WOLF v. NISSAN MOTOR ACCEPTANCE CORPORATION
OPINION. Signed by Judge Noel L. Hillman on 2/20/2015. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MATTHEW S. WOLF, on behalf of
himself and all others
Civil No. 10-3338 (NLH/KMW)
NISSAN MOTOR ACCEPTANCE
Michael John DeBenedictis, Esquire
DeBenedictus & DeBenedictis LLC
125 Kings Highway West
Haddonfield, New Jersey 08033
Thomas T. Booth, Jr., Esquire
Law Offices of Thomas T. Booth, Jr., LLC
129 W. Evesham Road
Voorhees, New Jersey 08043
Counsel for Plaintiff
William H. Grae, Esquire
The Chartwell Law Offices, LLP
75 Main Street
Millburn, New Jersey 07041
Counsel for Defendant
HILLMAN, District Judge:
The Court previously entered an Order staying the instant
proceedings and referring the matter to arbitration.
before the Court is Plaintiff’s letter motion [Doc. No. 27]
seeking to lift the stay and reopen this case based upon the
purported failure of Defendant, Nissan Motor Acceptance
Corporation, to submit the proper arbitration fee, which
resulted in the matter being withdrawn from arbitration.
Defendant filed opposition to the letter motion, and Plaintiff
has filed a reply.
The Court has considered the submissions of
the parties and decides this matter pursuant to Federal Rule of
Civil Procedure 78.
For the reasons that follow, Plaintiff’s
motion will be denied.
The Court exercises jurisdiction over Plaintiff’s federal
claim pursuant to 28 U.S.C. § 1331, and may exercise
supplemental jurisdiction over Plaintiff’s state law claim under
28 U.S.C. § 1367.
This case involves a putative class action suit in which
Plaintiff alleges, inter alia, violations of the Servicemembers
Civil Relief Act, 50 U.S.C. §§ 501 et seq. (hereafter, “SCRA”).
In November 2006, Plaintiff entered into an agreement to lease a
2007 Nissan Infiniti G35 Sedan for thirty-nine months.
[Doc. No. 15] 2, June 22, 2011.)
At the inception of the lease,
Plaintiff paid $595 in “Capitalized Cost Reduction” (hereafter,
“CCR”), an advance toward the lease’s rent.
(Id. at 3.)
also prepaid for other items which he could instead have paid on
a monthly basis.
During the lease term, Plaintiff
entered into active military service, returned the leased
vehicle to Nissan, and invoked the SCRA.
contends in the complaint that the SCRA entitles military
service members, like himself, to a prorated refund of lease
payments made in advance.
Defendant, however, refused to
refund to Plaintiff any prorated CCR payments.
then filed a putative class action in this Court.
Based on an optional arbitration clause contained in the
lease agreement, Defendant filed a motion to stay the instant
proceedings and compel arbitration.
In opposition to the
motion, Plaintiff raised a number of challenges, including that
the arbitration clause is unconscionable because it included a
class action waiver.
On June 22, 2011, this Court entered an Opinion and Order
granting Defendant’s motion.
The Court upheld the class action
waiver provision in the arbitration clause, finding that the
provision was not precluded either by the SCRA or New Jersey
The Court did, however, strike two provisions in the
arbitration clause concerning the payment of arbitration fees.
Specifically, the arbitration clause contained a fee-shifting
provision and an appeals provision which could be construed so
as to require Plaintiff to shoulder the entire financial burden
of the arbitration and appeal of his claims, irrespective of the
(Op. [Doc. No. 15] 18-19, June 22, 2011.)
thus severed these unconscionable provisions but nonetheless
found the arbitration clause otherwise valid and enforceable.
(Id. at 19.)
As such, the Court stayed the case and referred
the matter to arbitration.
On October 22, 2012, counsel for Defendant wrote to
Plaintiff’s counsel in an effort to initiate the arbitration
Because the arbitration provision in the lease
agreement provided Plaintiff an opportunity to choose the
arbitration forum, defense counsel sought input as to whether
Plaintiff preferred to arbitrate the matter through the American
Arbitration Association (hereafter, “AAA”), the National
Arbitration Forum, or JAMS.
(Def.’s Ltr. Br. dated May 16, 2014
(hereafter, “Def.’s Ltr. Br.”) [Doc. No. 30], Ex. A.)
receiving no response from Plaintiff, Defendant decided to
submit the case to the AAA.
(Decl. of James R. Bruinsma, Esq.
(hereafter, “Bruinsma Decl.”) [Doc. No. 30-1] ¶¶ 9-13.)
