Amicus Curiae Brief — Jim Skinner Ford, Inc. v. Warren

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IN THE

Supreme Court Of Che United States

October Term, 1989

JIM SKINNER FORD, INC.,

Petitioner,

vs.

JACK D. WARREN AND JUANITA WARREN,

Respondents.

On Petition for a Writ of Certiorari

to the Supreme Court of Alabama

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE AND BRIEF AMICUS CURIAE OF THE

AUTOMOBILE DEALERS ASSOCIATION

OF ALABAMA, INC. AND THE ALABAMA

INDEPENDENT AUTOMOBILE DEALERS

ASSOCIATION, INC. IN SUPPORT OF

THE PETITION FOR CERTIORARI

OF JIM SKINNER FORD, {NC.

RoBertT A. HuFFAKER, Esq.

Counsel of Record

General Counsel

Automobile Dealers Association

of Alabama, Inc.

Post Office Box 270

Montgomery, Alabama 36195

Telephone: (205) 834-8480

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TABLE OF CONTENTS

TABLE OF AUTHIORITIES ...........cccscee. ; in

MOTION FOR LEAVE TO FILE

BRler AMICUS CURIAE ...... 0c ccesesccsnsececs

BRIEF AMICUS CURIAE OF THE

AUTOMOBILE DEALERS ASSOCIATION

OF ALABAMA,

INC.AND THE ALABAMA

INDEPENDENT AUTOMOBILE DEALERS

ASSOCIATION, INC. IN SUPPORT OF

THE PETITION FOR CERTIORARI OF

JERE SIS INGWeeee WEIMER, BITE co cet eect c cnc nees

INTEREST OF THE ADAA AND THE

AIADA AS AMICUS CURIAE .....................

ARGUMENT ..

The Decision of the Alabama Supreme Court

Deprives Numerous Alabama New Car

Dealers of the Right to Enforce Arbitration

Agreements and Promotes Forum Shopping .......

CONCLUSION

ee eS ee ee ee ee ee ee ee eee eae ee eo eee

Page

TABLE OF AUTHORITIES

Cases: Page

Ex Parte Jack D. Warren,

let I ett <6. 5 5 ono WW gle ee RS Passim

Southland Corp. v. Keating, :

Se Wie, ER iw ence xekanteaciniasbacrua 6, 7, 9, 10

Perry v. Thomas, 482 U.S. 483 (1987) ............. 6, 7, 10

Terni O. Williams v. Dan Tucker Auto Sales,

Read... Ge Fa ick koe Kees eek Rane 2,9

Moses H. Cone Memorial Hospital v. Mercury

Construction Corp., 460 U.S. 1 (1983) ................. q

Statutes:

Federal Arbitration Act, 9 U.S.C. §1 ................ 2,6

Alabama Code (1975) §8-1-4(3) ..............00000. ae,

IN THE

Supreme Court Of Che United States

October Term, 1989

JIM SKINNER FORD, INC.,

Petitioner,

VS.

JACK D. WARREN AND JUANITA WARREN,

Respondents.

On Petition for a Writ of Certiorari

to the Supreme Court of Alabama

MOTION FOR LEAVE TO FILE

BRIEF AMICUS CURIAE

The Automobile Dealers Association of Alabama, Inc.

(ADAA) and the Alabama Independent Automobile Dealers

Association, Inc. (ATADA) respectfully move this Court for

leave to file the accompanying brief as amicus curiae in

support of the position of the Petitioner in this case. Consent

to the filing of an amicus curiae brief has been requested of

the Petitioner and the Respondent and has been obiained

from the Petitioner. The Respondent has neither consented

to nor objected to the filing of an amicus curiae brief as of the

date of the filing hereof.

2

The ADAA and the AIADA are trade associations

comprised of over 1,000 new and used automobile dealer-

members located throughout the State of Alabama. ADAA

and AIADA are affiliated with the National Automobile

Dealers Association (NADA) and the National Independent

Automobile Dealers Association (NIADA) which have over

14,000 new and used automobile dealer-members through-

out the United States.

ADAA and AIADA’s objectives include promoting the

business of its members and assisting automobile dealers to

comply with various state and federal laws and regulations

affecting their business operations. Both trade associations

work in concert with their respective parent organizations to

encourage state legislatures and Congress to standardize laws

and administrative procedures regulating the automobile

industry throughout the United States.

