Case No EE IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT JOSHUA PARNELL,

Transcription

1 Case: Date Filed: 11/24/2014 Page: 1 of 37 Case No EE IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT JOSHUA PARNELL, Plaintiff/Appellee, v. CASHCALL, INC., Defendant/Appellant, and WESTERN SKY FINANCIAL, LLC, and MARTIN A. ( BUTCH ) WEBB, Defendants. On appeal from the United States District Court for the Northern District of Georgia Case No. 4:14-cv-0024-HLM REPLY BRIEF OF APPELLANT CASHCALL, INC. William J. Holley, II Nancy H. Baughan Erin M. Moore Parker, Hudson, Rainer & Dobbs LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, N.E. Atlanta, GA Telephone: (404) Facsimile: (404) Attorneys for Defendant-Appellant CashCall, Inc. Katya Jestin Neil M. Barofsky Brian J. Fischer Jenner & Block LLP 919 Third Avenue New York, NY Telephone: (212) Facsimile: (212) Barry Levenstam Daniel T. Fenske Jenner & Block LLP 353 N. Clark Street Chicago, IL Telephone: (312) Facsimile: (312)

2 Case: Date Filed: 11/24/2014 Page: 2 of 37 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii REPLY ARGUMENT... 1 I. Mr. Parnell Fails To Distinguish Controlling Precedent Requiring The Court To Sustain The Arbitration Clause Against An Attack On Unconscionability Grounds A. Mr. Parnell Agreed To Delegate Arbitrability To The Arbitrator And The Case Law He Cites Does Not Permit Him To Evade His Agreement B. Delegation Provision Aside, Mr. Parnell Fails To Justify The District Court s Decision To Void The Arbitration Clause On Unconscionability Grounds The FAA Preempts Georgia s Unconscionability Defense The Arbitration Clause Is Not Unconscionable C. Inetianbor and Jackson Are Irrelevant To This Case II. III. IV. Like The District Court, Mr. Parnell Fails To Show That A Designated Arbitral Forum Is Unavailable Mr. Parnell Fails To Explain Why The Unavailability Of One Designated Forum Where The Arbitration Clause Expressly Provides For Other Fora Invalidates The Entire Clause For Preservation Purposes, CashCall Respectfully Submits That The Inetianbor Case Was Incorrectly Decided CONCLUSION i

3 Case: Date Filed: 11/24/2014 Page: 3 of 37 TABLE OF AUTHORITIES CASES Page(s) American Express Co. v. Italian Colors Restaurant, 133 S. Ct (2013)... 4 AT&T Mobility LLC v. Concepcion, 131 S. Ct (2011)... 8, 9, 10, 12 Bank of Hoven v. Long Family Land & Cattle Co., 32 Indian L. Rep. 601 (CRST Ct. App. 2004) Brown v. ITT Consumer Financial Corp., 211 F.3d 1217 (11th Cir. 2000)... 20, 27 Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S. Ct (2006)... 6, 13 Chitoff v. CashCall, Inc., No. 0:14-cv (S.D. Fla. Nov. 17, 2014), ECF No , 17 Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011) Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir. 2011)... 2, 26 First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct (1995)... 4 FusionStorm, Inc. v. Presidio Networked Solutions, Inc., 871 F. Supp. 2d 1345 (M.D. Fla. 2012) Gulf Guaranty Life Insurance Co. v. Connecticut General Life Insurance Co., 304 F.3d 476 (5th Cir. 2002) Hull v. Norcom, Inc., 750 F.2d 1547 (11th Cir. 1985) ii

4 Case: Date Filed: 11/24/2014 Page: 4 of 37 In re Checking Account Overdraft Litigation MDL No. 2036, 674 F.3d 1252 (11th Cir. 2012)... 3, 5, 7 Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014)...passim Inetianbor v. CashCall, Inc., 962 F. Supp. 2d 1303 (S.D. Fla. 2013) Jackson v. Payday Financial, LLC, 764 F.3d 765 (7th Cir. 2014)... 15, 16 Jenkins v. First American Cash Advance of Georgia, LLC, 400 F.3d 868 (11th Cir. 2005) Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257 (11th Cir. 2011) Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285 (11th Cir. 1998) Luckie v. Smith Barney, Harris Upham & Co., 999 F.2d 509 (11th Cir. 1993) Michaels v. Mariforum Shipping, S.A., 624 F.2d 411 (2d Cir. 1980) Michigan v. Bay Mills Indian Community, 134 S. Ct (2014) Muriithi v. Shuttle Express, Inc., 712 F.3d 173 (4th Cir. 2013)... 9 Oglala Sioux Tribe v. C&W Enterprises, Inc., 542 F.3d 224 (8th Cir. 2008) Pendergast v. Sprint Nextel Corp., 691 F.3d 1224 (11th Cir. 2012)... 8 Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct (1967)... 6, 13 iii

5 Case: Date Filed: 11/24/2014 Page: 5 of 37 Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir. 2010) Reddam v. KPMG LLP, 457 F.3d 1054 (9th Cir. 2006) Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 130 S. Ct (2010)... 1, 4, 5, 6, 7 Sam Reisfeld & Son Import Co. v. S. A. Eteco, 530 F.2d 679 (5th Cir. 1976)... 6, 16 Savers Property & Casualty Insurance Co. v. National Union Fire Insurance Co. of Pittsburg, 748 F.3d 708 (6th Cir. 2014) Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S. Ct (1974) Solymar Investments, Ltd. v. Banco Santander S.A., 672 F.3d 981 (11th Cir. 2012) Supply Basket, Inc. v. Global Equipment Co., No. 1:13-CV-3220-RWS, 2014 WL (N.D. Ga. June 4, 2014) Travelers Insurance Co. v. Davis, 490 F.2d 536 (3d Cir. 1974) U.S. Nutraceuticals, LLC v. Cyanotech Corp., No , --- F.3d ---, 2014 WL (11th Cir. Oct. 30, 2014) United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S. Ct (1960) Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 115 S. Ct (1995) Wallace v. Rick Case Auto, Inc., 979 F. Supp. 2d 1343 (N.D. Ga. 2013) White Wolf v. Myers, 34 Indian L. Rep (CRST Ct. App. 2007) iv

