The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
TRINA MOSLEY, )
)
Plaintiff, )
v. )
) Case No.: 2:20-cv-00105-AMM
EDUCATION CORPORATION )
OF AMERICA, )
)
Defendant. )
MEMORANDUM OPINION ON DEFENDANT’S MOTION TO COMPEL
ARBITRATION AND DISMISS ACTION
This case is before the court on Defendant’s Motion To Compel Arbitration
and Dismiss Action, Doc. 8. For the reasons explained below, the motion is
GRANTED.
I. BACKGROUND
Ms. Mosley’s complaint, filed in state court and removed by Education
Corporation of America (“Education Corporation”), asserts three counts. The first is
styled as a count for “Negligence/Fraud/Bad faith/Misrepresentation.” It alleges a
“breach of legal duty” owed to her to provide training and job opportunities, which
duty allegedly flowed from an agreement between the parties. Doc. 1-1 at 7. The
second count is for “Breach of Contract” and alleges other breaches of duties arising
from that agreement. Id. at 9. The third count is styled as “Fictitious Students” and
alleges that Education Corporation used students at Virginia College to defraud Ms.
Mosley into signing the agreement. Id. at 10.
The source of these claims is the Enrollment and Tuition Agreement (“the
Agreement”) that Education Corporation attached to its motion, Doc. 8-1.
Ms. Mosley admits that she “did execute an Enrollment and Tuition Agreement” to
attend Virginia College in Macon, Georgia, and that the “Arbitration agreement was
included in the contract . . . .” Doc. 10 at 2. The arbitration provision in the
Agreement states, among other things, the following in bold and all caps:
BY SIGNING THIS CONTRACT, THE STUDENT (AND, IF
APPLICABLE, HIS/HER PARENT OR LEGAL GUARDIAN)
GIVE UP THE RIGHT TO GO TO COURT AND THE RIGHT
TO TRIAL BY JURY AND EXPRESSLY ACKNOWLEDGE
AND UNDERSTAND THAT HIS, HER OR THEIR RIGHTS
AND REMEDIES WILL BE DETERMINED BY AN
ARBITRATOR AND NOT BY A JUDGE OR JURY.
Doc. 8-1 at 8. Ms. Mosley separately signed an Arbitration Policy with an identical
provision. Doc. 8-1 at 10. The Agreement provides that Alabama law governs the
parties’ rights under the contract. Doc. 8-1 at 7.
Education Corporation has moved to enforce the arbitration provision and
dismiss this case. Doc. 8.
II. STANDARD OF REVIEW
The court must decide only “whether the parties agreed to arbitrate,”
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985),
without deciding whether their Agreement could hold up in court. The court’s ruling
is “in effect a summary disposition of the issue of whether or not there has been a
meeting of the minds on the agreement to arbitrate,” and the standard of review is
analogous to a summary judgment motion. In re Checking Account Overdraft Litig.,
754 F.3d 1290, 1294 (11th Cir. 2014) (citations omitted). Accordingly, the movant
must establish “that there is no genuine dispute as to any material fact,” Fed. R. Civ.
P. 56(a), on the question whether the parties agreed to arbitrate. A fact is material
“if, under the applicable substantive law, it might affect the outcome of the case.”
Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004). A genuine
dispute as to a material fact exists where “the nonmoving party has produced
evidence such that a reasonable factfinder could return a verdict in its favor.”
Waddell v. Valley Forge Dental Assocs., Inc., 276 F.3d 1275, 1279 (11th Cir. 2001).
III. ANALYSIS
A. Whether An Agreement To Arbitrate Is Established And Enforceable
The Federal Arbitration Act (“the Act”) applies to a written contract
“evidencing a transaction involving commerce” and provides that an arbitration
clause within the contract “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. “Section 3 [of the Act] requires a federal court in which suit has been brought
‘upon any issue referable to arbitration . . . to stay the court action pending arbitration
once it is satisfied that the issue is arbitrable under the agreement.” Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 400 (1967). These provisions
“manifest a liberal federal policy favoring arbitration agreements.” E.E.O.C. v.