Many of these members maintain their principal business

addresses in Alabama but actually conduct business in Ala-

bama and surrounding states. These businesses, although

not parties to this action, are directly affected by the decision

of the Alabama Supreme Court in Ex Parte Jack D. Warren.

In addition, one of these members currently has litigation

pending in the United States District Court for the Northern

District of Alabama, Southern Division, in which that Court

has stayed the civil action in favor of arbitration under the

provisions of 9 U.S.C. §1, et seq., refusing to follow Ex Parte

Jack D. Warren."

ADAA and AIADA are filing this motion and brief to

express their concern that automobile dealers conducting

business in Alabama are not being offered the same federal

rights under 9 U.S.C. §1, et seq., as businesses in other states,

and to point out the uncertainty of their rights and remedies

resulting from the Ex Parte Jack D. Warren decision.

"Terni O. Williams vs. Dan Tucker Auto Sales, Inc., (89-AR-1350-S). Copies

of the Motion to Stay, Motion to Remand and Order, in this unreported

case are set forth in the Appendix to this Brief. (App. at A-1-5).

3

For these reasons, this motion for leave to file an amicus

curiae brief should be granted.

Respectfully submitted,

RoBert A. HurFaker, Esq.

Counsel of Record

General Counsel

Automobile Dealers Association

of Alabama, Inc.

Post Office Box 270

Montgomery, Alabatna 36195

Telephone: (205) 834-8480

|

IN THE

Supreme Court Of Che United States

October Term, 1989

JIM SKINNER FORD, INC.,

Petitioner,

VS.

JACK D. WARREN AND JUANITA WARREN,

Respondents.

On Petition for a Writ of Certiorari

to the Supreme Court of Alabama

BRIEF AMICUS CURIAE OF THE

AUTOMOBILE DEALERS ASSOCIATION

OF ALABAMA, INC. AND THE ALABAMA

INDEPENDENT AUTOMOBILE DEALERS

ASSOCIATION, INC. IN SUPPORT OF

THE PETITION FOR CERTIORARI

OF JIM SKINNER FORD, INC.

INTEREST OF THE ADAA AND THE AIADA

AS AMICUS CURIAE

The Automobile Dealers Association of Alabama, Inc.

(“ADAA”) and the Alabama Independent Automobile Deal-

ers Association, Inc. (“AILADA”) are trade associations com-

prised of over 1,000 new and used automobile dealer-

members located throughout the State of Alabama. ADAA

and AIADA are affiliated with the National Automobile

6

Dealers Association and the National Independent Auto-

mobile Dealers Association, which together have 14,000

new and used automobile dealer-members throughout the

United States. The ADAA and ALADA’s objectives include

promoting the business of its members and assisting auto-

mobile dealers in complying with various federal and state

laws and regulations affecting the sales of motor vehicles.

These dealer-members, although not parties to this action,

are directly affected by the Alabama Supreme Court's refusal

to apply the provisions of the Federal Arbitration Act

(“FAA”) 9 U.S.C. §1, et seg., to.the intrastate sale of motor

vehicles.

The 1,000 dealer-members of ADAA and AIADA account

for nearly all of the 1,200,000 automobiles sold in Alabama

annually. Many of these sales are made pursuant to contracts

which, like ihe contract in Warren, contain arbitration

agreements. In Alabama, an estimated 200,000 of the auto-

mobile sales contracts executed in 1988 contained arbitration

agreements.' Dealers who have used such arbitration agree-

ments and others who may wish to use such arbitration

agreements in the future are directly and adversely affected

by the refusal of the Alabama Supreme Court to enforce

arbitration agreements in new Car sales contracts.

The opinion of the Alabama Supreme Court in Ex Parte

Jack D. Warren, —— Se.2d —— (1989), violates the federal

rights of ADAA and AIADA members under the FAA to

enforce arbitration agreements in automobile sales contracts,

and stands in direct conflict with this Court’s holdings in

Southland Corp. v. Keating, 465 U.S. 1 (1984), and Perry v.

Thomas, 482 U.S. 483 (1987).

This brief amicus curiae is filed contingent upon the

granting of the foregoing motion for leave to file said brief.

The ADAA and AIADA submit this amicus curiae brief to

demonstrate that the Alabama Supreme Court’s erroneous

'The figures set forth herein are based upon AIADA records or

estimates.

7

ruling below has costly and far-reaching effects for numer-

ous dealers, consumers and litigants, including the 1,000

plus dealer-members of the ADAA and AIADA.

