Arabian Motors Group W.L.L. v. Ford Motor Company
OPINION AND ORDER Denying Plaintiff's 5 Motion for Preliminary Injunction to Stay Arbitration. Signed by District Judge Matthew F. Leitman. (HMon)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
ARABIAN MOTORS GROUP W.L.L.,
Case No. 16-cv-13655
Hon. Matthew F. Leitman
FORD MOTOR COMPANY,
OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR
PRELIMINARY INJUNCTION TO STAY ARBITRATION (ECF #5)
In 2005, Plaintiff Arabian Motors Group W.L.L. (“Arabian Motors”), a
Kuwaiti automobile dealer, and Defendant Ford Motor Company (“Ford”) entered
into an agreement under which Ford sold vehicles to Arabian Motors for resale to
customers in the Middle East (the “Resale Agreement”). The Resale Agreement
contains an arbitration provision that requires the parties to arbitrate certain
disputes related to the agreement. After a dispute between the parties arose, Ford
commenced arbitration. Arabian Motors contends that it cannot be compelled to
arbitrate its dispute with Ford, and it now moves the Court to enjoin Ford from
proceeding with the arbitration (the “Motion”). (See ECF #5.)
Before the Court considers Arabian Motors’ request for an injunction, it
must answer a preliminary question: who should decide whether Arabian Motors
can be compelled to arbitrate its dispute with Ford – the Court or the arbitrator?
The Resale Agreement incorporates arbitration rules that delegate questions of
arbitrability to the arbitrator, and such a delegation would ordinarily require
Arabian Motors to submit its objection to arbitration to the arbitrator rather than to
the Court. But Arabian Motors says that a federal statute, the Motor Vehicle
Franchise Contract Arbitration Fairness Act (the “Fairness Act” or the “Act”), 15
U.S.C. § 1226, renders the delegation unenforceable. The Court disagrees. For the
reasons explained below, the Fairness Act does not apply to contracts – like the
Resale Agreement – between manufacturers and foreign dealers. Therefore, the
parties’ agreement to delegate questions of arbitrability to the arbitrator remains
enforceable, and the arbitrator, not the Court, must decide whether Arabian Motors
can be compelled to arbitrate its dispute with Ford. Accordingly, the Motion is
Arabian Motors is a corporation organized under the laws of Kuwait. (See
ECF #5-1 at 2, Pg. ID 225.) Ford is an automobile manufacturer headquartered in
Dearborn, Michigan. (See id.) On May 2, 2005, Arabian Motors and Ford entered
into the Resale Agreement in Dearborn, Michigan. (See id.)
Agreement appoints Arabian Motors as an authorized dealer of Ford products in
Kuwait. (See id.)
In the Resale Agreement, Arabian Motors and Ford agreed to arbitrate any
“dispute, claim or controversy … in connection with the breach, implementation,
invalidity, or termination” of the Resale Agreement that the parties could not
resolve through informal negotiations. (Resale Agmt. at ¶14, ECF #5-1 at 22-23,
Pg. ID 245-46.) Specifically, the parties agreed that any unresolved disputes
would be subject to “binding arbitration in accordance with the United Nations
Commission on Trade Law [“UNCITRAL”] Arbitration Rules in effect on the
date” the Resale Agreement was executed. (Id. at ¶14(b), ECF #5-1 at 22-23, Pg.
ID 245.) Those rules provided, among other things, that “the arbitral tribunal shall
have the power to rule on objections that it has no jurisdiction, including any
objection with respect to the existence or validity of the arbitration clause or of the
separate arbitration agreement.” 1976 UNCITRAL Arbitration Rules, Rule 21.
The relationship between Arabian Motors and Ford apparently began to
deteriorate in 2014. Two years later, on March 14, 2016, Ford sent written notice
to Arabian Motors terminating the Resale Agreement effective July 27, 2016 (the
“Notice of Termination”). (See ECF #5-2 at 44-46, Pg. ID 295-97.)
On March 31, 2016, Ford submitted a Notice of Arbitration and Statement of
Claim (the “Arbitration Demand”) to the American Arbitration Association (the
“AAA”). (See Arbitration Demand, ECF #5-2 at 2-16, Pg. ID 253-267.) The
Arbitration Demand sought a “declaratory judgment that Ford properly terminated
the [Resale Agreement] for any and/or all reasons stated in the [Notice of
Termination] and is not liable to [Arabian Motors] for terminating the [Resale
Agreement] or relating to the course of dealings between Ford and [Arabian
Motors].” (Id. at 15, Pg. ID 266.) The AAA assigned the matter to arbitrator
Lawrence S. Schaner (the “Arbitrator”).