Waffle House, Inc., 534 U.S. 279, 289 (2002) (quotation marks and citations
omitted).
“The threshold question of whether an arbitration agreement exists at all is
‘simply a matter of contract.’” Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d
1325, 1329 (11th Cir. 2016) (quoting First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 943 (1995)). “[S]tate law generally governs whether an enforceable
contract or agreement to arbitrate exists.” Id. At least so long as that state law is
consistent with “substantive federal arbitration law.” Rent-A-Center, W. Inc. v.
Jackson, 561 U.S. 63, 70–71 (2010). As the party seeking to enforce the
Agreement’s arbitration provision, Education Corporation bears the burden of
“proving the existence of a contract calling for arbitration.” S. Energy Homes, Inc.
v. Hennis, 776 So. 2d 105, 106 (Ala. 2000); Bazemore, 827 F.3d at 1334.
Education Corporation has met its burden of proving that an arbitration
agreement exists. It submitted a copy of the Agreement and an affidavit affirming
its authenticity. Doc. 8-1. Ms. Mosley does not dispute the existence of the
Agreement, Doc. 10 at 2, and she does not assert that the Agreement submitted by
Education Corporation is not the Agreement she signed, see Doc. 10 at 3.
Construed liberally, Ms. Mosley’s pro se complaint alleges that she would not
have agreed to contract with Virginia College (which is owned by Education
Corporation) had she known that the claim its recruiters were making—that Medical
Assistant students had a fifty-fifty chance of career placement—was bankrupt. See
Doc. 1-1 at 5 ¶ 5. The students’ real chances allegedly were closer to one-in-six. Id.
at 4-5 ¶ 4. Ms. Mosley alleges that Virginia College’s inability to make good on all
its promises eventually caught up with it: the Macon campus where she attended
classes is closed, and the college’s creditors have sued it on unpaid rent. Id. at 7-8.
Whether her claim has merit, this court cannot say. The Supreme Court has
decided that even where state law would dictate that a valid contract was never
entered into because of fraud, federal policy favoring arbitration allows that decision
to be made by an arbitrator. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.
440, 444-46 (2006).
Ms. Mosley also asserts that the Agreement lacks consideration because
nothing of value was exchanged, but this is incorrect. See Doc. 10 at 1. Her claim is
that Virginia College promised to provide the training she needed to have a good
opportunity to secure a job, and in return she promised to pay tuition. Mutual
promises are valuable, Smoyer v. Birmingham Area Chamber of Commerce, 517 So.
2d 585, 587 (Ala. 1987), and separate consideration to support an arbitration clause
is not required, Jim Walter Homes, Inc. v. Saxton, 880 So. 2d 428, 433 n.2 (Ala.
2003).
Because Education Corporation has demonstrated the existence of the contract
calling for arbitration, the burden shifts to Ms. Mosley to show that the portion of
the contract calling for arbitration—severed from the contract as a whole and
examined alone, Rent-A-Center, 561 U.S. at 71—is invalid. Green Tree Fin. Corp.
of Alabama v. Wampler, 749 So. 2d 409, 415 (Ala. 1999). Alabama law governs the
enforceability of the agreement to arbitrate because the Agreement so provides.
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Cherry, Bekaert &
Holland v. Brown, 582 So. 2d 502, 507 (Ala. 1991).
Ms. Mosley makes three attacks on the validity of the arbitration agreement.
First, she asserts that the arbitration agreement was one of adhesion because there
was no Enrollment Agreement she could sign without an arbitration clause. Doc. 10
at 1 ¶ 2. But “the times in which consumer contracts were anything other than
adhesive are long past,” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346–47
(2011), and courts addressing the defense of adhesion have found again and again
that “‘there is nothing inherently unfair or oppressive about arbitration clauses.’” Ex
parte Smith, 736 So. 2d 604, 612 (Ala. 1999) (quoting Coleman v. Prudential Bache
Securities, Inc., 802 F.2d 1350, 1352 (11th Cir.1986)).