6 Case: Date Filed: 11/24/2014 Page: 6 of 37 STATUTES 9 U.S.C U.S.C , 11, 12, 28 OTHER AUTHORITIES Frank Pommersheim, South Dakota Tribal Court Handbook (rev. ed. 2006), available at 25 v

7 Case: Date Filed: 11/24/2014 Page: 7 of 37 REPLY ARGUMENT Mr. Parnell s brief fails to provide any bases for affirming the district court s refusal to compel arbitration. First, having never challenged the validity of his agreement to delegate to the arbitrator all challenges to the Arbitration Clause, Mr. Parnell now argues that he may belatedly attack the Delegation Provision simply because it is not grammatically separate from other portions of the arbitration clause. 1 But the Supreme Court has held that, as a matter of federal arbitration law, a party seeking to challenge a delegation provision must do so separate and apart from any challenge to the rest of the arbitration clause. See Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70-71, 130 S. Ct. 2772, (2010). Its physical location within a particular sentence or part of the contract is irrelevant. Because Mr. Parnell never properly challenged the Delegation Provision here, the district court erred by addressing Mr. Parnell s challenges to the Arbitration Clause. Second, Mr. Parnell ignores the fact that his Arbitration Clause expressly allows him to choose unilaterally to arbitrate before the AAA or JAMS, or before any other arbitrator to which he and CashCall agree, within thirty miles of his home and at CashCall s expense. Those organizations and their rules which the Arbitration Clause plainly allows the parties to use are undoubtedly available to 1 Capitalized terms have the same meaning as in CashCall s opening brief. This brief will cite Mr. Parnell s brief as Resp. Br. and CashCall s opening brief as Op. Br.. 1

8 Case: Date Filed: 11/24/2014 Page: 8 of 37 hear this dispute. Mr. Parnell s interpretation of the Arbitration Clause would effectively nullify the AAA/JAMS provision. [T]hat is an interpretative no-no. Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1218 (11th Cir. 2011). Third, Mr. Parnell repeatedly relies on the distinguishable decision in Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014), which addressed an arbitration clause that did not include the AAA/JAMS provision. The district court thus erred by refusing to enforce the Arbitration Clause. I. Mr. Parnell Fails To Distinguish Controlling Precedent Requiring The Court To Sustain The Arbitration Clause Against An Attack On Unconscionability Grounds. A. Mr. Parnell Agreed To Delegate Arbitrability To The Arbitrator And The Case Law He Cites Does Not Permit Him To Evade His Agreement. As CashCall has explained, the district court erred by even considering the question of whether the Arbitration Clause is unconscionable. (Op. Br ) Mr. Parnell does not and cannot dispute that he agreed to submit all disputes about the enforceability of the Arbitration Clause to arbitration, not litigation. (Doc. 3-2 at 4.) Nor does he dispute that he never challenged the Delegation Provision below. Further, he concedes that the District Court did not address CashCall s argument that the arbitration clause s delegation provision required the District Court to defer to the decision of an arbitrator on the issue of arbitrability. (Resp. Br. 8, ) This concedes that the district court 2

9 Case: Date Filed: 11/24/2014 Page: 9 of 37 committed reversible error, as it shows that the district court never concluded that Mr. Parnell carried his required burden of challenging the Delegation Provision. See In re Checking Account Overdraft Litig. MDL No. 2036, 674 F.3d 1252, (11th Cir. 2012). 2 Mr. Parnell s argument that the Delegation Provision is not physically or grammatically separate from the Arbitration Clause, and thus he did not need to challenge it separately (Resp. Br ), fails as a matter of law. The fact that he and Western Sky needed only four words in a paragraph listing other arbitral details to submit arbitrability disputes to the arbitrator does not change the legal nature or effect of that submission. Mr. Parnell argues that severability should require a certain amount of severability to be valid, (id. at 15), but fails to offer any case law to support his argument that the validity of a delegation provision depends on whether it is physically or grammatically separate from the remainder of the arbitration terms. Nor does he provide any reason why the validity of the parties delegation should or would depend on whether it is in the same sentence 2 In a recent case involving this same Arbitration Clause, the Southern District of Florida recently granted CashCall s motion to dismiss and compel arbitration and noted that any arguments, except those addressing the availability of the arbitral forum, must be decided by the arbitrator in accordance with the delegation provision on page five of the loan agreement in this case. Chitoff v. CashCall, Inc., No. 0:14-cv-60292, slip op. at 2 n.1 (S.D. Fla. Nov. 17, 2014), ECF No

10 Case: Date Filed: 11/24/2014 Page: 10 of 37 as, or a different sentence from, a list of other disputes the arbitrator must decide. 3 Indeed, Supreme Court precedent requires this Court to reject such attacks on arbitration clauses because they require ad hoc case by case or word-byword balancing that is unwieldy and unsupported by the terms or policy of the [FAA]. Am. Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, (2013). Rent-A-Center, West, Inc. v. Jackson foreclosed Mr. Parnell s argument two years before Mr. Parnell signed his Loan Agreement in U.S. 63, 130 S. Ct (2010). There, the Supreme Court held as a matter of substantive federal arbitration law that a delegation provision is simply an additional, antecedent agreement that is severable from the remainder of the arbitration agreement. Id. at 70-71, 130 S. Ct. at (quotation marks omitted). Absent a specific agreement to delegate arbitrability to the arbitrator, courts must address that question. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S. Ct. 1920, (1995). With such a specific delegation agreement, however, the arbitrator decides. Id. The physical location of the specific delegation agreement within the arbitration clause is irrelevant. Just as the agreement to delegate arbitrability to an arbitrator always must be spelled out specifically, id. at 945, 115 S. Ct. at 1925, as a matter of law, a delegation provision always must be 3 It is therefore Mr. Parnell, not CashCall, whose argument would result in parties having to challenge an agreement as a whole, followed by a challenge to a certain clause, followed by challenges to single sentences, followed by challenges to words tacked on to conjunctions at the end of a sentence. (Resp. Br. 15.) 4

