Ratcliffe et al v. Dorsey School of Business, Inc., d/b/a Dorsey Schools

Filing 15

OPINION and ORDER Granting Defendant's 9 Motion to Compel Arbitration and Stay Proceedings. Signed by District Judge Linda V. Parker. (RLou)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DAVID RATCLIFFE, et al.,
Plaintiffs,
v.

Civil Case No. 18-10524
Honorable Linda V. Parker

DORSEY SCHOOL OF BUSINESS,
INC. d/b/a Dorsey Schools,
Defendant.
____________________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO
COMPEL ARBITRATION AND STAY PROCEEDINGS (ECF NO. 9)
Plaintiffs David Ratcliffe, Clifton Banford II, Davone Phillips, Craig Baldus,
Brandon Fuller, Raul Feijoo, John Rapley, Tranell Meeks, Darius Hinton, Christ
George, and Alden Vasser (“Plaintiffs”) filed an Amended Complaint and Demand
for Jury Trial (the “Amended Complaint”) against Defendant Dorsey Schools
(“Defendant”), asserting five counts arising out of Plaintiffs’ enrollment as
students in the electrical technician training program at Dorsey School of Business
(“Dorsey”). (ECF No. 2.) Presently before the Court is Defendant’s Motion to
Compel Arbitration or, in the alternative, Motion to Dismiss, filed March 26, 2018.
(ECF No. 9.) The motion has been fully briefed. (ECF Nos. 9, 13 & 14.) Finding
the facts and legal arguments sufficiently presented in the parties’ briefs, the Court

1 

is dispensing with oral argument pursuant to Local Rule 7.1(f)(2). For the reasons
stated below, the Court grants Defendant’s motion to compel and stays the
proceedings pending the resolution of arbitration.
I.

Factual and Procedural History
Defendant Dorsey Schools is a private, for-profit, postsecondary school that

offers career training in a variety of fields, including electrical technician training.
(ECF No. 9 at Pg ID 53.) Plaintiffs are eleven individuals who enrolled at Dorsey
in its Electrical Technician Educational Program, believing that upon successful
completion of the program they would be eligible to obtain an Apprentice
Electrical Certificate from the Michigan Department of Licensing and Regulatory
Affairs (“LARA”). (ECF No. 13 at Pg ID 153.) Defendant’s program was an
eleven-month, four-days-per-week, five-hours-per-day program. (Id.) Each
Plaintiff allegedly incurred approximately $21,000 in tuition expenses, book costs
and other incidental expenses. (Id.) Although each Plaintiff completed the course,
not one was ever granted an Electrical Apprenticeship Certificate from LARA
because, as Plaintiffs alleged, Defendant’s class was not approved or accredited by
LARA or the Department of Labor. (Id.)
On February 13, 2018, Plaintiffs initiated this suit, filing a Complaint and an
Amended Complaint on the same day, asserting five claims against Defendant.
(ECF Nos. 1 & 2.) Each claim arises out of Plaintiffs’ allegations that Defendant
2 

made both verbal and written representations that upon successful completion of
Defendant’s training program: (1) Plaintiffs would be qualified to obtain
undergraduate certificates as electrical technicians and (2) Plaintiffs would be
qualified to obtain an Apprentice Electrician Certificate issued by LARA. (ECF
No. 2, Am. Compl. at ¶¶ 10-11.) Additionally, Plaintiffs raised other allegations
involving Defendant’s representations about its accreditation: whether its program
met state law requirements for skilled trades and the accuracy of employment
opportunities upon completion of its training program. (Id. at ¶¶ 13-17.) In
response, Defendant argues that each Plaintiff signed an Enrollment Agreement
and Application for Admission (the “Agreement”) that contained a valid and
binding arbitration agreement. (ECF No. 9 at Pg ID 40.) Accordingly, Defendant
filed the instant Motion to Compel Arbitration, filed March 26, 2018. (ECF No.
9.)
II.

Standard of Review
The Federal Arbitration Act (“FAA”), 9 U.S.C § 2, provides in part, that
[a] written provision in any . . . contract evidencing a transaction
involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the refusal to perform the
whole or any part thereof, or an agreement in writing to submit to
arbitration an existing controversy arising out of such a contract,
transaction, or refusal, shall be valid, irrevocable, and enforceable . . . .

When considering a motion to compel arbitration, the court must consider whether:
(1) a valid arbitration agreement exists between the parties; (2) the disputes fall
3 

within the scope of the agreement; (3) Congress intended for certain federal
statutory claims to be nonarbitrable; and (4) if some of the claims fall outside the
scope of the arbitration agreement, if those claims will be stayed pending
arbitration. Orcutt v. Kettering Radiologists, Inc., 199 F. Supp. 2d 746, 750 (S.D.
Ohio Mar. 11, 2002) (citing Compuserve, Inc. v. Vigny Int’l Finance, Ltd., 760 F.
Supp. 1273, 1278 (S.D. Ohio 1990)); see also Stevens-Bratton v. Trugreen, Inc.,
675 F. App’x 563, 566-67 (6th Cir. 2017) (unpublished) (quoting Rowan v.
Brookdale Senior Living Cmtys., Inc., 647 F. App’x 607, 609 (6th Cir. 2016)).
“Any doubts concerning the scope of arbitrable issues should be resolved in favor
of arbitration, whether the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like defense to arbitrability.”
Orcutt, 199 F. Supp. 2d at 749-50. Finally, the opposing party may challenge the
validity of the arbitration agreement “upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2.
The United States Supreme Court has divided challenges to arbitration
agreements into two types. “One type challenges specifically the validity of the
agreement to arbitrate. The other challenges the contract as a whole, either on a
ground that directly affects the entire agreement (e.g., the agreement was
fraudulently induced), or on the ground that the illegality of one of the contract’s
provisions renders the whole contract invalid.” Buckeye Check Cashing, Inc. v.
4 

Cardegna, 546 U.S. 440, 444 (2006) 2006 (internal quotations and citations
omitted). Challenges to the contract as a whole must go to the arbitrator. Id.
III.

