Expiration of SOL Before AAA Arbitration Commences

[LaneBlane]

Because so many of you helped me out with my arbitration issues with a JDB some time ago, I wanted to ask for some feedback on arbitration that doesn't involve credit/debt.

I need to file an AAA demand for arbitration under their consumer rules against a business. One of my SOLs is expiring toward the end of the year, so I had some questions about this.

What happens if an SOL expires after a demand for arbitration is filed and arbitration never commences?  In other words, if AAA refuses to accept the case because the business fails to pay their portion of the arbitration costs/fees, can I file a complaint in civil court and have the SOL extended because my demand was filed in time?

Thanks for your help!

[BackFromTheDebt]

Maybe you should file in court, and then file an MTC.  The SOL is tolled while the case is in court. 

That way you are covered.  

[LaneBlane]

2 hours ago, BackFromTheDebt said:

Maybe you should file in court, and then file an MTC.  The SOL is tolled while the case is in court. 

That way you are covered.  

Thanks for the sound advise.  For all I know, they'll intentionally run the clock on the SOL before they pay their arbitration fees/costs.

If filing in court is the only way to stop the SOL clock, I'll have to do it.

 

[Clydesmom]

7 hours ago, LaneBlane said:

What happens if an SOL expires after a demand for arbitration is filed and arbitration never commences?

Then they have a gold plated defense of the SOL being expired if you try to sue on the matter if they don't arbitrate.

SOL only applies to litigation.  When it comes to arbitration the arbitrator is not necessarily bound by the strict letter on the law on something like that.  They have a LOT more leeway as to what they can and will consider. 

7 hours ago, BackFromTheDebt said:

Maybe you should file in court, and then file an MTC.

The major problem with this plan is they can motion to dismiss stating that if arbitration was the desired forum the case should have been brought there and not in court.  The only way to force arbitration that I am aware of when you are initiating and not defending a claim is to file with the forum and if the other party refuses to arbitrate then you file a motion in Federal Court to compel arbitration under the Federal Act.

[LaneBlane]

42 minutes ago, Clydesmom said:

The major problem with this plan is they can motion to dismiss stating that if arbitration was the desired forum the case should have been brought there and not in court.  The only way to force arbitration that I am aware of when you are initiating and not defending a claim is to file with the forum and if the other party refuses to arbitrate then you file a motion in Federal Court to compel arbitration under the Federal Act.

Thanks for your response.

Even if a court grated an MTC, it's my understanding that a court can't force a party to pay the required arbitration fees/expenses.  This is why I'm concerned about an SOL expiring if things get stuck in limbo with AAA.

The only arbitration case I've initiated (against a JDB after my MTC was granted) ended up being closed by JAMS because the business never paid.  That's why I'm kind of thinking the same thing may happen.

[fisthardcheese]

8 hours ago, LaneBlane said:

Thanks for your response.

Even if a court grated an MTC, it's my understanding that a court can't force a party to pay the required arbitration fees/expenses.  This is why I'm concerned about an SOL expiring if things get stuck in limbo with AAA.

The only arbitration case I've initiated (against a JDB after my MTC was granted) ended up being closed by JAMS because the business never paid.  That's why I'm kind of thinking the same thing may happen.

You file a Petition to Compel Arbitration in federal court and ask the court to order the Defendant to arbitrate according to the contract/user agreement.  That DOES require them to comply with all of the AAA rules, which include payment of the arbitration fees.  So when they don't pay, you can ask the court to sanction and re-compel them to arbitrate.

[LaneBlane]

5 hours ago, fisthardcheese said:

You file a Petition to Compel Arbitration in federal court and ask the court to order the Defendant to arbitrate according to the contract/user agreement.  That DOES require them to comply with all of the AAA rules, which include payment of the arbitration fees.  So when they don't pay, you can ask the court to sanction and re-compel them to arbitrate.

Thank you.  I read Section 4 of the FAA (Failure to Arbitrate Under Agreement) late last night.  This outlined the process involved.

 

[BV80]

On 9/30/2019 at 2:16 PM, LaneBlane said:

Thanks for the sound advise.  For all I know, they'll intentionally run the clock on the SOL before they pay their arbitration fees/costs.

If filing in court is the only way to stop the SOL clock, I'll have to do it.

 

@BackFromTheDebt

Check your case law to make sure that filing a lawsuit does not waive your right to request arbitration.

[LaneBlane]

3 hours ago, BV80 said:

@BackFromTheDebt

Check your case law to make sure that filing a lawsuit does not waive your right to request arbitration.

Great point!  If I'm not able to reach a settlement with them, I've decided to file a demand for arbitration and leave it at that.

Thanks!