11 Case: Date Filed: 11/24/2014 Page: 11 of 37 challenged specifically. Rent-A-Ctr., 561 U.S. at 72, 130 S. Ct. at In other words, a party s challenge to another provision of the contract, or to the contract as a whole is insufficient. Id. at 71, 130 S. Ct. at Rather than even attempting to address this holding, Mr. Parnell instead cites a dissenting opinion from Rent-A-Center. (Resp. Br ) But the Court s majority rejected the dissent s arguments. Indeed, the very excerpt Mr. Parnell quotes from Justice Stevens s dissent reflects the Justice s recognition that the Court s majority was adopting precisely the holding that defeats Mr. Parnell s position: Today the Court adds a new layer of severability something akin to Russian nesting dolls into the mix: Courts may now pluck from a potentially invalid arbitration agreement even narrower provisions that refer particular arbitrability disputes to an arbitrator. Rent-A-Ctr., 561 U.S. at 85, 130 S. Ct. at 2786 (Stevens, J., dissenting) (emphasis in original). This Court also has recognized, and held, that the majority opinion in Rent-A-Center means what it says: A delegation provision is severable from the rest of the arbitration agreement and must be challenged specifically. In re Checking Account Overdraft Litig., 674 F.3d at A simple analogy illustrates the error of Mr. Parnell s argument. If a party challenged an entire contract as unconscionable but never specifically attacked the arbitration clause, then that party could not claim on appeal that he implicitly 5

12 Case: Date Filed: 11/24/2014 Page: 12 of 37 meant for that unconscionability argument to apply also to the arbitration clause. Two Supreme Court cases establish this point beyond contradiction: Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, , 449, 126 S. Ct. 1204, (2006), and Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, , 87 S. Ct. 1801, 1806 (1967). Mr. Parnell never even mentions these cases, much less responds to CashCall s discussion of them. (Op. Br ) A delegation provision is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce, and the FAA operates on this additional arbitration agreement just as it does on any other. Rent-A-Ctr., 561 U.S. at 70, 130 S. Ct. at For that reason, a party must specifically attack that delegation provision separately from any attack on the larger arbitration clause, just like a party must challenge the arbitration clause separately from the contract as a whole. Mr. Parnell could have argued specifically that the Delegation Provision itself was a product of fraud, coercion, or such grounds as exist at law or in equity for the revocation of any contract. Sam Reisfeld & Son Import Co. v. S. A. Eteco, 530 F.2d 679, 681 (5th Cir. 1976) (quoting 9 U.S.C. 2). He did not. In fact, he never even used the word delegation in any of his briefing below, though CashCall repeatedly invoked the Delegation Provision. (Doc. 3-1 at 12-13; Doc at 11-12; Doc. 24 at 1-3; Doc at 4-5.) Mr. Parnell, like the plaintiff in 6

13 Case: Date Filed: 11/24/2014 Page: 13 of 37 Rent-A-Center, failed to challenge the Delegation Provision specifically: Nowhere in his opposition to [defendant s] motion to compel arbitration did [plaintiff] even mention the delegation provision. 561 U.S. at 72-73, 130 S. Ct. at By failing to challenge the Delegation Provision separately, Mr. Parnell failed to meet his burden under Rent-A-Center, 561 U.S. at 66, 130 S. Ct. at He also waived the opportunity to make this argument now. In re Checking Account Overdraft Litig., 674 F.3d at Finally, Mr. Parnell argues that there can be no delegation when no arbitral forum exists. (Resp. Br. 11.) This argument fails for two reasons. First, an arbitral forum is available here, and that arbitrator would be able to use the Delegation Provision to address Mr. Parnell s claims that the Arbitration Clause is unenforceable. See Section II below. Second, even if no arbitral forum were available, FAA 5 requires the district court to appoint a substitute arbitrator, who would then use the Delegation Provision to determine whether the Arbitration Clause is valid. See Section III below. The district court thus erred by not compelling the parties to arbitrate this entire dispute including any allegations of unconscionability. 7

14 Case: Date Filed: 11/24/2014 Page: 14 of 37 B. Delegation Provision Aside, Mr. Parnell Fails To Justify The District Court s Decision To Void The Arbitration Clause On Unconscionability Grounds. Even if the district court could have considered Mr. Parnell s claim that the Arbitration Clause is unconscionable, the court still erred by voiding the Arbitration Clause on that ground. (Op. Br ) Mr. Parnell s response ignores binding precedent holding that the FAA preempts such an unconscionability ground and does not explain how the Clause is so seriously flawed as to be unconscionable. 1. The FAA Preempts Georgia s Unconscionability Defense. Mr. Parnell fails in his attempts to distinguish AT&T Mobility LLC v. Concepcion, 131 S. Ct (2011), and this Court s decision in Pendergast v. Sprint Nextel Corp., 691 F.3d 1224 (11th Cir. 2012) both of which held that the FAA preempts a state law unconscionability defense to an arbitration clause. Mr. Parnell asserts that Concepcion preempts state law only in the narrow context where the law applies only to arbitration or derives its meaning from the fact an arbitration agreement is at issue. (Resp. Br. 17.) But he overlooks Concepcion s holding that even a generally applicable law is preempted if it would have a disproportionate impact on arbitration agreements. Concepcion, 131 S. Ct. at The question under Concepcion is thus whether the state law defense at 8

