598 S.W.3d 1
Ark.2020Background
- Willis and Bartholomew bought a car under an installment-sales contract from Automatic Auto Finance; the contract was later assigned to Jorja Trading.
- After missed payments the buyers voluntarily surrendered the vehicle; sale proceeds left a deficiency that Jorja sued for in Washington County district (small-claims) court and won a monetary judgment.
- Appellees appealed to circuit court, asserted usury and UCC counterclaims, sought class certification, and the appellants moved to compel arbitration under the contract's arbitration paragraph.
- The circuit court denied the motion to compel, finding the arbitration clause lacked mutuality of obligation (pointing to self-help/repossession, a class-action waiver, and an arbitrator-selection provision) and that appellants waived arbitration by first suing in small-claims court; the court of appeals affirmed.
- The Arkansas Supreme Court granted review and reversed: it held the arbitration clause is enforceable (the three challenged provisions do not destroy mutuality) and the contract expressly preserved the right to seek monetary relief in small-claims court without waiving arbitration.
Issues
| Issue | Plaintiff's Argument (Willis/Bartholomew) | Defendant's Argument (Jorja/assignors) | Held |
|---|---|---|---|
| Whether arbitration clause has mutuality given self-help/repossession language | Clause is one-sided because only seller can realistically repossess | Mutuality need not make every term reciprocal; whole contract has consideration | Self-help reservation does not destroy mutuality; arbitration clause is valid |
| Whether class-action waiver destroys mutuality | Class waiver binds buyer but provides no real reciprocal burden on seller | Class waivers are enforceable; FAA preempts rules singling out arbitration | Class-action waiver does not void mutuality and is enforceable under FAA (Concepcion) |
| Whether arbitrator-selection procedure allows seller to avoid arbitration | Seller could refuse consent and thereby evade arbitration | Provision requires purchaser to select with seller’s consent; if no agreement, court appoints arbitrator | Court reads clause to require court appointment if parties cannot agree; it does not permit unilateral avoidance |
| Whether suing first in small-claims court waived right to arbitrate | Filing for a money judgment in district court waived the contractual right to arbitrate | Contract expressly states seeking monetary relief in court does not waive arbitration | No waiver: contract unambiguously preserved the right to pursue monetary judgment without waiving arbitration |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (FAA preempts state rules that single out or disfavor arbitration clauses)
- Doctor’s Assocs. v. Casarotto, 517 U.S. 681 (states may not place arbitration provisions on unequal footing with other contract terms)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (ordinary state-law contract principles govern formation of arbitration agreements)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (state law is preempted to the extent it obstructs FAA objectives)