Second, Ms. Mosley asserts that arbitrators are inherently biased and that
arbitrating her claims will force her onto a pro-defendant playing field, Doc. 10 at 2
¶¶ 3–4, but these are precisely the kinds of “generalized attacks on arbitration that
rest on suspicion of arbitration as a method of weakening the protections afforded in
the substantive law to would-be complainants” that the United States Supreme Court
has rejected. See Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79,
89–90 (2000) (quotation marks and citations omitted).
Third, Ms. Mosley asserts that according to an unidentified source, it costs
between $6,650 and $11,625 to “initiate a claim to arbitrate.” Doc. 10 at 2 ¶ 5. But
she does not provide admissible evidence that pursuing her claims in arbitration will
cost that much. When “a party seeks to invalidate an arbitration agreement on the
ground that arbitration would be prohibitively expensive, that party bears the burden
of showing the likelihood of incurring such costs.” Green Tree Fin. Corp.-Alabama,
531 U.S. at 92. Education Corporation has stated “that Plaintiff is only liable for an
initial $200 nonrefundable Filing Fee,” and that “the remainder of the fees and
expenses are borne by the Defendant . . . .” Doc. 11 at 6.
Finally, Ms. Mosley points to Department of Education regulations which she
contends prohibit schools from enforcing arbitration clauses against their former
students. Doc. 10 at 3. But those regulations have to do with borrower defense
proceedings and do not apply to Ms. Mosley’s lawsuit against Education
Corporation. See 34 C.F.R. § 685.206; 81 FR 75926-01, at *75929 (“The rights
adjudicated in borrower defense proceedings are rights of the Direct Loan borrower
against the government regarding the borrower’s obligation to repay a loan made by
the government, and rights of the government to recover from the school for losses
incurred as a result of the act or omission of the school in participating in the Federal
loan program.”)
Finding that the parties made an agreement to arbitrate, the court turns to the
Act’s other requirements: that the transaction “involve[] commerce,” 9 U.S.C. § 2,
and that the issues presented in this lawsuit are “arbitrable under the agreement,”
Prima Paint Corp., 388 U.S. at 400. Education Corporation has established, and Ms.
Mosley has not contested, that their transaction involved commerce and that the
issues in this suit are all arbitrable under the agreement. See Doc. 8 at 4-6. Under
controlling precedent, Education Corporation has carried its burden to compel
arbitration.
B. Whether The Action Is Due To Be Dismissed
Education Corporation argues that because the parties agreed to arbitrate their
dispute, the court should dismiss this case with prejudice. Doc. 8 at 9. Education
Corporation cites three cases for this proposition, two of which remain good law,1
1 Education Corporation cited Dale v. Comcast Corp., 453 F. Supp. 2d 1367 (N.D. Ga. 2006),
but failed to note that that decision was reversed by the Eleventh Circuit.
but those cases were dismissed without prejudice. This distinction matters.
Dismissing a case without prejudice protects a party’s “right to litigate any issues
found non-arbitrable” by the arbitrator, Samadi v. MBNA Am. Bank, N.A., 178 F.
App’x 863, 866 (11th Cir. 2006), and leaves undisturbed a party’s ability to enforce
in court an award entered by the arbitrator, see Tucker v. Ernst & Young, LLP, 159
So. 3d 1263, 1271 (Ala. 2014).
CONCLUSION
For the foregoing reasons, Defendant’s Motion To Compel Arbitration And
Dismiss Action, Doc. 8, is granted and this case is dismissed without prejudice.
DONE and ORDERED this 25th day of June, 2020.
UNITED STATES DISTRICT JUDGE