15 Case: Date Filed: 11/24/2014 Page: 15 of 37 issue either derives its meaning from the fact that arbitration is at issue or would have a disproportionate effect on arbitration agreements. Id. Under Concepcion, therefore, it is not possible to apply substantive unconscionability doctrine even-handedly to arbitration clauses. The reason is that to apply substantive unconscionability doctrine, a court necessarily has to base its decision on the content of the contractual provision at issue, which when applied to arbitration clauses will necessarily focus on matters that are either unique to arbitration or that appear disproportionately in arbitration agreements. Consequently, the Fourth Circuit has recognized that Concepcion was not merely an assertion of federal preemption, but also plainly prohibited application of the general contract defense of unconscionability to invalidate an otherwise valid arbitration agreement. Muriithi v. Shuttle Express, Inc., 712 F.3d 173, (4th Cir. 2013). CashCall cited Muriithi (Op. Br. 26); Mr. Parnell ignores it. Looking at the specific grounds on which Mr. Parnell relies to argue that the Arbitration Clause is unconscionable reveals that his arguments are grounded in the fact that an arbitration clause is at issue. Mr. Parnell seeks to void the Clause on the ground that the arbitral forum it designates supposedly does not exist; that the arbitral procedural rules supposedly do not exist; that requiring arbitration would allow CashCall to avoid regulation. (Resp. Br. 22.) All of those arguments derive their meaning from the fact that an agreement to arbitrate is at issue, and 9

16 Case: Date Filed: 11/24/2014 Page: 16 of 37 would disproportionate[ly] impact arbitration agreements, Concepcion, 131 S. Ct. at , despite the fact that they are cast as an application of unconscionability doctrine. Cruz v. Cingular Wireless, LLC, 648 F.3d 1205, 1211 (11th Cir. 2011). Concepcion forecloses those arguments. 2. The Arbitration Clause Is Not Unconscionable. Preemption aside, the district court still erred by concluding that the alleged unavailability of the arbitral forum and rules meant that the entire Arbitration Clause was necessarily unconscionable. (Doc. 25 at ) To invalidate a contract as unconscionable under Georgia law, the court must assess whether it is both procedurally and substantively unconscionable. See Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, (11th Cir. 2005). Here, the Arbitration Clause is not procedurally unconscionable. Mr. Parnell relies heavily on the Inetianbor concurrence (which Mr. Parnell fails to acknowledge is only a concurrence that the other two panel members did not join), which expressed the view that Mr. Inetianbor s arbitration clause was procedurally unconscionable. (Resp. Br. 19.) The Inetianbor concurrence focused on the fact that it was impossible for Mr. Inetianbor to understand the provision of the agreement to arbitrate specifying the Tribe, together with its set of rules, as the arbitral forum, because those rules, it turned out, do not exist. (Id.) But here, the Arbitration Clause expressly allows the use of the AAA or JAMS, and states that 10

17 Case: Date Filed: 11/24/2014 Page: 17 of 37 the rules of the organization that Mr. Parnell chooses will govern. Those rules are available online for anyone to see. (See Op. Br & nn ) Because Mr. Parnell s Loan Agreement differs from Mr. Inetianbor s, the concern animating the concurrence does not apply here. Nor is the Arbitration Clause substantively unconscionable. The Arbitration Clause places all the burdens of arbitration on CashCall, not Mr. Parnell, by requiring CashCall to pay all applicable fees and allowing Mr. Parnell the choice of conducting the arbitration within thirty miles of his residence. (Op. Br. 6.) It also gives Mr. Parnell the right to select the particular arbitral forum the parties would use, including two of the most reputable arbitration organizations in the country, the AAA or JAMS. (Id.) To rule as Mr. Parnell urges would be tantamount to declaring that an arbitration before the AAA or JAMS, conducted within thirty miles of a consumer s residence, is unconscionable. Such an unsupported holding would find Georgia alone in rejecting these esteemed organizations. In holding the Clause unconscionable, the district court relied largely on the fact that one of the three arbitral fora designated in the Agreement is not available. That conclusion proves too much. (Doc. 25 at 73-75) FAA 5 establishes that mere unavailability cannot equal unconscionability. That section expressly applies when the parties choice of arbitrator is unavailable: [I]f for any... reason there 11

18 Case: Date Filed: 11/24/2014 Page: 18 of 37 shall be a lapse in the naming of an arbitrator or arbitrators or umpire, or in filling a vacancy, then upon the application of either party to the controversy the court shall designate and appoint an arbitrator[.] 9 U.S.C. 5. When the arbitral forum and rules are unavailable, Congress directed in 5 that the solution is not to void the entire Arbitration Clause, but to appoint substitutes. (See Op. Br , 51-54; Section III below.) To the extent Mr. Parnell argues, and the district court decided, that Georgia unconscionability law could trump the explicit provisions of 5, that decision was erroneous. Concepcion held that the FAA preempts state-law rules that stand as an obstacle to the accomplishment of the FAA s objectives. 131 S. Ct. at 1748; accord Hull v. Norcom, Inc., 750 F.2d 1547, 1551 (11th Cir. 1985) (recognizing that any state law that directly conflict[s] with... the Federal Arbitration Act will violate[] the supremacy clause ). Mr. Parnell claims that the district court s holding on unconscionability rested not just on the unavailability of the arbitral forum and rules, but also on the grounds that the Arbitration Clause was merely an attempt to escape otherwise applicable limits on interest rates and that the promise of a meaningful and fairly conducted arbitration is a sham and an illusion. (Resp. Br. 22.) To the extent that conclusion rested on the argument that the Arbitration Clause is part of a scheme to evade state limits on interest rates in the Loan Agreement as a whole, Buckeye Check Cashing and Prima Paint foreclose it. Those cases squarely hold that an 12