ARGU MENT

The Decision of the Alabama Supreme Court Deprives

Numerous Alabama New Car Dealers of the Right to

Enforce Arbitration Agreements and Promotes Forum

Shopping.

The Alabama Supreme Court in Ex Parte Jack D. Warren

held that the test under the Federal Arbitration Act for

determining whether a transaction involves interstate com-

merce is a distinct standard unique to the application of the

FAA, finding that Congress did not utilize its full Commerce

Clause powers. The Court below held that in order for an

arbitration agreement to be enforceable, the parties to the

written agreement must contemplate substantial interstate

activity. As noted in the petition for certiorari filed by Jim

Skinner Ford, Inc., that conclusion is wrong. It stands in

direct conflict with the decisions of this Court in Perry v.

Thomas, 482 U.S. 483 (1987), and Southland Corp. v. Keating,

465 U.S. 1 (1984). The mechanism of summary reversal was

created for cases such as this, so cleat is the conflict between

the decision of the court below and this Court's decisions in

Perry and Southland. For the reasons set forur in the petition

for certiorari, and because of the importancé of the issue as

discussed below, this Court should grant a writ of certiorari

and summarily reverse the decision below.

There are 1,000 dealer-members of ADAA and AIADA.

These dealer members account for nearly all of the

1,200,000 automobiles sold in Alabama annually, all of which

are manufactured outside Aladama and originally distrib-

uted by the manufacturers in interstate commerce. Mary of

those sales are made pursuant to contracts which, like the

contract in Warren, contain arbitration agreements. In

Alabama, at least 200,000 of the automobile sales contracts

executed in 1988 contained arbitration agreements. How-

\

8

ever, the substantial benefits which could be achieved

through the use of the arbitration provisions in these sales

contracts are now illusory in Alabama due to the erroneous

decision of the court below.

The decision of the Alabama Supreme Court in Ex Parte

Jack D. Warren adversely affects all of the 1,000 member

dealers of the ADAA and the AIADA. Their federal right to

enforce arbitration-agreements in their automobile sales

contracts will not be honored in the state courts of Alabama.

The decision below renders the FAA and its policies ineffec-

tive in a large number Of cases and prevents dealers from

effectively reducing their dispute resolution costs through

arbitration. The increased costs of resolving warranty claims

and related disputes that necessarily will result from the

Alabama Supreme Court’s ruling ultimately will be passed to

automobile purchasers in the form of higher automobile

prices.

Of course, some consumers may not wish to purchase

automobiles from dealers using arbitration agreements, and

they certainly have that option. In Alabama, a citizen in-

terested in purchasing an automobile can choose from hun-

dreds of dealers all selling basically the same products. What

frequently separates one dealer from another is price and

the terms of the sale. Some dealers have incorporated

arbitration agreements into their written contracts, while

some have not. Some dealers employ such agreements as a

selling tool, noting that disputes can be quickly and inexpen-

sively disposed of without protracted, time-consuming and

expensive litigation — the very purpose of the FAA. Still, if

consumers do not wish to purchase their automobile from a

dealer using arbitration agreements in its sales contracts,

they are not required to do so. In the greater Birmingham

metropolitan area — where Jim Skinner Ford conduts busi-

ness — a consumer can purchase a new motor vehicle from

97 different dealers. Of these, 40 utilize predispute arbitra-

tion agreements in their sales contracts while the others do

not.

In any event, automobile dealers and citizens alike have a

right to expect that federal laws will be uniformly applied

=a =-

.~_—_—

9

across the country. Anything less defies the announced

intent of Congress in passing the FAA — to enact a “national

policy favoring arbitration and withdrawing the power of

states to require a judicial forum for the resolution of claims

which the contracting parties agreed to resolve by arbitra-

tion.” Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). The

decision of the Alabama Supreme Court below not only

“requires the judicial forum for the resolution of claims

which the contracting parties agreed to resolve by arbitra-

tion,” but also lays the groundwork for forum shopping

between state and federal courts. The Alabama Supreme

Court itself brings this issue into sharp focus by its statement

in Ex Parte Jack D. Warren that “the enforcement of predis-

pute arbitration agreements, while approved in the federal

court system ... is specifically prohibited by Alabama Code

(1975) §8-1-4(3).” _ So.2d at __ .

Nor is the threat of forum shopping illusory. In fact, one

of the members of the ADAA and AIADA is currently

involved in litigation in which the United States District

Court for the Northern District of Alabama, Southern Divi-

sion has stayed the civil action in favor of arbitration under

the provisions of the FAA, refusing to follow Ex Parte Jack D.

