Disch v. Grubbs Automotive GRA, LLC et al

Filing 45

MEMORANDUM OPINION & ORDER: Before the Court is Defendants' 38 Motion to Compel Arbitration and Stay Case Pending Arbitration. The Court GRANTS Defendants' Motion (ECF No. 38) and STAYS this case pending resolution of the arbitration process. (Ordered by Judge Mark Pittman on 6/3/2024) (mmw)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
CASSIE DISCH, ET AL.,
Plaintiffs,
v.

No. 4:23-cv-01202-P

GRUBBS AUTOMOTIVE GRA,
LLC, ET AL.,
Defendants.
MEMORANDUM OPINION & ORDER
Before the Court is Defendants’ Motion to Compel Arbitration and
Stay Case Pending Arbitration. ECF No. 38. Having considered the
Motion, briefs, and applicable law, the Court concludes the Motion
should be and hereby is GRANTED.

BACKGROUND
Plaintiffs Cassie Disch and Jo Ellen Bergstrom bought cars from
Grubbs Acura in Grapevine, Texas. Both Plaintiffs claim Grubbs
overcharged them for their vehicles by “double-dipping,” i.e., by adding
a “destination charge” twice to their respective bills. Disch sued first,
filing this action against Defendants (Grubbs and its owners/agents) on
October 30, 2023. Her Original Complaint alleged counts under the
Racketeer Influenced & Corrupt Organizations Act (“RICO”) and the
Texas Deceptive Trade Practices Act (“DTPA”), along with claims for
common law fraud and civil conspiracy. She amended her complaint in
May 2024 to add Bergstrom, who brings identical claims.
Defendants moved to compel arbitration on May 24, arguing both
Plaintiffs signed arbitration agreements contemporaneously with their
car purchases. Defendants also ask the Court to stay this action while
the Parties’ dispute proceeds to arbitration. Plaintiffs push back,
arguing the arbitration agreement is invalid, has been waived, and does
not cover all their claims. As explained below, Defendants persuade that

this case should be arbitrated and should be stayed until such
arbitration is complete. Given the clarity of the relevant arbitration
agreements and controlling legal precedents, the Court need not wait for
Defendants’ reply brief before rendering a decision on the instant
Motion.

LEGAL STANDARD
Federal courts have become increasingly pro-arbitration for the past
several decades. See, e.g., Gilmer v. Interstate Johnson Lane Corp., 500
U.S. 20, 30 (1991) (recognizing the “current strong endorsement of the
federal statutes favoring [arbitration]”). Simply put, “[a]rbitration is
favored in the law.” Grigson v. Creative Artist Agency, LLC, 210 F.3d
524, 526 (5th Cir. 2000). Accordingly, “as a matter of federal law, any
doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24–25 (1983). This presumption is baked into the very
fabric of the Federal Arbitration Act (“FAA”). See 9 U.S.C. §§ 1–16.
The FAA provides that arbitration agreements “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract.” 9 U.S.C. § 2. Thus, “there
is a strong presumption in favor of arbitration and a party seeking to
invalidate an arbitration agreement bears the burden of establishing its
invalidity.” Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297
(5th Cir. 2004). Beyond the general pro-arbitration presumption, three
factors favor enforcement of a given arbitration agreement: (1) whether
the agreement was written, (2) whether the underlying transaction
involved interstate commerce, and (3) whether the agreement covers the
claims at issue.” See Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir.
1996).