19 Case: Date Filed: 11/24/2014 Page: 19 of 37 arbitration clause cannot be voided on the ground that the clause is housed within a contract that is illegal or skirts applicable substantive laws, including usury laws. In Buckeye Check Cashing, the Supreme Court rejected such an argument based squarely on interest rates that exceeded Florida s usury laws, concluding that it is irrelevant that the contract was illegal and void under Florida law. 546 U.S. at 446, 126 S. Ct. at 1209 (quotations omitted); see Prima Paint, 388 U.S. at 404, 87 S. Ct. at Although CashCall invoked both cases (Op. Br ), Mr. Parnell ignores those cases in arguing that this Court can even consider whether the Loan Agreement is part of an attempt to escape otherwise applicable limits on interest rates. (Resp. Br. 22.) That is a question about whether the Loan Agreement is legal, which was not properly before the district (or any) court. The premise of both the district court s and Mr. Parnell s conclusion that the Arbitration Clause is a sham or an illusion (Resp. Br. 22; Doc. 25 at 78) is that the designated forum is not available. But a contractual forum is available the AAA or JAMS so there is no basis for concluding that the Arbitration Clause is illusory. The sole basis for the district court s sham and an illusion finding is a decision in a different case (Jackson) which like Inetianbor addressed an arbitration clause that did not allow the parties to use the AAA or JAMS. (Doc. 25 at 78.) There is no basis for importing the Jackson court s finding to this distinct 13

20 Case: Date Filed: 11/24/2014 Page: 20 of 37 Clause. (See Part I.C below.) Even if there were some basis to claim bias as to a tribal arbitrator, none exists as to the AAA or JAMS. Furthermore, as a matter of law, Mr. Parnell cannot avoid arbitration by alleging bias before arbitration has even begun. For this reason, courts consistently hold that they cannot entertain an attack upon the qualifications or partiality of arbitrators until after the conclusion of the arbitration and the rendition of an award. Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414 n.4 (2d Cir. 1980) (emphasis added); accord Savers Prop. & Cas. Ins. Co. v. Nat l Union Fire Ins. Co. of Pittsburg, 748 F.3d 708, 714 (6th Cir. 2014) (same); Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d 476, 490 (5th Cir. 2002) (same); Travelers Ins. Co. v. Davis, 490 F.2d 536, (3d Cir. 1974) (same). The district court erred by considering any bias ground. Thus, regardless of the precise grounds for the district court s finding of unconscionability, the courts must still enforce the Delegation Provision and the Arbitration Clause. Ultimately, Mr. Parnell claims that this Court must affirm that the Arbitration Clause is unconscionable, even though it requires CashCall to pay all arbitrator and filing fees, allows Mr. Parnell to choose arbitration within thirty miles of his residence, and before the AAA or JAMS using those entities respective rules. (Doc. 3-2 at 5-6.) This Court should reject this extraordinary request and reverse with directions to compel arbitration. 14

21 Case: Date Filed: 11/24/2014 Page: 21 of 37 C. Inetianbor and Jackson Are Irrelevant To This Case. Mr. Parnell claims that this Court s decision in Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014), conclusively holds that the Arbitration Clause here is unconscionable. (Resp. Br ) There are two fatal errors in this assertion: (1) Mr. Parnell cites only the non-binding concurrence in Inetianbor not the majority opinion; and (2) both Inetianbor and the Seventh Circuit s decision in Jackson v. Payday Financial, LLC, 764 F.3d 765 (7th Cir. 2014), involved arbitration clauses significantly different from the one that Mr. Parnell signed. For these reasons, Inetianbor and Jackson are not applicable here, and they do not change the conclusion that the Arbitration Clause is enforceable. Mr. Parnell asserts that in Inetianbor, this Court went out of its way to address the unconscionability of the exact same Arbitration Agreement and concluded that it was a sham and unconscionable. (Resp. Br. 18.) Mr. Parnell then spends two pages quoting verbatim from Inetianbor before again arguing that this very Court found any fact finder would reach the same result as Jackson. (Resp. Br ) Mr. Parnell misreads Inetianbor: all of his citations and quotations come from the concurrence, which the other judges did not join and which was not part of the majority opinion or rationale. Compare Inetianbor, 768 F.3d at 1346 (Martin and Hinkle, JJ.), with id. at 1354 (Restani, J., concurring). The Inetianbor majority never mentions unconscionability. Id. 15

22 Case: Date Filed: 11/24/2014 Page: 22 of 37 In any event, Inetianbor and the Seventh Circuit s Jackson opinion are irrelevant here. Those cases both dealt with an arbitration clause that differed significantly from Mr. Parnell s a fact that Mr. Parnell also ignores. In both Jackson and Inetianbor, the borrower had agreed that arbitration would be conducted only by either (i) a Tribal Elder, or (ii) a panel of three (3) members of the Tribal Council. Jackson, 764 F.3d at 769; Inetianbor v. CashCall, Inc., 962 F. Supp. 2d 1303, 1305 (S.D. Fla. 2013). But Mr. Parnell s Arbitration Clause explicitly permits Mr. Parnell to choose arbitration before the AAA or JAMS (or any other entity agreed upon by the parties), and does not mention use of a Tribal Elder or Tribal Council members as the arbitrator. (Doc. 3-2 at 5.) It certainly would not be unconscionable for those well-respected and frequently-used arbitration organizations to hear this dispute. (See Op. Br & n.9; Section II below.) 4 II. Like The District Court, Mr. Parnell Fails To Show That A Designated Arbitral Forum Is Unavailable. CashCall s opening brief demonstrated that the district court erred in finding the designated arbitral forum to be unavailable because the Arbitration Clause 4 Jackson also is unpersuasive because it applied an outdated common-law reasonableness test to gauge the validity of the arbitration clause there. See 764 F.3d at 777. This Circuit explicitly rejects that test. See Sam Reisfeld & Son, 530 F.2d at (holding that the reasonableness test is not applicable to arbitration clauses because the enforceability of [an] arbitration clause... is governed exclusively by the explicit provisions of the [FAA] ). 16