In email messages sent to the AAA on April 30, 2016, May 24, 2016, and
September 6, 2016, Arabian Motors objected to arbitration on the grounds that (1)
the dispute was not arbitrable and (2) the AAA lacked jurisdiction to decide
whether Arabian Motors could be compelled to arbitrate. (See ECF #13-4 at 2, Pg.
ID 494; ECF #5-3 at 2, Pg. ID 299; ECF #13-6 at 7-8, Pg. ID 503-504.)
On October 13, 2016, Arabian Motors filed a Complaint in this Court
against Ford. (See Compl., ECF #1.) In its Complaint, Arabian Motors seeks two
types of relief.
First, Arabian Motors requests “preliminary and permanent
injunctive relief enjoining the Ford Motor Company arbitration” and a declaratory
judgement “that it [Arabian Motors] has no obligation to arbitrate [its dispute with
Ford].” (Id. at 43-44, Pg. ID 43-44.) Second, Arabian Motors seeks damages for
alleged breaches of the Resale Agreement and fraud by Ford. (See id. at 28-44, Pg.
On October 17, 2016, Arabian Motors filed the Motion in which it asks the
Court to issue a preliminary injunction staying the arbitration on the ground that it
cannot be compelled to arbitrate its dispute with Ford. (See ECF #5.)
responded to the Motion on November 15, 2016. (See ECF #13.) Arabian Motors
filed a reply on November 29, 2016. (See ECF #16.) The Court held a hearing on
the Motion on December 14, 2016.
When deciding whether to issue a preliminary injunction, the Court
generally considers the following factors:
(1) whether the movant has a “strong” likelihood of
success on the merits; (2) whether the movant would
otherwise suffer irreparable injury; (3) whether issuance
of a preliminary injunction would cause substantial harm
to others; and (4) whether the public interest would be
served by issuance of a preliminary injunction.
Leary v. Daeschner, 228 F.3d 729, 736 (6th Cir. 2000).
However, before the Court applies these factors here, it must answer a
preliminary question: who should decide whether Arabian Motors can be
compelled to arbitrate its dispute with Ford? If the Arbitrator must decide that
question, then the Court may not enjoin the arbitration on the ground that Arabian
Motors cannot be compelled to arbitrate. Thus, the Court begins with the question
of who decides arbitrability.
“[A]rbitration is simply a matter of contract between the parties; it is a way
to resolve those disputes—but only those disputes—that the parties have agreed to
submit to arbitration.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943
(1995). Generally, courts (rather than arbitrators) decide whether parties have
agreed to submit a particular dispute or issue to arbitration. The “default” rule “is
that questions of arbitrability are the province of courts, not arbitrators.” Solvay
Pharmaceuticals, Inc. v. Duramed Pharmaceuticals, Inc., 442 F.3d 471, 478 (6th
But there is a significant exception to this general rule. Because arbitration
is a “matter of contract,” parties can “agree to submit the arbitrability question …
to arbitration.” First Options, 514 U.S. at 943. Put differently, parties can “agree
to arbitrate ‘gateway’ questions of arbitrability, such as whether the parties have
agreed to arbitrate or whether their agreement covers a particular controversy,”
rather than have a court decide such questions. Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 63, 68-69 (2010). However, “[c]ourts should not assume that
parties agreed to arbitrate arbitrability unless there is clear and unmistakable
evidence that they did so.” First Options, 514 U.S. at 944 (internal punctuation
Here, the Resale Agreement contains clear evidence that the parties intended
to submit gateway questions of arbitrability to the Arbitrator. Among other things,
the parties agreed in the Resale Agreement to conduct their arbitration in
accordance with the then-governing UNCITRAL Arbitration Rules. (Resale Agmt.
at ¶14(b), ECF #5-1 at 22, Pg. ID 245.) As noted above, those rules provided that
“[t]he arbitral tribunal shall have the power to rule on objections that it has no
jurisdiction, including any objections with respect to the existence or validity of the
arbitration clause or of the separate arbitration agreement.” 1976 UNCITRAL
Arbitration Rules, Rule 21.