Before filing any papers with the AAA, however, counsel for
Defendant represents that he obtained advice from the AAA as to
Plaintiff subsequently filed a motion for reconsideration,
which was denied by Opinion and Order dated March 29, 2012.
Plaintiff then filed an appeal to the United States Court of
Appeals for the Third Circuit, but the appeal was dismissed for
lack of jurisdiction.
the appropriate method to initiate arbitration.
(Id. ¶ 13.)
According to counsel, he sought such advice because of the
unusual procedural circumstance in that Defendant -- although
filing the claim to initiate arbitration -- was not the party
seeking payment and thus was not the “claimant.”
counsel was purportedly advised to utilize the AAA’s standard
form and attach thereto those documents that Defendant believed
set forth the nature of the case and its status.
(Id. ¶ 14.)
In January 2013, Defendant completed the standard form and
attached Plaintiff’s complaint, this Court’s Order referring the
matter to arbitration, and the arbitration clause between the
(Def.’s Ltr. Br., Ex. B.)
Defendant determined that
the dollar amount of the claim would be $600, and that the
arbitration fee would be $775 based upon the AAA fee schedule,
which was the standard fee for claims up to $10,000.
Decl. ¶¶ 15-17.)
Defendant submitted the $775 fee with the
By letter dated February 7, 2013, Defendant wrote to the
AAA case manager advising that it should be designated as the
“Respondent” in the proceeding rather than as the “Claimant”
because it was not the party seeking payment.
specifically noted that “[t]his is not a claim by NMAC to
collect a consumer’s debt; rather, it is a claim by a consumer
against NMAC for damages and other relief as outlined in his
(Def.’s Ltr. Br., Ex. C.)
Defendant also requested
through this letter an in-person hearing with an arbitrator.
The AAA sent an invoice for an additional $750, which was
the flat rate due for compensation of an arbitrator for an inperson hearing.
(Id., Ex. D.)
Defendant paid the invoice in
In March 2013, the AAA designated the Honorable Burrell
Ives Humphreys (Retired) to serve as an arbitrator.
preliminary telephone conference was held on May 20, 2013, at
which time Plaintiff was directed to submit his own Statement of
(Pl.’s Ltr Br. [Doc. No. 35] 5, July 18, 2014; Bruinsma
Decl. ¶¶ 28, 32.)
Plaintiff submitted a Statement of Claim in
(Decl. of Michael J. DeBenedictis in Reply, Ex. G.)
The Statement of Claim set forth not only Plaintiff’s individual
claims, but also contained several class action allegations.
(See generally id.)
Although Plaintiff’s Statement of Claim
acknowledged that “any claim proceeding in arbitration can only
proceed on an individual basis” (id. ¶ 16), the Statement
nonetheless included the class action allegations and set forth
an “Amount in Controversy” of $2,100,000 in monetary damages
based upon “putative class claims,” with equitable and
injunctive relief having a similar economic value.
(Id. ¶ 26.)
The Statement of Claim contains no estimate as to the value of
Plaintiff’s individual claims.
Defendant filed a
response to Plaintiff’s Statement of Claim in July 2013, noting
therein that “the parties’ agreement provides that Claimant’s
claims may be arbitrated solely on an individual basis and not
as a class action.”
(Def.’s Ltr. Br., Ex. F at ¶¶ 58-72.)
In October 2013, a new AAA case manager, Derek Coppola,
sent an email to counsel with an attached invoice for $8,200.
(Def.’s Ltr. Br., Ex. H.)
The invoice was addressed to
Plaintiff’s counsel and was to be paid within fifteen days.
Plaintiff did not pay the fee.
(Bruinsma Decl. ¶ 41.)
Defense counsel represents that Mr. Coppola contacted him on
November 14, 2013 because Mr. Coppola had been unable to contact
According to defense counsel, Mr.
Coppola inquired as to whether Plaintiff intended to pay the
Mr. Coppola purportedly stated during that
conversation that the fee was assessed based on Plaintiff’s $2.1
million monetary demand in his Statement of Claim.
(Id. ¶ 42.)
Defense counsel further represents that Mr. Coppola stated “‘If
[Plaintiff] wants to arbitrate a $2 million claim, he has to pay
the fee first.’”
The parties at that point became entrenched in their
positions that neither was going to pay the $8,200 filing fee.
On February 11, 2014, Mr. Coppola emailed counsel for the
parties advising that Plaintiff’s claim would be deemed
withdrawn if the outstanding invoice was not paid by February
(Bruinsma Decl. ¶ 45.)
Although the parties wrote to
the AAA case manager arguing over who was responsible to pay the
fee, no party ever asked the case manager to reconsider the fee.
