n And Stay Judicial Proceedings (document # 30) is denied, w i t h o u t prejudice to being renewed as to any discrete claim once s e v e r a n c e is accomplished. I T IS FURTHER ORDERED that defendants' Motion To Sever Claims Of Plaintiffs (document #32) is granted, with the details of
s e v e r a n c e to proceed as directed in ¶6 of this Order. I T IS FURTHER ORDERED that Plaintiffs' Motion To Stay Ruling On D e f e n d a n t s ' Motion To Sever Claims Of Plaintiffs (document #37) is d e ni e d. I T IS FURTHER ORDERED that the July 31,2006, trial setting for t h i s matter is continued sine die. I T IS SO ORDERED. /s/ Jimm Larry Hendren JIMM LARRY HENDREN U N I T E D STATES DISTRICT JUDGE
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