Courts have consistently held that such an
incorporation of the 1976 UNCITRAL Arbitration Rules is “clear and
unmistakable evidence” that the parties agreed to arbitrate threshold issues of
arbitrability. See Oracle Am., Inc. v. Myriad Group A.G., 724 F.3d 1069, 1073-75
(9th Cir. 2013) (collecting cases).1 Arabian Motors does not contend otherwise.
(For ease of reference, from this point forward, the Court refers to the language of
the Resale Agreement incorporating the UNCITRAL rules as the “Delegation
While the United States Court of Appeals for the Sixth Circuit has not yet ruled
on this question, the Court finds the authority cited above persuasive on this
Instead, Arabian Motors contends that the Court must decide the question of
arbitrability because enforcement of the Delegation Provision would violate the
Fairness Act. Because Arabian Motors is specifically attacking the Delegation
Provision, the Court must determine whether that provision is enforceable. See
Rent-A-Center, at 71-72 (holding that a federal court may rule on enforceability of
a delegation provision only where it is specifically challenged and not where a
party challenges validity of arbitration provision as a whole).2 If the provision is
enforceable, the parties must submit the question of arbitrability to the Arbitrator.
See Granite Rock Co., 561 U.S. at 299-300 (explaining that a “valid” delegation
provision shifts the arbitrability question from a court to an arbitrator). Thus, the
Court turns now to Arabian Motors’ contention that the Fairness Act renders the
Delegation Provision unenforceable.
The Fairness Act provides that “whenever a motor vehicle franchise contract
provides for the use of arbitration to resolve a controversy arising out of or relating
to such contract, arbitration may be used to settle such controversy only if after
such controversy arises all parties to such controversy consent in writing to use
arbitration to settle such controversy.” 15 U.S.C § 1226(a)(2) (emphasis added).
During the hearing on the Motion, counsel for Arabian Motors explained that
Arabian Motors is lodging a specific attack on the enforceability of the Delegation
Provision and is not merely attacking the general enforceability of the entire
arbitration provision in the Resale Agreement.
Arabian Motors insists that the Act precludes enforcement of the Delegation
Provision because (1) the Act requires the post-dispute consent of all parties to
submit any issue (including arbitrability) to an arbitrator but (2) the Delegation
Provision purports to assign the issue of arbitrability to the arbitrator even though
Arabian Motors has not given its post-dispute consent to such an assignment. (See
ECF #5 at 15-26, Pg. ID 209-20.) Ford counters that the Fairness Act does not
apply to the Resale Agreement and that the Delegation Provision is therefore fully
enforceable. (See ECF #13 at 20-27, Pg. ID 410-417.)
The viability of the
Delegation Provision thus turns upon whether the Fairness Act applies to the
Resale Agreement. The Court concludes that it does not.
The Fairness Act applies to one type of contract: a “motor vehicle franchise
contract.” 15 U.S.C. § 1226(a)(2). This is a contract “under which a motor vehicle
manufacturer, importer, or distributor sells motor vehicles to any other person for
resale to an ultimate purchaser and authorizes such other person to repair and
service the manufacturer's motor vehicles.” 15 U.S.C. § 1226(a)(1)(B). The Resale
Agreement satisfies much of this definition. It is an agreement under which Ford
sold motor vehicles to Arabian Motors for resale to an ultimate purchaser. Ford
nonetheless contends that the Resale Agreement is not a “motor vehicle franchise
contract” because that term does not include agreements between manufacturers
and foreign automobile dealers. (See ECF #13 at 20-27, Pg. ID 410-417.) The
When assessing whether an agreement between a manufacturer and a foreign
dealer may qualify as a “motor vehicle franchise contract,” the Court looks first to
the statutory definition of that term. See United States v. Boucha, 236 F.3d 768,
774 (6th Cir. 2001) (“It is a well settled canon of statutory construction that when
interpreting statutes, the language of the statute is the starting point for
interpretation, and it should also be the ending point if the plain meaning of that
language is clear.”) (internal quotation marks omitted).
As noted above, the
definition provides that the parties to a “motor vehicle franchise contract” are a
manufacturer and “any other person.” 15 U.S.C. § 1226(a)(1)(B). At first blush,
the phrase “any other person” would seem to include foreign dealers. The term
“person” as used in federal statutes generally includes both “corporations” and
“companies,” see The Dictionary Act, 1 U.S.C. § 1, and the broad reference to
“any other person,” if read literally, would appear to encompass foreign dealers
organized in a corporate form.