23 Case: Date Filed: 11/24/2014 Page: 23 of 37 specifies that the parties may arbitrate before the AAA, JAMS, or an arbitration organization agreed upon by [Mr. Parnell] and [CashCall]. (Doc. 3-2 at 5.) See Chitoff, No. 0:14-cv-60292, slip op. at 2. There is no question that the AAA and JAMS are available or that some other reputable arbitration organization is available. That is all the Arbitration Clause requires. 5 Mr. Parnell s responses do not alter this simple logic. Indeed, he does not defend most of the grounds upon which the district court relied. Specifically, Mr. Parnell does not defend the district court s holding that its conclusion that the tribal court lacks jurisdiction somehow renders the distinct arbitration fora unavailable. (Doc. 25 at 73; Op. Br. 34 (refuting this ground).) Similarly, Mr. Parnell does not defend the district court s conclusion that the failure of the Arbitration Clause to designate the arbitrator in advance renders it unenforceable. (Doc. 25 at 76; Op. Br (refuting this ground).) Finally, Mr. Parnell does not defend the district court s conclusion that CRST law is unavailable or that somehow that 5 Chitoff also held that the plaintiff there had provided no evidence that the Cheyenne River Sioux is unavailable as an arbitration forum, but merely attempted to rely upon citations to other cases where the forum has been found to be unavailable in lieu of providing his own evidence. Chitoff, No. 0:14-cv-60292, slip op. at 2-3. This same rationale applies to Mr. Parnell: having never attempted to arbitrate with the AAA or JAMS, he cannot show that they are unavailable. Even assuming arguendo that tribal arbitration were required (it is not), Mr. Parnell never attempted to arbitrate before that forum, either. In other words, Mr. Parnell has completely failed to satisfy his burden of proving unavailability. Id. 17

24 Case: Date Filed: 11/24/2014 Page: 24 of 37 unavailability vitiates the Arbitration Clause. (Doc. 25 at 76-77; Op. Br (refuting this ground).) Mr. Parnell s defenses of the remainder of the district court s conclusions are infirm. First, Mr. Parnell repeats the district court s conclusion that the provision allowing use of the AAA or JAMS does not matter because that provision states that the rules of those organizations will apply if they do not contradict CRST law or the terms of the Arbitration Clause. (Resp. Br. 23.) CashCall has already explained why that argument fails. (Op. Br ) Neither the district court nor Mr. Parnell point to any conflict between the procedural rules of the AAA or JAMS and CRST law, because none exists. Further, if no tribal consumer dispute rules exist, there would be no conflict between those rules and the selected arbitration organization s rules or the Arbitration Clause, so that those rules and the terms of the Clause would control under the Clause s plain terms. (Doc. 3-2 at 5.) Mr. Parnell s argument is thus meritless. In any event, Mr. Parnell directs these challenges to the wrong forum: under binding Supreme Court and Circuit precedent, any potential conflict between CRST law and the designated organization s procedural rules and Mr. Parnell identifies none is an issue for the arbitrator to decide. 6 (Op. Br. 40.) 6 Organizations like the AAA are not unaccustomed to addressing alleged conflicts between their rules and tribal law. See, e.g., Oglala Sioux Tribe v. C&W Enterprises, Inc., 542 F.3d 224, (8th Cir. 2008) (arbitrator resolved conflict 18

25 Case: Date Filed: 11/24/2014 Page: 25 of 37 Second, Mr. Parnell argues that even if JAMS or AAA were able to conduct an arbitration within 30 miles of Mr. Parnell s home, this arbitration proceeding would be required to still be conducted in accordance with the consumer dispute rules of the Cheyenne River Sioux Tribe. (Resp. Br. 23.) The district court did not rely on this argument (see Doc. 25), and for good reason. The Arbitration Clause expressly states that if the parties select the AAA, JAMS, or another arbitration organization [t]he arbitration will be governed by the chosen arbitration organization s rules and procedures applicable to consumer disputes, to the extent that those [organizations ] rules and procedures do not contradict either the law of the Cheyenne River Sioux Tribe or the express terms of this Agreement to Arbitrate. (Doc. 3-2 at 5 (emphasis added).) The Arbitration Clause thus does not require the parties to use the CRST s consumer dispute rules if the parties use the AAA, JAMS, or another organization to oversee the dispute. Third, Mr. Parnell is wrong to argue that [i]f no consumer dispute rules exist in the [CRST], and no regulations regarding arbitration exist in the [CRST], then an arbitration forum is still unavailable under the terms of the Arbitration Agreement because holding an arbitration which complies with the terms of the Arbitration Agreement is fundamentally impossible. (Resp. Br. 24.) Private arbitration before the AAA or JAMS is fully consistent with CRST law: As this between the AAA s jurisdictional rules and the tribe s assertion of sovereign immunity). 19

26 Case: Date Filed: 11/24/2014 Page: 26 of 37 Court acknowledged in Inetianbor, the CRST has stated that [a]rbitration, as in a contractual agreement, is permissible [under CRST law], even though the tribal court does not involve itself in the arbitration process. 768 F.3d at Fourth, Mr. Parnell ignores that regulations regarding arbitration to govern this dispute exist, because the Arbitration Clause is covered by the FAA (as the district court correctly found). (Doc. 25 at 64.) Contrary to Mr. Parnell s implication that arbitration in this case must take place using some unknown or complicated procedures in a foreign land, it will not. The Arbitration Clause authorizes arbitration in Georgia (within 30 miles of Mr. Parnell s residence) before a neutral arbitrator appointed by the AAA or JAMS, or another reputable organization. This Court and others in this Circuit enforce similar clauses routinely. See, e.g., Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000) (requiring district court to appoint substitute arbitrator using JAMS); Supply Basket, Inc. v. Global Equip. Co., No. 1:13-CV-3220-RWS, 2014 WL , at *3 (N.D. Ga. June 4, 2014) (compelling arbitration before AAA); Wallace v. Rick Case Auto, Inc., 979 F. Supp. 2d 1343, (N.D. Ga. 2013) (same); FusionStorm, Inc. v. Presidio Networked Solutions, Inc., 871 F. Supp. 2d 1345, (M.D. Fla. 2012) (compelling arbitration before JAMS). There is no reason not to do so here. 20