Most notably, it does not appear from the record that Plaintiff
ever clarified to the case manager that the arbitration was
based only on his individual claims, which were not within the
range of $1,000,000 to $5,000,000 and did not require an $8,200
Defendant attempted to explain to the case manager that
Plaintiff was improperly asserting a class claim, which
generated an increased fee, but Defendant did not request that
the case manager reduce the fee.
Rather, Defendant insisted
that it had already paid the fees required to arbitrate
Plaintiff’s individual claim and that Plaintiff was responsible
for any fees resulting from his class action allegations.
On March 7, 2014, after neither party paid the $8,200
filing fee, Mr. Coppola sent another email to counsel stating
that “[t]he Association has been advised that Claimant has
withdrawn its claim from arbitration.”
(Grae Ltr. Br., Ex. J.)
Defense counsel responded to clarify whether Plaintiff was the
“Claimant,” noting that Mr. Coppola’s email “says the Claimant
has withdrawn ‘its’ claim[.]”
that Plaintiff “withdrew his claim.”
The case manager confirmed
Section 2 of the Federal Arbitration Act (hereafter, “FAA”)
provides for enforcement of arbitration agreements in written
9 U.S.C. § 2.
Pursuant to Section 4 of the FAA, a
party “aggrieved by the alleged failure, neglect, or refusal of
another to arbitrate under a written agreement for arbitration
may petition any United States district court . . . for an order
directing that such arbitration proceed in the manner provided
for in such agreement.”
9 U.S.C. § 4.
Section 3 of the FAA
states that a district court may stay the trial of a matter
where the parties have agreed to arbitrate an issue, “provid[ed]
the applicant for the stay is not in default in proceeding with
9 U.S.C. § 3.
Although the Court already stayed this matter so that the
parties may proceed with arbitration, Plaintiff now asks the
Court to lift the stay.
Plaintiff contends in this regard that
Defendant defaulted by failing to pay the filing fee to initiate
arbitration, and consequently has purportedly waived its right
to arbitrate Plaintiff’s claims under Section 3 of the FAA.
In deciding whether Defendant defaulted in proceeding with
the arbitration, the Court must determine whether Defendant was
responsible for paying the $8,200 filing fee requested by the
For the reasons discussed below, the Court finds that the
AAA required Plaintiff to pay this filing fee, and therefore
Defendant’s failure to pay the fee does not constitute a default
in proceeding with arbitration.
The Court first rejects Plaintiff’s contention that the AAA
case manager required Defendant to pay the invoice for $8,200.
Although the invoice was sent via email to defense counsel, both
attorneys for Plaintiff were “cc:d” on the email and the invoice
attached thereto is addressed to Plaintiff’s counsel.
itself states that it “acknowledge[s] receipt of a [sic]
Claimant Matthew Wolf’s Statement of Claimant” and that “the
claim is not properly filed without the submission of the
appropriate filing fee.”
(Def.’s Ltr. Br., Ex. H.)
further states that “at this time we request that Claimant
submit the appropriate filing fee in the amount of $8,200.00 . .
The content of the email and the invoice attached
thereto thus belie Plaintiff’s assertion that Defendant was
required by the AAA to pay the invoice.
Moreover, the Court notes that the AAA case manager
assessed the $8,200 when Plaintiff filed a Statement of Claim
containing class action allegations. 2
Plaintiff fought the class
action issue before this Court and lost, both in connection with
The Court notes that under AAA Rule R-53, “[t]he filing fee
shall be advanced by the party or parties making a claim or
counterclaim, subject to final apportionment by the arbitrator
in the award.” AAA Rule R-53.
Defendant’s motion to compel arbitration and Plaintiff’s motion
for reconsideration, and Plaintiff was unable to obtain relief
from the Third Circuit.
Despite this, Plaintiff proceeded to
set forth class allegations in the Statement of Claim and sought
$2.1 million in damages for the class claims. 3
$8,200 fee, which is the standard fee for claims between $1
million and $5 million, was predicated upon Plaintiff’s
assertion of class claims.
It does not appear that Plaintiff
ever attempted to clarify with the AAA case manager that the
value of his individual claims did not warrant an $8,200 fee.