But the Supreme Court has long cautioned against a literal reading of the
term “any person”:
The words ‘any person or persons’ are broad enough to
comprehend every human being. But general words must
not only be limited to cases within the jurisdiction of the
state, but also to those objects to which the legislature
intended to apply them.
United States v. Palmer, 16 U.S. 610, 631 (1818). And while the Supreme Court
has recognized that “the word ‘any’ has an expansive meaning,’” United States v.
Gonzales, 520 U.S. 1, 5 (1997), the Court has reaffirmed that “a legislature that
uses the statutory phrase ‘any person’ may or may not mean to include ‘persons’
outside ‘the jurisdiction of the state.’” Small v. United States, 544 U.S. 385, 388
(2005) (quoting Palmer, 16 U.S. at 631); see also Shady Grove Orthopedic
Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 453 (2010) (same). Thus, when
Congress defined “motor vehicle franchise contract” to include agreements
between manufacturers and “any other person,” it “may or may not” have meant to
include agreements with foreign dealers. Small, 544 U.S. at 388. Accordingly, the
question of whether a contract between a manufacturer and a foreign dealer
qualifies as a “motor vehicle franchise contract” cannot be resolved by looking
solely to the “plain language” of the statutory definition.
So how should the Court determine whether the phrase “any other person”
as used in the definition of “motor vehicle franchise contract” includes foreign
dealers? Ford suggests that the Court invoke “a canon of statutory construction
known as the presumption against extraterritoriality: Absent clearly expressed
congressional intent to the contrary, federal laws will be construed to have only
domestic application.” RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090,
Ford says that application of this presumption compels the
conclusion that Congress did not intend to include foreign dealers within the
universe of “any other person[s]” covered by the Fairness Act. (See ECF #13 at 2027, Pg. ID 410-417.)
However, it is not clear that the presumption applies here. Federal courts
“typically apply the presumption to discern whether an Act of Congress regulating
conduct applies abroad.” Kiobel v. Dutch Petroleum, 133 S.Ct. 1659, 1664 (2013)
The Court questions whether the Fairness Act is best
characterized as one that “regulates conduct.” The Act seems more accurately
described as one that sets a pre-condition for the enforcement of certain contractual
The Court acknowledges that the presumption is not strictly limited to
conduct-regulating statutes. In Kiobel, for instance, the Supreme Court applied the
presumption to the Alien Tort Statute, 28 U.S.C. § 1350, which gives district
courts jurisdiction over “any civil action by an alien for tort only, committed in
violation of the law of nations or a treaty of the United States.” 133 S.Ct. at 16631665. And in RJR Nabisco, the Supreme Court applied the presumption to a
provision of the federal Racketeer Influenced and Corrupt Organizations Act that
afforded relief for certain prohibited conduct (by creating a private cause of action)
but did not, itself, purport to regulate any conduct. See RJR Nabisco, 136 S.Ct. at
2101. The Supreme Court explained that the presumption may apply “regardless
of whether the statute in question  regulates conduct,  affords relief, or 
merely confers jurisdiction.” Id. However, the Fairness Act is arguably not a
perfect fit for any of these three categories, and thus it is not clear that this Court
should apply the presumption to the Act.
In the end, this Court need not decide whether to apply the presumption to
Even when the presumption does not “apply directly,” a “similar
assumption” in favor of domestic application may be “appropriate” and may
require a federal court to limit a statute’s reach to domestic matters and subjects.
Small, 544 U.S. at 389. That is true here.
The decision in Small, supra, provides a helpful framework for applying the
“assumption” that Congress intended its statutes to reach only domestic subjects.
Small involved a federal statute that made it “unlawful for any person … who has
been convicted in any court, of a crime punishable by imprisonment for a term
exceeding one year … to … possess … any firearm.” 18 U.S.C. 922(g)(1). The
Supreme Court addressed whether the phrase “in any court” applied “only to
convictions entered in any domestic court or to foreign convictions as well.” Small,
544 U.S. at 387.
The Supreme Court explained that “the word ‘any’ considered alone cannot
answer this question” because “in ordinary life” speakers often do not use that
word in its strictest literal sense. Id. at 388. “[E]ven though the word ‘any’
demands a broad interpretation,” the Supreme Court felt compelled to “look
beyond that word itself.” Id.