27 Case: Date Filed: 11/24/2014 Page: 27 of 37 Thus, each of the grounds upon which Mr. Parnell relies to justify the district court s decision fails under scrutiny. Furthermore, considering Mr. Parnell s arguments as a whole confirms that they are inconsistent with federal arbitration law. Federal law requires that any doubts concerning the scope of arbitral issues should be resolved in favor of arbitration. Solymar Invs., Ltd. v. Banco Santander S.A., 672 F.3d 981, (11th Cir. 2012). In other words, courts should not deny arbitration unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, , 80 S. Ct. 1347, 1353 (1960); accord U.S. Nutraceuticals, LLC v. Cyanotech Corp., No , --- F.3d ---, 2014 WL , at *3 (11th Cir. Oct. 30, 2014) (same). Mr. Parnell s arguments depend upon ignoring key provisions of the Arbitration Clause and asking this Court to interpret purported contractual ambiguities in a manner designed to defeat arbitration. That is the opposite of how the FAA requires courts to interpret arbitration agreements. Id. 21

28 Case: Date Filed: 11/24/2014 Page: 28 of 37 III. Mr. Parnell Fails To Explain Why The Unavailability Of One Designated Forum Where The Arbitration Clause Expressly Provides For Other Fora Invalidates The Entire Clause. For the reasons explained in CashCall s opening brief, the use of a tribal forum is not an integral part of the Arbitration Clause. 7 (Op. Br ) But this Court need not even reach that question. The integral part test only applies when the fora designated by an arbitration agreement are unavailable, and the court asks whether those fora are integral to the agreement such that the court is not permitted to compel arbitration before a forum not expressly provided for in the parties contract. That is not this case: the Arbitration Clause here allows the parties to arbitrate before the AAA or JAMS (or any other organization the parties agree upon), so there is no failure of the chosen forum to trigger the integral part issue in the first place. For that reason, Parnell s reliance upon this Court s decision in Inetianbor to hold the tribal forum integral to the arbitration clause there is misplaced. As discussed above, the arbitration clause there specified only a tribal arbitration forum. 768 F.3d at It did not specify that Mr. Inetianbor could select the 7 For the reasons explained in CashCall s opening brief (at 51-54), the FAA contains no integral part proviso to the obligation of courts to appoint a substitute arbitrator if the designated forum is unavailable. CashCall acknowledges, however, that in Inetianbor this Court held that the law of this Circuit is to apply the integral part test. 768 F.3d at CashCall has petitioned the full Court to rehear Inetianbor en banc to reconsider the Circuit s law on this point. See Appellant CashCall, Inc. s Petition for Rehearing En Banc, Inetianbor v. CashCall, Inc., No (11th Cir. Oct. 23, 2014). 22

29 Case: Date Filed: 11/24/2014 Page: 29 of 37 AAA or JAMS as the arbitral forum. Here, by contrast, the Arbitration Clause merely allows the parties to arbitrate before a tribal representative but does not require it, and it allows Mr. Parnell to choose the AAA or JAMS, or the parties to select any other arbitral organization of their choosing. (Doc. 3-2 at 5.) Given the fundamental differences between the two clauses, Mr. Parnell s reliance on Inetianbor is misplaced. Inetianbor s holding that the required tribal forum there was integral to the arbitration clause thus does not apply here. The fact that the Arbitration Clause selects the CRST s substantive law as governing does not change that fact. In Inetianbor, this Court relied largely on the fact that the arbitration clause there designated a tribal forum as the exclusive forum to hold that the forum was integral. 768 F.3d at (references the importance of the designated forum or forum selection to the clause). Here, the Arbitration Clause does not reference the tribe as the exclusive forum, as it allows the use of the AAA or JAMS. As CashCall stated in its opening brief, [g]iven this list of potential arbitrators and rules in Mr. Parnell s Arbitration Clause, one contractual option... cannot possibly be exclusive and therefore integral. (Op. Br ) Mr. Parnell never responds to that simple logic. Mr. Parnell implies that the fact that the Arbitration Clause states that the arbitration will be governed by CRST law renders it unenforceable because that 23

30 Case: Date Filed: 11/24/2014 Page: 30 of 37 refer[ence] to the Tribe somehow shows that a tribal forum was essential to the Clause. (Resp. Br , ) That is simply incorrect. A tribal forum is not any more integral to an arbitration agreement stating that tribal law governs than a Georgia forum would be integral to an agreement selecting Georgia law but allowing the parties to sue in a non-georgia forum. Courts routinely enforce such provisions because the law permits parties to designate a forum that is not within the jurisdiction whose laws will govern the dispute. The Supreme Court, for example, enforced a choice-of-law provision requiring an arbitrator in France to apply the law of the State of Illinois. Scherk v. Alberto-Culver Co., 417 U.S. 506, 516, 94 S. Ct. 2449, (1974); see also Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1292 (11th Cir. 1998). There is no principled distinction between that and an agreement that the AAA or JAMS arbitrator sitting in Georgia must apply CRST law. For that reason, the Supreme Court has held that the choice-of-law question... must be decided in the first instance by the arbitrator. Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 541, 115 S. Ct. 2322, 2330 (1995). Indeed, courts enforce choice-of-law clauses that select the laws of other nations and do so even if the substantive law applied in arbitration potentially provides reduced remedies (or fewer defenses) than those available under U.S. law. Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1269 (11th Cir. 2011). As 24