Whether the AAA case manager was correct in assessing a
filing fee in the amount of $8,200 or in directing the invoice
to Plaintiff is not for this Court to decide.
questions which grow out of the dispute and bear on its final
disposition’ are presumptively not for the judge, but for an
Plaintiff’s counsel indicates that he was directed by the
arbitrator to include in the Statement of Claim an estimate of
the size of the class and the potential impact of equitable
remedies in monetary terms. It is not clear to the Court why
any class issues were raised and discussed with the arbitrator,
when the Court had already ruled that the class action waiver
provision in the arbitration agreement was valid and
enforceable. Moreover, while Plaintiff submitted an estimate of
the value of the class action claim, he did not submit an
estimated value of his individual claim. In so doing, he placed
the burden on the AAA case manager to sift through the
allegations in his Statement of Claim to determine which claims
were actually subject to arbitration to set the appropriate
arbitrator, to decide.”
Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 84, 123 S. Ct. 588, 154 L. Ed. 2d 491
(2002)(quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543, 546-47, 84 S. Ct. 909, 11 L. Ed. 2d 898 (1964)).
arbitrator should decide whether a condition precedent to
arbitrability, such as time limits, notice, laches, or estoppel,
has been fulfilled.
Id. at 85, 123 S. Ct. 588.
At least one
court has held that “questions related to the payment of fees .
. . are for arbitrators to decide.”
Pre-Paid Legal Services,
Inc. v. Cahill, No. 12-CV-346-JHP, 2014 WL 1514161, at *1 (E.D.
Okla. Apr. 16, 2014).
In Lifescan, Inc. v. Premier Diabetic Services, Inc., 363
F.3d 1010 (9th Cir. 2004), the Ninth Circuit reversed the
district court’s order compelling a party to pay an arbitration
fee when the arbitrator had required another party to pay such
The issue before the court was “[w]hat happens when a
party to an arbitration is unable to pay its pro-rata share of
the arbitration fees[.]”
Lifescan, 363 F.3d at 1011.
the parties had participated in AAA arbitration but, before the
final hearing, one of the parties, Premier Diabetic Services,
Inc., was unable to pay its pro-rata share of the arbitrators’
estimated fees and costs for the remainder of the proceedings.
The arbitrator gave the other party, Lifescan, Inc., the
option of advancing the fees owed by Premier, but Lifescan
The AAA declined to proceed and suspended the
Lifescan then asked the district court to
compel Premier to pay its pro-rata share of the fees, which
request was granted by the district court.
On appeal, the Ninth Circuit reversed the district court’s
decision, finding that the arbitrators acted within their
discretion in requiring Lifescan to pay Premier’s share of the
Id. at 1013.
In so holding, the Ninth
Circuit noted that the AAA rules provide the arbitrators with
“the authority to apportion fees and expenses as appropriate.”
Id. at 1012.
In particular, the Ninth Circuit noted that
“[a]lthough the arbitrators originally requested an equal
deposit from the parties, they changed their order when Premier
informed them that it could not afford to pay.”
recognizing that the arbitrators’ decision “may not be an ideal
solution to the problem of a party’s failure to pay its share of
the fees, . . . it is well within the discretion of the
Another Ninth Circuit decision relevant to the present case
is Sink v. Aden Enterprises, Inc., 352 F.3d 1197 (9th Cir.
In Sink, the district court stayed the plaintiff’s
lawsuit for breach of an employment contract and referred the
matter to arbitration pursuant to an arbitration clause in the
Id. at 1198.
The employment agreement required the
defendant, as the employer, to pay the costs of any arbitration
arising from the employment relationship.
Id. at n.1.
defendant-employer failed to pay the filing fee, and the
arbitrator cancelled the arbitration due to non-payment of fees.
Id. at 1199.
The plaintiff then sought to lift the stay of
proceedings in the district court, which request was granted.
On appeal, the Ninth Circuit found that the defendantemployer defaulted in the arbitration.
defendant was in default, the FAA no longer permitted a stay of
the court proceedings in favor of arbitration and did not
require the district court to order the parties to return to
Id. at 1201-02.
The Ninth Circuit held “that a
party to an arbitration agreement may not compel arbitration of
claims under FAA § 4 where a prior default in arbitration of
those claims precludes that party from obtaining a stay of
litigation pending arbitration under § 3.”
Id. at 1201.
holding, the Ninth Circuit noted that if the parties were
required to return to arbitration, “[t]he same offending party
could then default a second time, and the prejudiced party’s
sole remedy, again, would be another order compelling
Id. at 1201.
“This cycle could continue,
resulting in frustration of the aggrieved resolution of claims.”
The facts of this case fall neither squarely within
Lifescan nor Sink.
Lifescan involved payment of fees associated
with the arbitration hearing rather than the initial filing fee,
but supports the notion that the Court cannot require one party
to pay a fee when the arbitrator has required a different party
to pay such fee.