The Supreme Court found “help” construing the phrase “in any court” in the
“commonsense notion that Congress generally legislates with domestic concerns in
mind.” Id. (quoting Smith v. United States, 507 U.S. 197, 204, n. 5 (1993)). That
“notion,” the Supreme Court explained, led to “the legal presumption that
Congress ordinarily intends its statutes to have domestic, not extraterritorial,
application.” Id. And even though that presumption did not “apply directly” –
because the statute in question was being applied in a prosecution for domestic
possession of a firearm – the Supreme Court deemed it “appropriate” to apply an
“ordinary assumption” that Congress intends domestic application of its statutes.
Id. at 389-91. The Supreme Court found that assumption “appropriate” because,
among other things, “foreign convictions differ from domestic convictions in
important ways.” Id. at 389.
The Supreme Court ultimately “assume[d] a
congressional intent that the phrase ‘convicted in any court’ applies domestically,
not extraterritorially.” Id. at 390-91.
The Supreme Court stood “ready to revise this assumption should statutory
language, context, history, or purpose show the contrary.” Id. at 391. But after
analyzing these matters, the Supreme Court “found no convincing indication” that
Congress intended the statute to reach foreign convictions, and the Supreme Court
thus declined to override the assumption of domestic application. Id. The Supreme
Court highlighted that “[t]he statute’s language does not suggest any intent to reach
beyond domestic convictions” or “mention foreign convictions,” that the statute’s
“subject matter” was not “special” in a way that would make foreign convictions
“seem especially relevant,” and that the legislative history contained no indication
that Congress intended to reach foreign convictions. Id. at 391-93.
As with the gun possession statute in Small, it makes good sense to assume
that Congress enacted the Fairness Act with “domestic concerns” and domestic
dealers in mind. Just as the “important” differences between foreign and domestic
convictions in Small supported application of the assumption to the statute there,
the significant differences between foreign and domestic dealers support
application of the assumption to the Fairness Act. Domestic dealers occupy a far
more important place in the American economy. They employ American workers,
buy a wide range of products (beyond vehicles) from American suppliers, sell cars
and provide service to American customers, and often play important roles in their
local economies. Foreign dealers do not. These key differences would be relevant
to any consideration of whether to extend the Fairness Act to foreign dealers.
Thus, as in Small, it is reasonable to apply the “ordinary assumption” that Congress
did not have foreign dealers in mind when it enacted the Fairness Act. Indeed, the
Court cannot conceive of any reason why Congress would have wanted to extend
the protections of the Fairness Act to foreign dealers.3
The Court declines “to revise” its assumption because the available data
provide no “convincing indication” that Congress intended to reach foreign
dealers. Small, 544 U.S. at 391.
To begin, the Court rejects Arabian Motors’ argument that the context of the
Fairness Act clearly evidences a congressional intent to reach dealers beyond our
borders. (See Arabian Motors Reply Br., ECF #16 at 10-12, Pg. ID 533-35.)
The Fairness Act stripped away a competitive advantage enjoyed by, among
others, American automobile manufacturers. One can understand why Congress
would have been concerned about American manufacturers using that advantage
against American dealers – who, as noted above, comprise an important segment
of the domestic economy. But the Court sees no reason why Congress would have
been concerned about the prospect of American manufacturers using a competitive
advantage against foreign dealers.
When domestic manufacturers utilize
advantages over foreign dealers, there is no direct harm to any segment of our
economy. Indeed, there would seem to be a benefit to our economy when
domestic manufacturers exercise their market power over foreign entities.
Arabian Motors’ context-based argument is most easily understood when it is
broken down into the following steps:
The Fairness Act is codified in Chapter 15 of the United
States Code. See 15 U.S.C. § 1226.
Chapter 15 of the United States Code also includes a second
act, the Automobile Dealers Day in Court Act (the
“ADDCA”), 15 U.S.C. §§ 1221-25, which permits
“automobile dealers” to bring certain claims against
automobile manufacturers in federal court.4
The ADDCA’s definition of an “automobile dealer” is
expressly limited to domestic dealers: “any person,
partnership, corporation, association, or other form of
business enterprise resident in the United States or in any
Territory thereof or in the District of Columbia operating
under the terms of a franchise and engaged in the sale or
distribution of passenger cars, trucks, or station wagons.” 15
U.S.C. § 1221(c).