Warren. See Terri O. Williams v. Dan Tucker Auto Sales, Inc.,

(CV-89-AR-1350-S) (copies of the Motion to Stay, Motion to

Remand, and Order to Stay in this unreported case are set

“forth in the appendix to this brief). Thus, the enforceability

of arbitration agreements in automobile sales contracts in

Alabama will now turn on whether the litigants are in state or

federal court. This is precisely the result Congress sought to

avoid in enacting the FAA. See e.g. Southland Corp. v. Keating,

465 U.S. 1, 14-16 (1984); Moses H. Cone Memorial Hospital v.

Mercury Construction Corp., 460 U.S. 1, 26, n. 34 (1983).

CONCLUSION

For the foregoing reasons, the Automobile Dealers Associ-

ation of Alabama, Inc. and the Alabama Independent

Automobile Dealers Association, Inc. respectfully request

10

that the Petition for Writ of Certiorari in this cause be

granted. The ADAA and AIADA submit that the decision of

the Court below should be summarily reversed on authority

of Perry v. Thomas, 482 U.S. 483 (1987) and Southland Corp. v.

Keating, 465 U.S. 1 (1984). 3

Respectfully submitted,

—-~— Rosertr A. HUFFAKER

Counsel of Record

General Counsel

Automobile Dealers Association

of Alabama, Inc.

Post Office Box 270

Montgomery, Aiabama 36195

Telephone: (205) 834-8480

APPENDIX

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A-1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

TERRI O. WILLIAMS,

PLAINTIFF,

Civil Action No: |

VS. CV-89-AR-1350-S

DAN TUCKER AUTO SALES, INC.

and GENE BOLTON,

mee eee ee”

DEFENDANTS.

MOTION TO STAY

Comes now Dan Tucker Auto Sales, Inc. and Gene Bolton

and moves the Court to stay this action and require the

plaintiff to submit her dispute to binding arbitration, pur-

suant to the provisions of 9 USC §1, et. seq., and according to

the Commercial Rules of Arbitration of the American Arbi-

tration Association.

In support hereof, your movants show as follows:

1. On or about April 15, 1989 the Plaintiff and the

Defendant Dan Tucker Auto Sales, Inc. entered into a

written agreement to arbitrate any dispute arising out of the

transaction sued upon by the Plaintuff at bar. A copy of such

agreement is attached hereto, incorporated herein by refer-

ence, and attached as Exhibit “A”. At the time, the Defen-

dant, Gene Bolton was an agent and employee of Dan

Tucker Auto Sales, Inc., acting at all times within the line and

scope of his employment for said dealership.'

‘Your movants have highlighted the arbitration language in the attached

Exhibit for the Court’s convenience. The arbitration clause on the original

document signed by the Plaintiff, is in bold red print on white paper,

contrasted from the dark blue print of the remaining printed portion of

the form.

A-2 |

2. The transaction between the parties involved com-

merce. The action commenced by the Plaintiff at bar asserts a

federal cause of action (the Motor Vehicle Information and

Costs Savings Act, 15 USC §1981) which was promulgated by

Congress under its Commerce powers, and is based upon the

Congressional finding that the sale of motor vehicles has an

impact upon commerce.

3. Additionally, the Plaintiff previously submitted this

dispute to binding arbitration and participated in the process

of arbitration heretofore, but refused to complete said pro-

cess having instead elected to file this action. Copies of

documents from Plaintiffs counsel to the American Arbitra-

tion Association, showing such participation in arbitration

are attached hereto, marked collectively as Exhibit “B” and

incorporated herein by reference.

4. An arbitrator has been selected and the matter is

scheduled for hearing in the fail of 1989, only having been

delayed by Plainiiff's counsel’s request to the Arbitrator to be

permitted to conduct limited discovery.

WHEREFORE, and pursuant to 9 USC §1, et. seq., the

Defendants move as aforesaid.

Respectfully subrnitted,

/s/ John Martin Galese

by John Martin Galese, Esq.

of Counsel:

GALESE AND MOORE

3058 Independence Drive

P.O. Box 75061

Birmingham, Alabama 35253

(205) 870-0663

A-3

CERTIFICATE OF SERVICE

I hereby certify that I have mailed a copy of the above and

foregoing document upon all counsel of record in this cause,

U.S. Mail, postage prepaid, to their proper office addresses,

on this the 4th day of August, 1989.