[fisthardcheese]

On 10/2/2019 at 6:18 PM, BV80 said:

@BackFromTheDebt

Check your case law to make sure that filing a lawsuit does not waive your right to request arbitration.

Filing a Petition to Compel Arbitration in Federal court both stops the clock and preserves your right to arbitration.

[LaneBlane]

3 hours ago, fisthardcheese said:

Filing a Petition to Compel Arbitration in Federal court both stops the clock and preserves your right to arbitration.

Just to clarify.  I'm not being sued.  I wanted to file in arbitration against a business in a matter that doesn't involve credit/debt.

I'm up against an SOL that expires later this year.  (I'd file in arbitration a month or more before this happens.)  Because of what happened in my JDB arbitration case, I'm afraid the other party won't pay their portion of the arbitration fees and costs.  This would allow the SOL to expire while things were in limbo.  It seems filing a Petition to Compel Arbitration in Federal court would protect me, but it wouldn't stop the clock.

Another option I have is to file a civil Complaint against the business  (which would stop the clock).  The amount involved well exceeds what's allowed in small claims.  Then I could wait for the business to file a MTC arbitration and agree to their MTC.  The only drawback is having to pay a few hundred dollars for the filing fee.  (Worth it in the scheme of things).

 

[fisthardcheese]

14 hours ago, LaneBlane said:

I wanted to file in arbitration against a business in a matter that doesn't involve credit/debt.

They most likely will not ignore arbitration in that instance.

14 hours ago, LaneBlane said:

Because of what happened in my JDB arbitration case, I'm afraid the other party won't pay their portion of the arbitration fees and costs

JDBs and CRAs are the only companies in my vast arbitration experience that flat refuse to respond to arbitration filings.  Other companies will comply because they do not want to lose the ability to be able to use arbitration against consumers (or hide from class action lawsuits).

14 hours ago, LaneBlane said:

It seems filing a Petition to Compel Arbitration in Federal court would protect me, but it wouldn't stop the clock.

It seems to me it SHOULD stop the clock, however, I'm not 100% on that.

14 hours ago, LaneBlane said:

Another option I have is to file a civil Complaint against the business  (which would stop the clock).  The amount involved well exceeds what's allowed in small claims.  Then I could wait for the business to file a MTC arbitration and agree to their MTC.  The only drawback is having to pay a few hundred dollars for the filing fee.  (Worth it in the scheme of things).

My opinion is that you are overthinking it too much and talking yourself out of something based on no information.  Why don't you file the arbitration case and wait to see how they respond and THEN worry about how you would proceed if they ignore it.  You will know within 30 days how they intend to handle the case.

[LaneBlane]

3 hours ago, fisthardcheese said:

My opinion is that you are overthinking it too much and talking yourself out of something based on no information.  Why don't you file the arbitration case and wait to see how they respond and THEN worry about how you would proceed if they ignore it.  You will know within 30 days how they intend to handle the case.

Thanks for taking the time to send a detailed response.  I think you're right.  I'm probably overthinking things.

[BackFromTheDebt]

5 hours ago, fisthardcheese said:

They most likely will not ignore arbitration in that instance.

JDBs and CRAs are the only companies in my vast arbitration experience that flat refuse to respond to arbitration filings.  Other companies will comply because they do not want to lose the ability to be able to use arbitration against consumers (or hide from class action lawsuits).

 

I did have a case in which Cap 1 ignored arbitration.  They never responded; never paid.  The case was dismissed from court.

 

Of course, that was in the days when Cap 1 had an arbitration provision in their credit card agreements.  

Things were different in those days.  In those days, the laws in my state were less favorable to JDBs, so every case I ever had was an OC.  

Cap 1 was the ONLY OC to ignore arbitration.  Citi, AmEx and Discover all at least replied.  The Citi cards were settled before the fees were paid, as I expected.  AmEx and Discover went fairly deep into arbitration before agreeing to settlements.  

 

But then, Cap 1 was dealing with an extremely sleazy law firm, Messerli and Kramer, so maybe the law firm just neglected to answer the arbitration case.  

[LaneBlane]

Reminder:  This issue doesn't involve credit/debt.  It's a consumer arbitration case I filed against a business.

I filed my Demand for Arbitration with AAA toward the end of October 2019. In response, AAA sent a letter to the parties in mid-November.  The letter reads:

"The claimant has filed with us a demand for arbitration. The American Arbitration Association (“AAA”) has
determined that this arbitration arises out of a consumer agreement and, as such, the Consumer Arbitration Rules
(“Consumer Rules”) apply to this dispute. The Consumer Rules may be found on our website at www.adr.org.