Congress could have, but did not, use the domesticallylimited term “automobile dealer” in the Fairness Act. More
specifically, Congress could have defined a covered “motor
vehicle franchise contract” as one between an automobile
manufacturer and a (necessarily-domestic) “automobile
dealer.” Instead, Congress defined the relevant contract as
one between a manufacturer and “any other person.”
In relevant part, the ADDCA provides: “An automobile dealer may bring suit
against any automobile manufacturer engaged in commerce, in any district court of
the United States in the district in which said manufacturer resides, or is found, or
has an agent, without respect to the amount in controversy, and shall recover the
damages by him sustained and the cost of suit by reason of the failure of said
automobile manufacturer from and after August 8, 1956, to act in good faith in
performing or complying with any of the terms or provisions of the franchise, or in
terminating, canceling, or not renewing the franchise with said dealer: Provided,
That in any such suit the manufacturer shall not be barred from asserting in defense
of any such action the failure of the dealer to act in good faith.” 15 U.S.C. § 1222.
Under the maxim expressio unius est exclusio alterius – i.e.,
the expression of one thing is the exclusion of the other – the
Court must presume that Congress’ choice not to use the
domestically-limited term “automobile dealer” in the
Fairness Act reflects an intentional decision by Congress to
apply the Act to foreign dealers.
(See ECF #16 at 10-12, Pg. ID 533-35.)
While this argument has some surface appeal, it also suffers from some
First, as Arabian Motors acknowledges, the expressio unius est
exclusio alterius canon applies “where Congress includes particular language in
one section of a statute but omits in another section of the same act,” (Arabian
Motors Reply Br., ECF # 16 at 6, Pg. ID 534 (emphasis added), quoting Russello v.
United States, 464 U.S. 16, 23 (1983)), but Arabian Motors is relying on language
in two different acts: the ADDCA (enacted in 1956) and the Fairness Act (enacted
in 2002). Arabian Motors has not directed the Court to any persuasive evidence
that Congress intended the Fairness Act to amend, or to become a part of, the
The distinctness of the ADCCA and the Fairness Act undercuts
Arabian Motors’ reliance on the expressio unius est exclusio alterius canon.
The United States Court of Appeals for the Second Circuit has suggested in dicta
that Congress enacted the Fairness Act as an “amendment to” and “a part” of the
ADDCA. Arciniaga v. Gen. Motors Corp., 460 F.3d 231, 235 (2d Cir. 2006). But
the Second Circuit cited no authority for that proposition, and this Court has found
none. As originally proposed, the Fairness Act provided that it was amending the
Federal Arbitration Act (the “FAA”). See S. 1140 107th Cong. (2001) (Beginning
the proposed bill with the words “To amend chapter 1 of title 9 [i.e., the FAA]”);
H.R. 1296, 107th Cong. (2001) (same). But the reference to the FAA was
Second, even if the Fairness Act and ADDCA could be considered part of a
unified legislative scheme, the expressio unius est exclusio alterius canon would
not necessarily have substantial value in construing the Fairness Act. The Fairness
Act was adopted nearly fifty years after the ADDCA, and the canon appears to be
less persuasive when applied to two acts passed far apart in time. In fact, the
United States Court of Appeals for the First Circuit has called the canon a “pretty
weak” aid in construing statutes “when it is applied to acts of Congress enacted at
widely separated times.” Moreno Rios v. United States, 256 F.2d 68, 71 (1st Cir.
1958).6 The canon does not seem to have dispositive force here given the nearly
50 year gap between the ADDCA and the Fairness Act.
Finally, applying the expressio unius est exclusio alterius canon in the
manner urged by Arabian Motors would attribute to Congress an inconsistency that
eliminated, and the final, adopted version of the Fairness Act did not specify that it
was amending (or was intended to amend) any particular prior act of Congress.
Nor did the final, approved version of the Act identify where Congress intended
the Act to appear in the United States Code. The decision to place the Fairness Act
in Chapter 15 of the United States Code appears to have been made by the Office
of the Law Revision Counsel (“OLRC”), not by Congress. See 2 U.S.C. § 285b
(declaring that one function of the OLRC is to “classify newly enacted provision of
law to their proper positions in the Code where the titles involved have not yet
been enacted into positive law”).