/s/ John Martin Galese

by John Martin Galese, Esq.

A-4

IN THE UNITED STATES DISTRICT COURT

- NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

\

TERRI O. WILLIAMS,

Plaintiff, 7

CIVIL ACTION

VS. : NUMBER

CV 89-AR 1350S

DAN TUCKER AUTO SALES, INC.

and GENE BOLTON,

ee eee eee eee eee Se”

Defendants.

MOTION TO REMAND

Comes now the Plaintiff by and through her attorney of

record, and moves this Court to remand the above-

referenced action to this Circuit Court of Jefferson County,

and as grounds for said motion would submit the following:

1. Suit was filed in the above-referenced cause in Jeffer-

son County Circuit Court, Alabama, on July 20, 1989.

2. Piainuff has alleged in her Complaint, a copy of which

is attached hereto and made a part hereof as Exhibit “A”,

various causes of action and theories of recovery, to wit:

(a) an action under the Motor Vehicle Information and

Costs Savings Act, 15 USC § 1981 et seq.; (b) an action for

misrepresentation under the laws of the State of Alabama;

(c)an action for fraud under the laws of the State of

Alabama; and (d) an action for outrageous conduct under

the laws of the State of Alabama.

3. The only basis for the removal of this action from

Jefferson County Circuit Court to the Northern District of

Alabama, Southern Division, is the allegation by defense

counsel that said action is brought under the Motor Vehicle

A-5

Information and Costs Savings Act. Under said act, in 15

USC § 1989 (b), it is plainly set out: “An action to enforce

any liability created under Subsection (a) of this section,

may be brought in a United States District Court without

regard to the amount in controversy, or in any other court

of competent jurisdiction, within two years from the date on

which the liability arises.”

4. The Defendants have, on the same date that the Peti-

tion for Removal was filed, filed a Motion to Stay any and

all legal proceedings brought by Plaintiff against Defendant

on the basis of an arbitration agreement proportedly en-

tered into between Plaintiff and Defendant at the time of

the purchase of the automobile made the basis of the

dispute. Plaintuff would submit that the Alabama Supreme

Court, in the case of Ex Parte Warren —— So. 2d __ (July 7,

1989), stated, “The enforcement of predispute arbitration

agreements, while approved in the Federal Court system . . .

is specifically prohibited by Alabama Code 1975, § 8-1-

41(3).”

WHEREFORE, Terri O. Williams, moves the Court to

remand this case to Jefferson County Circuit Court, on the

basis of 15 USC § 1989 and Alabama state law.

/s/ Michael L. McKerley

Nicheal L. McKerley

PRITCHARD, McCALL & JONES

\ 800 Financial Center

505 North 20th Street

Birmingham, Alabama 35203-2605

A-6

CERTIFICATE OF SERVICE

I hereby certify that I have served a copy of the above

and foregoing pleading upon all counsel of record by plac-

ing a copy of same in the United States mail, first-class

postage prepaid, this 11th day of August, 1989, as follows:

John Martin Galese

Galese and Moore

3058 Independence Drive

Post Office Box 75061

Birmingham, Alabama 35253

/s/ Michael L. McKerley

OF COUNSEL

A-7

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

TERRI O. WILLIAMS,

)

)

Plainuff, )

) CIVIL ACTION

VS. ) NO.:

) 89-AR-13508S

DAN TUCKER AUTO SALES, INC.)

ET AL. )

. )

Defendants. )

ORDER

The court has for consideration the motion of plaintiff,

Terri O. Williams, to remand the above-entitled cause to the

Circuit Court of Jefferson County, and the motion of defen-

dants, Dan Tucker Auto Sales, Inc., and Gene Bolton, to stay

the action while requiring plaintiff to proceed with binding

arbitration of the issues she would present in this cause.

The motion to remand is not well taken and is DENIED.

The motion for a stay is well taken and is GRANTED. There

shall be no discovery or other activity in this court pending

resolution of the issues by and between the parties by the

arbitrator selected in accordance with the arbitration agree-

ment attached as Exhibit “A” to defendants’ motion to stay.

Within ten (10) days after the arbitrator’s decision, a copy of

that decision shall be filed with the Clerk in order that this

action can thereupon be mooted or otherwise appropriately

disposed of.

DONE this 16th day of August, 1989.

/s/ William M. Acker, Jr.

- WILLIAM M. ACKER, JR.

UNITED STATES DISTRICT JUDGE