31 Case: Date Filed: 11/24/2014 Page: 31 of 37 this Court pays such respect to selections of foreign law, so it should respect selection of the law of Indian tribes, domestic dependent nations that exercise inherent sovereign authority. Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024, 2030 (2014). To be clear, tribal law does not extinguish any remedies Mr. Parnell may have against CashCall, as it provides a robust set of laws that Mr. Parnell could invoke if CashCall committed a legal wrong against him. See Appendix of Legal Authority Referenced in Brief of Appellant CashCall, Inc., Filed Pursuant to FRAP 32.1(b); Frank Pommersheim, South Dakota Tribal Court Handbook (rev. ed. 2006), available at %20Handbook.pdf. 8 As CashCall noted (Op. Br. 48 n.15), the CRST courts often employ traditional contractual principles, including Restatement principles, to interpret contracts. White Wolf v. Myers, 34 Indian L. Rep. 6102, 6106 (CRST Ct. App. 2007); Bank of Hoven v. Long Family Land & Cattle Co., 32 Indian L. Rep. 6001, 6004 (CRST Ct. App. 2004). (Docs. 18-3, 18-4.) That the Arbitration Clause 8 Acknowledging that CRST law is available by citing to it, Mr. Parnell points to a single section of the tribal law and order code that, he claims, imposes an 18% interest rate cap under CRST law. (Resp. Br. 24 n.3 (citing of the CRST Law & Order Code).) The CRST s subsequent adoption of of the Tribal Commercial Code superseded that provision. See Appendix of Legal Authority Referenced in Brief of Appellant CashCall, Inc., Filed Pursuant to FRAP 32.1(b), Ex. D. In any case, under the Loan Agreement and the FAA, the question whether Mr. Parnell s loan violates tribal law is a question for the arbitrator. (Doc. 3-2 at 5.) 25

32 Case: Date Filed: 11/24/2014 Page: 32 of 37 designates CRST law to apply thus has no effect on this Court s obligation to enforce the Clause and order that the district court compel arbitration. At the end of his brief, Mr. Parnell discusses the general rule that courts are to look to the arbitration agreement when determining whether to compel arbitration, not to general policy goals, and courts are not to twist the language of the contract to achieve a result which is favored by federal policy but contrary to the intent of the parties. (Resp. Br (quoting Doe, 657 F.3d at 1214).) CashCall urges this Court to apply that rule: the language of the Arbitration Clause expressly authorizes Mr. Parnell to choose arbitration before the AAA or JAMS, using the rules of those organizations. (Doc. 3-2 at 5.) The reading below twist[ed] the language of the contract by giving it the unnatural construction that it authorized the AAA or JAMS only to administer an arbitration that the Tribe would actually conduct. Even Mr. Parnell does not really defend that construction. Rather, he repeatedly ignores the AAA and JAMS language. In this case, federal policy and the parties Agreement point in the same direction: the district court should have compelled arbitration before the AAA or JAMS, or any other arbitral organization upon which the parties could agree. IV. For Preservation Purposes, CashCall Respectfully Submits That The Inetianbor Case Was Incorrectly Decided. Because of the key factual differences between this case and Inetianbor detailed above, this Court need not disagree with Inetianbor to reverse. 26

33 Case: Date Filed: 11/24/2014 Page: 33 of 37 Nonetheless, Inetianbor is incorrect as to a number of points. Inetianbor distinguished other authority holding that an unavailable contractual forum was not integral to the arbitration clause on the ground that those cases only designated procedural rules, not a forum, unlike here. 768 F.3d at But that is not what those cases said. Brown, for example, held that the there is no evidence that the choice of the NAF as the arbitration forum was an integral part of the agreement to arbitrate. Brown, 211 F.3d at 1222 (emphasis added). Indeed, as one of the cases upon which CashCall relies noted, [a] number of other courts of appeals have decided that a clause which adopts the rules of an organization... implicitly chooses that organization as the, or a, forum. Reddam v. KPMG LLP, 457 F.3d 1054, 1060 (9th Cir. 2006) (citing, among others, Brown, 211 F.3d at 1222, and Luckie v. Smith Barney, Harris Upham & Co., Inc., 999 F.2d 509, , (11th Cir. 1993) (per curiam)). There is thus no principled distinction between the selection of the forum itself and the selection of its rules. Inetianbor also failed to give effect to the severance provision in Mr. Inetianbor s agreement. 768 F.3d at As CashCall has explained here, the Severance Provision answers the question before this Court: if any provision of the Arbitration Clause cannot be implemented (including the use of a particular arbitral forum), the remainder shall remain in effect. That remainder includes the overarching agreement stated in the first sentence of the Arbitration Clause: 27

34 Case: Date Filed: 11/24/2014 Page: 34 of 37 [A]ny dispute you have with Western Sky or anyone else under this loan agreement will be resolved by binding arbitration. (Op. Br. 47 (citations omitted).) Inetianbor responded that a severance provision does not apply to an essential part of the contract. 768 F.3d at But that overlooks that whether a provision is essential is a matter of contractual intent, and a severance provision makes clear that the parties did not view any part of the contract as essential to it. [I]f the [tribal forum] was so integral as to not be severable, why did [the parties] include an explicit severability clause in the arbitration provision that failed to except out the tribal forum provision? Puleo v. Chase Bank USA, N.A., 605 F.3d 172, 190 n.3 (3d Cir. 2010). For these reasons, too, Inetianbor should not control this case. CONCLUSION CashCall respectfully requests that this Court reverse the district court s order refusing to compel arbitration and remand to the district court with instructions that the case be sent to arbitration either (a) before the AAA, JAMS, or any other arbitral forum agreed upon by the parties; or (b) before an alternative arbitral forum appointed under FAA 5. Respectfully submitted this 24th day of November,