See also United States v. Councilman, 418 F.3d 67 (1st Cir. 2005) (en banc)
(explaining that if a first statutory “provision was already part of the law, whereas
the second is entirely new, Congress may have paid less attention to subtle
differences between the two.”); Abdullah v. American Airlines, Inc., 181 F.3d 363,
373 (3d Cir. 1999) (declining to apply the canon in light of 20-year time lapse
between the enactment of the statutes under consideration).
defies reasonable explanation. Under Arabian Motors’ application of the canon,
Congress intentionally excluded foreign dealers from the protections of the
ADDCA and then intentionally included those dealers in the Fairness Act’s
protections. But why would Congress have given foreign dealers the right to resist
arbitration in the Fairness Act after depriving them of the right to sue under the
ADDCA? Arabian Motors has not offered a satisfying response to that question.
For all of these reasons, the Court cannot accept Arabian Motors’
application of the expressio unius est exclusio alterius canon to the Fairness Act,
and the Court concludes that the context of the Fairness Act – whether viewed as
part of the ADDCA or not – does not provide persuasive evidence that Congress
intended to cover foreign dealers. While Arabian Motors’ contextual arguments
are not unreasonable, they fall short of the “convincing indication” of
congressional intent necessary to rebut the assumption of domestic application
under Small. Small 544 U.S. at 391.
The Fairness Act’s lengthy legislative history also provides no indication
that the Act applies to foreign dealers. See Small, 544 U.S. at 393 (looking to
legislative history when considering whether there was evidence to rebut
assumption that Congress acted with a domestic focus). For instance, the Senate
Judiciary Committee’s report on the Fairness Act emphasizes that Congress
intended to preserve for dealers the range of dispute-resolution “remedies afforded
by State law,” S. REP. NO. 107-266, at 2 (2002) (the “Senate Report”),7 but such
state-law remedies are generally not available for foreign dealers.8 Moreover, the
Senate Report does not mention foreign dealers, cites survey data from the
domestically-focused National Automobile Dealers Association, and includes only
domestic motor vehicle dealers as examples of dealers harmed by mandatory
arbitration clauses. See S. REP. NO. 107-266, at 1-15 (2002).
In relevant part, the Senate Report provides:
This legislation would allow motor vehicle dealers the
option of either going to arbitration or utilizing
procedures and remedies available under State law such
as those involving State-established administrative
boards specifically created and uniquely equipped to
resolve disputes between motor vehicle dealers and
manufacturers. This legislation is intended to ensure that
motor vehicle dealers are not required to forfeit important
rights and remedies afforded by State law as a condition
of obtaining or renewing a motor vehicle franchise
S. REP. NO. 107-266, at 2 (2002). As noted above, after the Senate Report was
issued, Congress eliminated from the Fairness Act all references to the FAA.
Apart from that change, the language of the final, approved version of the Act
matches the language in the bill at the time the Senate Judiciary Committee issued
See e.g., Mich. Comp. Laws §445.1582 (“Notwithstanding the terms, provisions,
or conditions of a dealer agreement, [the Michigan Dealer Act] shall have no
application to dealers located outside the state of Michigan.”); Tex. Occ. Code
Ann. §§ 2301.002(16), 2301.453(e) (allowing a “franchised dealer” to file a protest
with the board of the Texas Department of Motor Vehicles prior to the termination
or discontinuance of its franchise contract, but limiting the definition of
“franchised dealer” to only include dealers that are “licensed” by the State of
Nor does the legislative history beyond the Senate Report undermine the
Court’s assumption that Congress did not intend to reach foreign dealers. For
instance, on March 1, 2000, the Senate Judiciary Committee’s Subcommittee on
Administrative Oversight and the Courts held a hearing on the Fairness Act, and
there was no mention of foreign dealers. See Overview of Contractual Mandatory
Binding Arbitration: Hearing Before the Subcomm. on Administrative Oversight
and the Courts of the S. Committee on the Judiciary, 106th Cong. (2000) (the
“Committee Hearing Transcript”) (discussing the Fairness Act during the first half
of the hearing).9
And on October 3, 2000, Representative Mary Bono, who
introduced the Fairness Act in the House of Representatives, explained during a
floor speech that the legislation was intended to protect “America’s community
auto dealers.” 163 CONG. REC. H8688 (daily ed. October 3, 2000) (statement of
A subsequent floor speech by Representative William Delahunt
underscored that the Fairness Act is “about preserving local businesses that are a
cornerstone in our communities.” Id. at H8689 (Statement of Rep. Delahunt).