ANALYSIS
Defendants furnished facially relevant arbitration agreements
signed by Disch and Bergstrom. See ECF No. 38-2. As the Parties
resisting arbitration, Plaintiffs bear the burden in proving the
arbitration agreements were defective, invalid, or otherwise
inapplicable. See Carter, 362 F.3d at 297. As explained below, they fail
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to do so. In resisting Defendants’ Motion, Plaintiffs argue (1) they don’t
recall signing the arbitration agreements because Grubbs utilized
ostensibly shady tactics to effectuate them, (2) subsequent agreements
superseded the arbitration agreements, (3) Defendants waived their
right to arbitrate this dispute, and (4) Plaintiffs’ RICO claims aren’t
within the claims contemplated by the arbitration agreements. See ECF
No. 43 at 5–14.
A. The Arbitration Agreements are Valid and Unwaived.
Plaintiffs make a compelling case that Grubbs Acura, not unlike
others in the industry, resorts to shady tactics. See ECF No. 43. Indeed,
subsequent interactions between Grubbs and an undercover
investigator establish as much. Id. at 2. But “individuals seeking to
avoid the enforcement of an arbitration agreement face a high bar.”
Carter, 362 F.3d at 297. And Plaintiffs do not hurdle that bar here.
First, weighing against Plaintiffs’ allegations of chicanery are their
signatures on the relevant agreements. See ECF No. 38-2 at 9–16. Under
the FAA, an arbitration agreement is presumptively valid and
enforceable absent “such grounds as exist at law or equity for the
revocation of any contract.” See 9 U.S.C. § 2. Thus, without a legal or
equitable reason to overlook someone’s signature on an arbitration
agreement, that signature represents their adherence to its terms. That
remains true even where a plaintiff “does not recall signing it.” ECF No.
43 at 2. Consequently, Plaintiffs’ invalidity arguments start ten feet
behind the starting line here.
Second, Plaintiffs argue the Buyer’s Order (which contains
arbitration language) was superseded by the Retail Purchase
Agreement (which doesn’t). See ECF No. 43 at 6. That’s because “[t]he
binding contract, or the RPA . . . shares the terms of the Buyer’s Order

without the arbitration agreement.” Id. While that’s admittedly shady,
it doesn’t erase Plaintiffs’ signatures from the arbitration agreement.