Under the Consumer Rules, the consumer pays a filing fee of $200 and the business pays a filing fee of $300. We
have received the consumer’s $200 portion of the filing fee. So that the filing requirements are complete, the
business is requested to submit filing fees of $300, the expedited consumer clause review fee of $250 and its
arbitrator’s compensation deposit of $2,500, totaling $3,050.  (The clause review fee is only required if an arbitration
clause is not registered with AAA.)

Please make the check payable to the American Arbitration Association and include a reference to the case
number. Checks should be mailed to 1101 Laurel Oak Road, Suite 100, Voorhees, NJ 08043. In the event that
payment is being made by a third party, such as an insurance company, please request that payment be sent
directly to the business’ representative. The business’ representative should then forward payment to the AAA in
accordance with the foregoing instructions.

The requested payment and submission should be received no later than December 2, 2019 and the AAA
may decline to administer this dispute if the business does not timely respond. It should be noted that the
consumer’s satisfaction of the filing requirements triggers the business’ obligation to promptly pay its share of the
filing fees under the rules and the business may owe all or a portion of the filing fees even if the matter is settled
or withdrawn. The AAA will refund any overpayments received from the consumer with the filing.

No answering statement or counterclaim is due at this time and the parties will be notified of the applicable
deadlines upon satisfaction of all the filing requirements."

 

After the business missed their December 2, 2019 deadline, AAA sent the following letter to the parties today:

"On November 14, 2019 parties were notified that the filing requirements for the above matter have not been met. We have not received the signed submission letter or $3,050 filing fees from the business.  AAA does not have authority to administer this dispute under the consumer rules.  Accordingly, we have administratively closed our file.  The AAA will return the filing fees to the filing party.  In the future should you decide to resubmit this matter, please provide all requisite information along with the appropriate filing fee."

 

The business' insurance company has hired an attorney to represent the business.  In the two phone calls I've had with him, he's tried very hard to talk me into agreeing to mediation.  I've declined and have told him I'd rather he submit a settlement offer on behalf of his client.  Then the attorney sent an email this morning to ask if I had time to discuss things by phone again.  In response I asked him to email an outline of what he would like to discuss with me, and mentioned it appears his client has waived their right to arbitration by not submitting their arbitration clause for review and by failing to pay their portion of the fees/costs.  I'm sure he'll be reaching out to his contact person at the business to find out WTF is going on.

Ironically, this business has had two class action cases filed against them in recent months.  In both cases, the business has filed a MTC Arbitration.

I've learned I'm still comfortably within the SOL, so that's no longer an issue.  Right now I'm still hopeful that a settlement can be worked out.

Reminder:  This issue doesn't involve credit/debt.  It's a consumer arbitration case I filed against a business.

 

[Pericles]

2 hours ago, LaneBlane said:

Reminder:  This issue doesn't involve credit/debt.  It's a consumer arbitration case I filed against a business.

After the business missed their December 2, 2019 deadline, AAA sent the following letter to the parties today:

"On November 14, 2019 parties were notified that the filing requirements for the above matter have not been met. We have not received the signed submission letter or $3,050 filing fees from the business.  AAA does not have authority to administer this dispute under the consumer rules.  Accordingly, we have administratively closed our file.  The AAA will return the filing fees to the filing party.  In the future should you decide to resubmit this matter, please provide all requisite information along with the appropriate filing fee."

Interesting that the AAA did not invoke rule R-1(d) of the consumer arbitration rules, as they typically do in debt buyer cases (see rejection letter previously posted on the forum here).

When the AAA invokes rule R-1(d), they tell everybody that they can just go to court instead (see below).  In your letter, it seems that resubmission of the same claim to the AAA would be permitted.

Quote

On a previously-filed consumer matter, this business did not timely submit its share of the filing fees and/or failed to waive a provision in its consumer contract that the AAA identified as a material and substantial deviation from the Protocol.  The AAA sent correspondence informing the business that we may decline to administer consumer arbitrations involving this business and requested that the business remove AAA from its consumer arbitration agreements so that there would be no confusion to the public.

Accordingly, we have administratively closed our file and will refund any payment received by the filing party.
According to R-1(d) of the Consumer Arbitration Rules, should the AAA decline to administer an arbitration, either party may chose to submit its dispute to the appropriate court for resolution.

Maybe the business in your case does not have a "previously-filed consumer matter" in which they also did not pay the fees within the time provided.

[LaneBlane]

1 hour ago, Pericles said:

Interesting that the AAA did not invoke rule R-1(d) of the consumer arbitration rules, as they typically do in debt buyer cases (see rejection letter previously posted on the forum here).

When the AAA invokes rule R-1(d), they tell everybody that they can just go to court instead (see below).  In your letter, it seems that resubmission of the same claim to the AAA would be permitted.

Thanks for your response, Pericles.

