Rose v. Silverleaf Resorts, Inc.
4:15-cv-00695
E.D. Mo.Jul 20, 2015Background
- Plaintiffs Robert and Lilly Iappini sue Silverleaf Resorts, Inc. under Missouri’s Merchandising Practices Act and seek contract rescission.
- Plaintiffs purchased time-share units in Missouri after January 1, 2010 and allege deceptive tactics by Silverleaf.
- Contracts include an Arbitration Addendum governed by the FAA that appears to require binding arbitration and contains a class action waiver.
- Silverleaf moves to compel individual arbitration and dismiss or stay the action pending arbitration.
- Plaintiffs argue the class action waiver is ambiguous, unconscionable, and that the FAA savings clause exempts their claims from arbitration.
- Court finds the arbitration agreement valid, unambiguous, and applicable to all claims, and dismisses the action without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the class action waiver unambiguous? | Iappinis contend waiver is ambiguous and favors class action rights. | Silverleaf argues waiver is clear and effective to bar class actions once arbitration begins. | Waiver is unambiguous when read as a whole. |
| Is the Arbitration Addendum procedurally unconscionable? | Addendum uses fine print and high-pressure tactics to induce signing. | No procedural unconscionability; documents are not hidden and disclosure is conspicuous. | No procedural unconscionability established. |
| Is the Arbitration Addendum substantively unconscionable? | Class waiver defeats statutory rights and is one-sided. | Concepcion prohibits invalidating arbitration due to class waiver; no other unconscionability shown. | Arbitration clause, including the class waiver, is not substantively unconscionable. |
| Do Plaintiffs' claims fall within the scope of the arbitration agreement? | Claims arise from or relate to the contract and should be outside arbitration. | Claims fall within the broad scope covering contracts, relationships, and statements related to the contract. | Yes, the claims fall within the arbitration agreement’s broad scope. |
| Does the FAA savings clause prevent arbitration here? | Savings clause saves claims related to MMPA and rescission from arbitration. | Savings clause does not override enforceable arbitration when unconscionability is not proven. | Savings clause does not prevent arbitration. |
Key Cases Cited
- Torres v. Simpatico, Inc., 781 F.3d 963 (8th Cir. 2015) (clarifies FAA scope and unconscionability standards)
- AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (U.S. 2011) (unconscionability cannot be sole basis to invalidate arbitration)
- Brewer v. Missouri Title Loans, 364 S.W.3d 486 (Mo. 2012) (limits unconscionability review to contract formation)
- Robinson v. Title Lenders, Inc., 364 S.W.3d 505 (Mo. banc 2012) (state contract principles govern arbitration validity)
- Concepcion, U.S. Supreme Court concurring, 131 S. Ct. 1740 (U.S. 2011) (confirms FAA preempts state rules limiting arbitration clauses)
- Faber v. Menard, 367 F.3d 1048 (8th Cir. 2004) (arbitration scope and enforceability considerations)