252 So. 3d 67
Ala.2017Background
- Multiple plaintiffs bought vehicles from Locklear Chrysler Jeep Dodge, LLC (Locklear CJD) and signed an identical "Binding Pre-Dispute Arbitration Agreement." Plaintiffs later alleged identity theft after providing personal information to the dealership.
- Plaintiffs sued Locklear CJD, Locklear Automotive Group, Inc. (Locklear Group, the sole member of Locklear CJD), and others asserting torts and statutory claims arising from the identity-theft incidents.
- Locklear CJD moved to compel arbitration as to claims against it; Locklear Group (a nonsignatory) also sought to compel arbitration of claims against it. Trial courts split: in most cases they compelled arbitration as to Locklear CJD but denied arbitration as to Locklear Group; in the Lollars’ case the court denied arbitration entirely.
- The arbitration clause is broadly worded to cover "all disputes ... resulting from, arising out of, relating to or concerning the transaction entered into or sought to be entered into," and also contains language stating the "terms of this agreement and all clauses herein contained, their breadth and scope" shall be submitted to arbitration.
- Key legal questions: (1) who decides arbitrability (court or arbitrator) when the clause contains an arbitrability provision; (2) whether a nonsignatory (Locklear Group) may compel arbitration under equitable estoppel given the clause’s wording and the relationship between claims against signatory and nonsignatory; (3) whether specific plaintiffs’ claims (notably the Lollars’) fall within the clause’s scope.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (court vs. arbitrator)? | Plaintiffs: trial courts retained right to decide because defendants did not properly preserve the arbitrability argument in trial court (except Hood). | Defendants: clause language ("terms...breadth and scope") is clear and unmistakable; arbitrator should decide. | Waiver where defendants failed to adequately raise the issue in trial court; but where argued (Hood) clause is clear and arbitrator decides. |
| Can nonsignatory Locklear Group compel arbitration (equitable estoppel)? | Plaintiffs: agreement is party-specific ("undersigned" and "dealer") so nonsignatory cannot enforce it. | Locklear Group: clause is broad; plaintiffs’ claims against Group are intertwined with claims against signatory Locklear CJD, invoking equitable estoppel. | Arbitration clause is broad (not party-limited); plaintiffs’ claims are intertwined with signatory’s claims; equitable estoppel allows Locklear Group to compel arbitration. |
| Do plaintiffs’ identity-theft claims fall within the arbitration clause’s scope? | Plaintiffs (Lollars/Hood): identity-theft incidents occurred during separate visits/transactions and thus are not "relating to" the transaction identified in the agreement. | Defendants: clause is broadly phrased to reach claims "relating to" the transaction and arbitrability should be decided by arbitrator. | For Lollars: on the face of the agreement the 2013 arbitration clause did not cover an unrelated 2015 incident — trial court properly denied arbitration. For Hood: defendants preserved arbitrability argument at hearing; court reversed and compelled arbitration. |
| Validity/authenticity challenge to submitted arbitration agreement (Hood) | Hood: the copy submitted was fabricated/altered (added dealer name) so arbitrability unresolved and court must decide existence. | Defendants: Hood admitted signing substantially identical agreement; added dealer-name was not a material alteration. | Alleged addition of dealer name was immaterial; valid arbitration agreement exists; arbitrability clause applies. |
Key Cases Cited
- Jim Burke Automotive, Inc. v. McGrue, 826 So.2d 122 (Ala. 2002) (identical arbitrability language is clear and unmistakable evidence that parties intended arbitrator to decide arbitrability)
- Ex parte Waites, 736 So.2d 550 (Ala. 1999) (same: clause covering "terms...their breadth and scope" shows intent to arbitrate arbitrability)
- Smith v. Mark Dodge, Inc., 934 So.2d 375 (Ala. 2006) (discusses equitable-estoppel exception and party-specific limitation preventing nonsignatories from compelling arbitration)
- Ex parte Napier, 723 So.2d 49 (Ala. 1998) (broad "all disputes...arising from or relating to" language can encompass claims against nonsignatories)
- Capitol Chevrolet & Imports, Inc. v. Payne, 876 So.2d 1106 (Ala. 2003) (arbitration clause did not cover later, unrelated torts; disputes must have legal and logical nexus to transaction)
- Ex parte Greenstreet, Inc., 806 So.2d 1203 (Ala. 2001) (once movant makes prima facie showing, burden shifts to opponent to present evidence opposing arbitration)
- Ex parte Stamey, 776 So.2d 85 (Ala. 2000) (two-part test: arbitration clause breadth and whether claims against nonsignatory are intertwined with contract obligations)