Neither the 102-page transcript of the hearing nor the prepared testimony of the
five witnesses mention foreign dealers. Instead, the questions and testimony
focused on the displacement of state-law protections and dispute-resolution
mechanisms by manufacturers’ use of mandatory arbitration clauses. See
Committee Hearing Transcript. Even Senator Jeff Sessions, who opposed the
Fairness Act, focused his questions at the hearing on whether there were dealers in
the United States who themselves were using mandatory arbitration clauses in their
contracts with consumers. See id. at 42-43.
Finally, on October 2, 2002, Senator Russ Feingold stated on the floor of the
Senate that the provisions of the Fairness Act “are very important to address a real
unfairness that is being perpetrated on the auto dealers of this country.” 148 CONG.
REC. S9833 (daily ed. October 2, 2002) (statement of Sen. Feingold) (emphasis
added). Simply put, nothing in the Fairness Act’s legislative history suggests that
Congress intended the Act to cover foreign dealers.
In summary, the “statutory language, context, history, [and] purpose” of the
Fairness Act do not provide a “convincing indication” that Congress intended the
Fairness Act to reach foreign dealers, and the Court thus adheres to its
“assumption” that Congress did not intend the Act to cover those dealers. Small,
544 U.S. at 391. Because the Fairness Act does not apply to contracts – like the
Resale Agreement – between manufacturers and foreign dealers, the Act does not
preclude enforcement of the Delegation Provision.
Under that provision, the
Arbitrator must decide whether Arabian Motors may be compelled to arbitrate its
dispute with Ford.
As a final argument, Arabian Motors asserts that Ford is judicially estopped
from taking the position that the Fairness Act does not apply to contracts with
foreign dealers because Ford took the opposite position in Ford Motor Co. v.
Ghreiwati Auto, 945 F.Supp.2d 851 (E.D. Mich. Nov. 7, 2013). (See ECF #5 at 22-
26, Pg. ID 216-20.)
In Ghreiwati, two foreign automobile dealers filed for
arbitration against Ford after it terminated its contracts (like the Resale Agreement)
with the dealers. See Ghreiwati, 945 F.Supp.2d at 853-54. In response, Ford
sought to enjoin the arbitration on the grounds that: (1) the Fairness Act applies to
contracts with foreign dealers; and (2) Ford did not consent to the arbitration filed
by the Ghreiwati dealers. See id.
Ford’s position in Ghreiwati is plainly contrary to Ford’s position here, but
that does not mean that Ford is subject to judicial estoppel. Judicial estoppel must
be “applied with caution” and requires more than contradictory positions by a party
in an earlier case. Teledyne Industries, Inc. v. N.L.R.B., 911 F.2d 1214, 1218 (6th
Cir. 1990). “In order to invoke the doctrine of judicial estoppel, a party must show
that the opponent took a contrary proceeding under oath in a prior proceeding and
that prior position was accepted by the court.” Id. (emphasis added). Moreover,
“[j]udicial estoppel . . . does not usually apply to shifting legal arguments; it
typically applies to shifting factual arguments.” Law Office of John H. Eggersten
P.C. v. C.I.R., 800 F.3d 758, 766 (6th Cir. 2015).
Ford’s assertions in Ghreiwati concerning the scope of the Fairness Act were
not under oath and were not factual claims. Furthermore, for the reasons explained
in Ford’s response brief (see ECF #13 at 27-30, Pg. ID 417-20), the Court cannot
conclude that the court in Ghreiwati accepted Ford’s position that the Fairness Act
applies to foreign dealers. Because the elements of judicial estoppel are not
satisfied, Ford remained free to argue in this case that the Fairness Act does not
apply to the Delegation Provision.
For all of the reasons stated above, the Delegation Provision enforceable,
and thus it is for the Arbitrator, not this Court, to rule on whether Arabian Motors
may be compelled to arbitrate its dispute with Ford.10 Because this Court may not
decide that question, it may not enjoin the arbitration between Ford and Arabian
Motors on the basis requested by Arabian Motors. Accordingly, the Motion (ECF
#5) is DENIED.
IT IS SO ORDERED.
Dated: January 19, 2017
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on January 19, 2017, by electronic means and/or
s/Holly A. Monda
The Arbitrator has already concluded that the parties’ dispute is arbitrable. (See
Arbitrator’s Interim Award on Jurisdiction, ECF #17-1.) This Court will not
disturb that ruling.
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