Car sales often contain a lot of boilerplate language and contractual
gobbledygook. But Plaintiffs agreed to an arbitration agreement for “any
Claim related to or arising out of the transaction” identified in the
Buyer’s Order. ECF No. 38-1 at 5. The RPA contains no language that
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explicitly overrides that material term, though it does contain a merger
clause. See ECF No. 43 at 7. Yet the merger clause incorporates “any
documents” that were part of the transaction. Id. While Plaintiffs say
they never agreed to the Buyer’s Order, thus rendering this language
inapplicable vis-à-vis the arbitration agreement, there’s no express
representation to add teeth to this assertion. What does have teeth is
the arbitration agreement itself, which Plaintiffs signed. See ECF No.
38-1 at 5. And Plaintiffs do not carry their steep burden to overcome the
Court’s presumption in favor of enforcing that agreement. See Webb, 89
F.3d at 258.
Third, contrary to Plaintiffs’ assertions, see ECF No. 43 at 8,
Defendants did not waive their right to arbitrate this dispute. This is
admittedly a Hail-Mary argument, as “[t]here is a strong presumption
against waiver of arbitration.” Subway Equip. Leasing Corp. v. Forte,
169 F.3d 324, 326 (5th Cir. 1999) (collecting cases). Plaintiffs brief how
a finding of prejudice factors into this analysis, see ECF No. 43 at 8, but
the Court need not reach that consideration because Defendants’
invocation of the legal process is insufficient to waive the right to
arbitration. See Aptim Corp. v. McCall, 888 F.3d 129, 141 (5th Cir.
2018). In many cases, filing an initial complaint “raising a claim for
damages” that does not “assert[] an arbitration clause” sufficiently
waives the right. Id. (citing Nicholas v. KBR, Inc., 565 F.3d 904, 908 (5th
Cir. 2009). Here, however, Plaintiffs seek to apply these precedents
against Defendants who have mainly played defense. See ECF No. 43 at
8. And the law is clear that a defendant waives its right to arbitrate a
dispute only by litigating “a specific claim it subsequently seeks to
arbitrate.” Forby v. One Techs., L.P., 13 F.4th 460, 465 (5th Cir. 2021)
(collecting cases).
In analyzing Plaintiffs’ waiver argument, the Court is mindful that
such arguments are “evaluated on a case-by-case basis.” Id. at 462. In
this case, Defendants have filed an answer to Plaintiffs’ Original
Complaint and Amended Complaint (ECF Nos. 32, 42) and the present
Motion (ECF No. 38). Far from dragging this case along, Defendants
have engaged the legal process only as needed to respond to allegations
against them and properly raise their right to arbitrate. Plaintiffs
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rightly note that Defendants “did not file the Motion when this case was
before Judge Starr; they did not file it before Judge O’Connor; and now,
they file it before [the undersigned] only after advantageously waiting
for a ruling on a dismissal motion.” ECF No. 43 at 11. By stretching one
fact (this case has been transferred twice) into three assertions
(defendants didn’t file the Motion before Judge Starr or Judge
O’Connor), Plaintiffs divert attention from this case’s relative youth.
Indeed, the referenced transfers have all occurred since October 30,
2023. See ECF No. 1. Moreover, service of process was not properly
effected upon all Defendants until late December. See ECF No. 18.
In this short timeframe, Defendants have not gone on the attack or
otherwise devoted time and resources to litigating a claim they now wish
to arbitrate. See Forby, 14 F.4th at 465. Rather, they have filed required
responsive pleadings and moved to enforce a valid arbitration
agreement. See ECF Nos. 32, 38, 42. Indeed, they filed the present
Motion less than two weeks after Plaintiffs filed their Amended
Complaint. See id. They even filed it before their Amended Answer. See
ECF Nos. 38, 42. If Defendants’ defensive maneuvers waived their right
to arbitrate, the very act of filing a motion to compel arbitration would
defeat the remedy requested. Thus, the Court finds Plaintiffs do not
overcome the “strong presumption against waiver of arbitration.” Forte,
169 F.3d at 326.
B. The Arbitration Agreements Cover Plaintiffs’ RICO
Claims.
Plaintiffs next contend that, “[e]ven if valid arbitration agreements
exist,” the RICO claims at issue in this action “are not within the
arbitration agreements’ ambits.” ECF No. 43 at 8. Insofar as the Court’s
analysis begins with the agreement’s language itself, see Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985),
the Court is unaware how Plaintiffs reach this conclusion. Disch’s
arbitration agreement covers “any Claim related to or arising out of the
transaction.” ECF No. 38-1 at 5. Bergstrom’s covers “[a]ny claim or
dispute, whether in contract, tort, statute, or otherwise (including the
interpretation and scope of this Arbitration Provision, and the
arbitrability of the claim or dispute).” Id. Plaintiffs’ RICO claims are
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“any claim or dispute.” And they’re certainly “any claim or dispute
[arising from a] statute.” Thus, absent case law suggesting RICO claims
are immune from the Court’s strong pro-arbitration presumption, the
Court is unpersuaded by this argument. That is especially true
considering that “as a matter of federal law, any doubts concerning the
scope of arbitrable issues should be resolved in favor of arbitration.”
Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25.

CONCLUSION
A party resisting arbitration has a tough field to plow. The Court
must favor a signed arbitration agreement. See Grigson, 210 F.3d at 526.
And it must resolve doubts regarding the agreement’s scope in favor of
arbitration. See Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25. For the
reasons stated above, Plaintiffs fail to carry their burden here. They
further argue that, should the Court grant Defendants’ Motion,
“dismissal of the action [is] more appropriate than a stay.” ECF No. 43
at 14 (cleaned up). This assertion relies upon old law and is contrary to
clear Supreme Court precedent. See Smith v. Spizzirri, ___ U.S. ___, 144
S. Ct. 1173, 1172 (2024) (“When a federal court finds that a dispute is
subject to arbitration, and a party has requested a stay of the court
proceeding pending arbitration, the court does not have discretion to
dismiss the suit on the basis that all the claims are subject to
arbitration.”). In other words, when 9 U.S.C. § 3 says “shall,” it means
it. Accordingly, the Court GRANTS Defendants’ Motion (ECF No. 38)
and STAYS this case pending resolution of the arbitration process.
SO ORDERED on this 3rd day of June 2024.

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