Sink is more on point insofar as it involved
the failure to pay the initial filing fee, but in that case the
employer-defendant was clearly obligated by contract to pay the
fee and failed to do so. 4
There was no dispute as to the amount
of the fee or any conduct by the plaintiff that generated an
Here, by contrast, Defendant paid
the initial fee, and the arbitrator then required Plaintiff to
pay a significantly increased fee as a result of Plaintiff’s
assertion of a class action claim in excess of $2 million.
The FAA “establishes that, as a matter of federal law, any
doubts concerning the scope of arbitrable issues should be
Plaintiff also cites Stowell v. Toll Brothers, No. 06-cv-2103,
2007 WL 30316, at *1 (E.D. Pa. Jan. 4, 2007), for the
proposition that a defendant’s failure to pay an initial filing
fee in arbitration constitutes default and, as such, is a waiver
of the defendant’s right to compel arbitration. The relevant
facts in Stowell were the same as those in Sink, because both
cases involved a defendant who sought arbitration but then
outright refused to pay an arbitration fee despite an obligation
to do so. Those cases are distinguishable from the present case
because Defendant here paid the initial filing fee but refused
to pay the additional fee invoiced to Plaintiff and generated
when Plaintiff filed his Statement of Claim.
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
Moses H. Cone Mem. Hosp. v. Mercury
Construction Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed.
2d 765 (1983).
There is a strong presumption against waiver of
See Sherrock Bros., Inc. v. DaimlerChrysler Motors
Co., LLC, 260 F. App’x 497, 500 (3d Cir. 2008); Tracinda Corp.
v. DaimlerChrysler AG, 502 F.3d 212, 223 (3d Cir. 2007).
The Court recognizes, as discussed in Sink, that when the
purpose of arbitration -- that is, to provide a cost-effective
and efficient means of resolving a claim -- is thwarted by a
party’s failure to pay the required fees, the defaulting party
should not be permitted to return to arbitration.
But this is
not a case where Plaintiff was held at the mercy of a non-paying
party who merely sought to delay resolution of the claims at
Defendant paid a filing fee and completed the paperwork
to initiate the arbitration.
Plaintiff then failed to pay an
$8,200 invoice directed to him based on the claim he filed with
The AAA ultimately found that Plaintiff waived his
Under these circumstances, the Court cannot conclude
that it was Defendant’s conduct that resulted in the case being
removed from arbitration.
As such, the Court does not find
that Defendant defaulted in the arbitration proceedings so as to
overcome the strong federal policy favoring the enforcement of
In so finding, the Court notes Plaintiff’s argument that
Defendant has purportedly shifted the arbitration fees onto
Plaintiff in contravention of this Court’s ruling.
previously held that because the fee-shifting provision in the
arbitration clause gave unfettered discretion to an arbitrator
to allocate the entire cost of the arbitration to Plaintiff,
such provision was unconscionable and unenforceable to the
extent it “may be construed and applied to require [Plaintiff]
to shoulder the entire financial burden of the arbitration . . .
(Op. [Doc. No. 15] 18-19, June 22, 2011.)
Defendant paid the initial fees and there is no indication that
Defendant ever asked Plaintiff to bear the entire financial
burden of arbitration.
Furthermore, there is no indication that
the arbitrator has required Plaintiff to shoulder the entire
financial burden, but has only required Plaintiff to pay a
filing fee based upon a claim submitted by Plaintiff.
The Court also notes Plaintiff’s argument that the “outcome
determinative question” is whether the $775 fee submitted by
Defendant was sufficient to submit all of Plaintiff’s claims to
Plaintiff contends that Defendant should have
checked the boxes on the initial filing form for injunctive and
declaratory claims, which would have resulted in a filing fee of
Because Defendant only paid $775, Plaintiff argues that
Defendant did not pay a filing fee sufficient to submit all of
Plaintiff’s claims to arbitration and has thus defaulted.
The Court will not predict whether the AAA case manager
would have assessed a $3,350 fee if Defendant had checked
different boxes on the filing form.
Plaintiff never asked the
AAA case manager to reduce the fee to $3,350, the AAA never
sought a filing fee in the amount of $3,350, Defendant was never
invoiced for $3,350, and the case was not withdrawn from
arbitration based upon the failure to pay a $3,350 filing fee.
The Court is thus unable to find Defendant in default for
failing to pay a filing fee that Defendant was never asked to
For the reasons set forth above, the Court denies
Plaintiff’s request to lift the stay entered on June 22, 2011
and directs the parties to return to arbitration.
An Order consistent with this Opinion will be entered.
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
At Camden, New Jersey
Dated: February 20, 2015
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?