The instant arbitration clause only requires application of the NAF’s rules, similar to the arbitration clause in Reddam

The instant arbitration clause only requires application of the NAF’s rules, similar to the arbitration clause in Reddam

The instant arbitration clause states that all disputes «shall be resolved by binding individual (and not class, consolidated or representative) arbitration by and under the Code of Procedure of the National Arbitration Forum («NAF») in effect at the time the claim is filed.» Def.’s Mot. to Dismiss or Compel Arbitration, Ex. Cf. In re Solomon, 68 F.3d at 557; Carideo, 2009 WL 3485933, at *4. See 457 F.3d at 1059. The language of the instant arbitration clause is permissive; it does not require that a party file a claim with the NAF, but instead states that claims «may be filed» at an NAF office or with the NAF through the internet, telephone, or U.S. mail. Def.’s Mot. to Dismiss or Compel Arbitration, Ex. A (emphasis added). The «notice» provision at the end of the arbitration clause states that the parties agree to binding arbitration and waive their right to file a lawsuit www.signaturetitleloans.com/payday-loans-pa in court, but it does not specify any arbitral forum.

The plain language of the arbitration clause makes it clear that the parties agreed to arbitrate; it is not clear that the parties agreed to arbitrate only if a certain forum were available. Because there is no language evidencing a clear intent to designate the NAF as the exclusive arbitral forum, appointing a substitute arbitrator would not contravene the parties’ intent. The availability of NAF is not integral to the arbitration clause. The arbitration clause remains valid and enforceable despite the unavailability of the NAF to administer arbitration. The court will appoint a substitute arbitrator under Section 5 of the FAA.

III. Conclusion

The arbitration clause is valid and enforceable under Section 2 of the FAA. The motion to dismiss in favor of, or to compel, arbitration will be granted. Because the NAF is no longer available to administer arbitration, the court will, under Section 5 of the FAA, appoint a substitute arbitrator to administer arbitration pursuant to NAF rules. An appropriate order follows.

We have subject matter jurisdiction under the Class Action Fairness Act because there is diversity of citizenship between the parties and the aggregate amount in controversy from all putative class members exceeds $5 million. See 28 U.S.C. § 1332(d)(2).

A. Unlike the arbitration clauses in In re Solomon and Carideo, the arbitration clause in each of Clerk’s loan agreements does not contain an express statement designating NAF as the exclusive arbitral forum and requiring it to administer arbitration

The Supreme Court reversed. The Court held that the FAA preempted California unconscionability law, and under the FAA, the arbitration clause and its class action waiver were valid and enforceable. Concepcion, 131 S. Ct. at 1746-53. The Court acknowledged that Section 2 of the FAA contains a savings clause permitting «generally applicable contract defenses, such as fraud, duress, or unconscionability,» to invalidate an arbitration agreement, but decided that even generally applicable defenses may be preempted by the FAA if they are «applied in a fashion that disfavors arbitration» and undermine the FAA’s central purpose. Id. at 1746-49. The Court stated that classwide arbitration undermines the central purpose of the FAA by «sacrific[ing] the principal advantage of arbitration-its informality» for a procedure that is «slower, more costly, and more likely to generate procedural morass than final judgment.» Id. at 1750-51. The Court held that the FAA preempts California unconscionability law because the state law in effect requires the availability of classwide arbitration, and classwide arbitration undermines the central purpose of the FAA. Id. at 1753.

If an arbitration clause requires application of the rules of a particular arbitral forum, but does not require that arbitration occur in any particular forum, then the arbitral forum is an ancillary logistical concern, rather than an integral part of the arbitration clause, and the arbitration clause remains enforceable despite the unavailability of the designated arbitral forum. See Reddam, 457 F.3d at 1060. In Reddam, the arbitration clause stated that «[a]ny arbitration under this agreement shall be determined pursuant to the rules then in effect of the National Association of Securities Dealers, Inc.» Id. at 1059. Because the arbitration clause required application of the rules of the National Association of Securities Dealers, Inc. («NASD»), but did not require that the NASD itself administer the arbitration, the court determined that the NASD was not an integral part of the arbitration clause; any other arbitral forum could administer arbitration and simply apply NASD’s rules. Id. at 1059-60. NASD’s unavailability to administer the arbitration did not render the arbitration clause unenforceable. Id. at 1060-61.

The instant arbitration clause only requires application of the NAF’s rules, similar to the arbitration clause in Reddam

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