Although AAA determined the consumer rules applied to my dispute, the business' arbitration provision doesn't specify which version of AAA's rules apply.  The arbitration clause states arbitration "...shall be resolved using the rules of the American Arbitration Association."  This may preclude AAA from invoking rule R-1(d) because, as they said in today's letter, they don't have the authority to administer the dispute under the consumer rules.

AAA's original letter from November included a section both parties were required to sign to acknowledging the dispute would be handled under the consumer rules.  This must have been AAA's attempt to remedy a material and substantial deviation from the Consumer Due Process Protocol... failure to specify which version of the rules applied.

 

1 hour ago, Pericles said:

On a previously-filed consumer matter, this business did not timely submit its share of the filing fees and/or failed to waive a provision in its consumer contract that the AAA identified as a material and substantial deviation from the Protocol.  The AAA sent correspondence informing the business that we may decline to administer consumer arbitrations involving this business and requested that the business remove AAA from its consumer arbitration agreements so that there would be no confusion to the public.

Accordingly, we have administratively closed our file and will refund any payment received by the filing party.
According to R-1(d) of the Consumer Arbitration Rules, should the AAA decline to administer an arbitration, either party may chose to submit its dispute to the appropriate court for resolution.

I asked AAA if the business failed to meet their obligations in any previous disputes filed against them.  They weren't able to provide me with any information. 

The fact that the arbitration clause doesn't specify which version of the rules apply seems to have created a grey area that I've fallen into.

[Pericles]

3 minutes ago, LaneBlane said:

Although AAA determined the consumer rules applied to my dispute, ...

I'm pretty sure that the AAA's administrative determination is all that is required.

6 minutes ago, LaneBlane said:

the business' arbitration provision doesn't specify which version of AAA's rules apply.

I haven't seen any arbitration agreement that specifies application of the consumer rules.  Since the business rules weren't expressly indicated, the question is for the AAA to administratively decide, at least at the filing stage.

11 minutes ago, LaneBlane said:

as they said in today's letter, they don't have the authority to administer the dispute under the consumer rules.

That sentence follows "We have not received the signed submission letter or $3,050 filing fees from the business.".

My reading of the two sentences together is that they don't have the authority because the fees have not been paid.

[LaneBlane]

2 minutes ago, Pericles said:

My reading of the two sentences together is that they don't have the authority because the fees have not been paid.

Thanks again for your response.

I could always ask AAA if Rule R-1(d) applies to my case.  If it doesn't, I'll ask why.

[Brotherskeeper]

13 hours ago, LaneBlane said:

The fact that the arbitration clause doesn't specify which version of the rules apply seems to have created a grey area that I've fallen into.

Lane, your arb experience in this case and your previous case indicate that grey area is wider than I imagined. I'm learning a great deal from you and @Pericles. Thank you!

[LaneBlane]

13 hours ago, Brotherskeeper said:

Lane, your arb experience in this case and your previous case indicate that grey area is wider than I imagined. I'm learning a great deal from you and @Pericles. Thank you!

I'm glad you've been able to learn from this exchange.  It's been a learning experience for me, too.

I was also expecting a letter from AAA that referenced Rule R-1(d).  Rule R-12 also contains similar language: "If the AAA declines to administer a case due to the business’s non-compliance with this notification requirement, the parties may choose to submit their dispute to the appropriate court."

I asked AAA if these rules applied to my case.  If they don't, I asked them to explain why.   I'll let you know what I find out.

[LaneBlane]

On 12/4/2019 at 8:03 PM, Pericles said:

My reading of the two sentences together is that they don't have the authority because the fees have not been paid.

You're absolutely right.  I called AAA and clarified this with them.

Rules R-1(d) and R-12 do apply.  I just ended up with a letter that doesn't spell this out. 

[fisthardcheese]

I think this is all being overly analyzed.  The right to court always exists. AAA does not need to give express permission in their rejection letters nor in their rules.  They include it in their rules just as a CYA, however, your right to go to court is always an option.  I think way too much is being read into " the parties may choose to submit their dispute to the appropriate court. "

I have always operated under a very simple guide:  1. I can go to court, but they may invoke arbitration.  2. I go to arbitration and they refuse, so I then go to court and they no longer have standing to invoke arbitration.  Easy. Done.  Nothing more complicated.

[BV80]

On 12/4/2019 at 8:50 PM, LaneBlane said:

The fact that the arbitration clause doesn't specify which version of the rules apply seems to have created a grey area that I've fallen into.

Under which other version would your dispute fall?

[LaneBlane]

24 minutes ago, BV80 said:

On 12/4/2019 at 7:50 PM, LaneBlane said:

The fact that the arbitration clause doesn't specify which version of the rules apply seems to have created a grey area that I've fallen into.

Under which other version would your dispute fall?

AAA determined my dispute would fall under the consumer rules, so that was enough to take came of the grey area.