Applicable Law & Analysis
Plaintiffs do not challenge that they signed and entered into the Agreement,

which contained an arbitration provision. Accordingly, a valid arbitration clause
exists. Because the Court finds the arbitration clause valid, the Court does not
have authority to determine the validity of the contract as a whole, and the
arbitrator shall resolve Plaintiff’s claims concerning the validity of the contract.
It is well settled that “the substantive law the Act created [is] applicable
in state and federal courts. And when parties commit to arbitrate
contractual disputes, it is a mainstay of the Act’s substantive law that
attacks on the validity of the contract, as distinct from attacks on the
validity of the arbitration clause itself, are to be resolved “by the
arbitrator in the first instance, not by a federal or state court.” For these
purposes, an “arbitration provision is severable from the remainder of
the contract,” and its validity is subject to initial court determination;
but the validity of the remainder of the contract (if the arbitration
provision is valid) is for the arbitrator to decide.
Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17, 20-21 (2012) (internal quotations
and citations omitted); Buckeye Check Cashing, Inc., 546 U.S. at 446 (“regardless
of whether the challenge is brought in federal or state court, a challenge to the
validity of the contract as a whole, and not specifically to the arbitration clause,
must go to the arbitrator.”); see also Great Earth Cos. v. Simons, 288 F.3d 878,
889 (6th Cir. 2002) (“The Supreme Court has explained that in deciding whether a
valid agreement to arbitrate exists, district courts may consider only claims
5 

concerning the validity of the arbitration clause itself, as opposed to challenges to
the validity of the contract as a whole.”); Yaroma v. CashCall, Inc., 130 F. Supp.
3d 1055, 1067-68 (E.D. Ky. 2015).
“In order to place the validity of the agreement to arbitrate in issue,
therefore, the party opposing the petition to compel arbitration must state a ‘wellfounded claim of fraud in the inducement of the arbitration clause itself, standing
apart from the whole agreement, that would provide grounds for the revocation of
the agreement to arbitrate.’” Great Earth Cos., 288 F.3d at 878. “[I]f the claim is
fraud in the inducement of the arbitration clause itself -- an issue which goes to the
‘making’ of the agreement to arbitrate -- the federal court may proceed to
adjudicate it. But the statutory language [of the FAA] does not permit the federal
court to consider claims of fraud in the inducement of the contract generally.” Id.
at 889-90.
Defendant argues that Plaintiffs are required to submit to arbitration
pursuant to the Agreement, which mandates that “any dispute” between the parties
“be submitted to binding arbitration.” (ECF No. 9 at Pg ID 60-61.) Defendant
further argues that “the fundamental basis of Plaintiffs’ claims” fall squarely within
the scope of the arbitration agreement. (Id. at Pg ID 61.) Plaintiffs have failed to
raise any claim of fraud in the inducement of the arbitration clause itself, standing

6 

apart from the whole agreement. Each of Plaintiffs’ allegations are of fraudulent
inducement into the Agreement as a whole.
The Court’s initial review is limited to whether there was a valid arbitration
agreement, and the Court so finds. The Agreement provides that the parties agree
to arbitrate “any dispute,” which would include the claims alleged in Plaintiffs’
Amended Complaint. Although Plaintiffs argue that the arbitration clause is
invalid because the contract is void “ab initio,” such a position is inconsistent with
the law of this jurisdiction and Supreme Court precedent. See Nitro-Lift Techs.,
L.L.C., 568 U.S. at 21 (holding that district courts are only to consider the validity
of the arbitration clause and not the contract as a whole); accord Buckeye Check
Cashing, Inc., 546 U.S. at 446; Great Earth Cos., 288 F.3d at 889. Therefore, the
Court finds that: (1) a valid arbitration agreement exists between the parties; (2) the
disputes fall within the scope of the agreement; (3) none of Plaintiff’s claims were
intended to be nonarbitrable; and (4) none of Plaintiff’s claims fall outside the
scope of the arbitration agreement. Consequently, Plaintiffs’ arguments as to the
validity of the contract are to be considered by the arbitrator. Accordingly, the
Court is staying the case pending the resolution of arbitration.
IV.

Conclusion
Defendant’s motion to compel arbitration is granted.
Accordingly,

7 

IT IS ORDERED, that Defendant’s motion to compel arbitration (ECF No.
9) is GRANTED; and
IT IS FURTHER ORDERED, that this case is STAYED, and the parties
shall submit to arbitration pursuant to the Enrollment Agreement and Application
for Admission.
IT IS SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: November 2, 2018
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, November 2, 2018, by electronic and/or
U.S. First Class mail.
s/ R. Loury
Case Manager

8