DUNCAN, Circuit Judge:
Santander Consumer USA ("Santander") appeals from the district court's order denying its motion to compel arbitration and stay court proceedings of Antonia Rota-McLarty's ("Rota-McLarty") claims against it.
The relevant facts are few and undisputed. On July 5, 2007, Rota-McLarty, a Maryland resident, purchased a used car
The second was a Retail Installment Sale Contract ("RISC"), which does not contain an arbitration provision. The RISC provides the financing terms for Rota-McLarty's loan and information about repossession rights and procedures. Additionally, the RISC contains an integration clause, which states: "This contract contains the entire agreement between you and us relating to this contract. Any change to this contract must be in writing and we must sign it. No oral changes are binding." J.A. 19. Santander pre-approved the financing terms, and Easterns assigned the RISC to Santander immediately after the sale.
Rota-McLarty returned the car, which she claimed was defective, to Easterns's lot in Maryland, having never made a payment on her loan. Santander sought collection of the outstanding debt after repossessing and selling the car at a loss.
Rota-McLarty filed a putative class action in state court against Santander on March 9, 2010, alleging violations of various Maryland consumer protection laws for undisclosed finance charges and other unfair business practices. On April 13, 2010, Santander removed the complaint to federal court on the basis of diversity. Santander filed an answer the next day, and within a month the parties had agreed on a bifurcated discovery schedule, whereby the first stage would focus on the issue of hidden finance charges, with class and other discovery to follow. During the brief discovery period that ensued, Santander took Rota-McLarty's deposition on both stage one and stage two issues, and Rota-McLarty took Easterns's deposition and sought production of various documents. One such document was a letter Easterns had received from Santander in 2007, detailing the terms of the RISC assignment, which Rota-McLarty asserts supports her hidden finance charge allegations.
On September 30, 2010, Santander moved to compel non-class arbitration of Rota-McLarty's claims and to stay the proceedings in federal court. Santander claimed the delay in seeking arbitration was caused by uncertainty in the law regarding whether it would be forced into class arbitration, which was clarified by the Supreme Court's decision in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. ___, 130 S.Ct. 1758, 1775, 176 L.Ed.2d 605 (2010) ("[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so."). Santander waited longer, until a district court had applied Stolt-Nielsen in the consumer context, to file its motion.
Santander argues that the district court erred in failing to apply the FAA and in finding waiver. Rota-McLarty disagrees, and also contests the district court's conclusion that a binding arbitration agreement existed between the parties. Before turning to the merits, however, we must first assure ourselves of our jurisdiction over this appeal.
Courts of appeal ordinarily may review only final decisions of district courts. Wheeling Hosp., Inc. v. Health Plan of the Upper Ohio Valley, Inc., 683 F.3d 577, 584 (4th Cir.2012); Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 627, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009); see also 28 U.S.C. § 1291. Although the district court's order denying Santander's motion to compel arbitration and stay proceedings is not a final decision, we may nevertheless exercise appellate jurisdiction if the order falls within an exception to the final judgment rule established by the FAA.
The FAA provides for appeals from, inter alia, orders "refusing a stay of any action under section 3 of this title,"
Here, our determination of whether the district court's order falls within an exception comprises two steps. We must first decide whether the transaction is one that involves interstate commerce to which the FAA applies.
Turning first to the question of whether the parties' agreement falls within the scope of the FAA, we note that the reach of the statute is broad. It operates to enforce an arbitration provision included in "a contract evidencing a transaction involving commerce." 9 U.S.C. § 2; see also 13D Wright, Miller, & Cooper, Federal Practice and Procedure § 3569 (2008), where "commerce" means "commerce among the several States," 9 U.S.C. § 2. The Supreme Court has interpreted this provision as exercising the full scope of Congress's commerce-clause power. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273-77, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Moreover, the term "evidencing a transaction" requires only that the transaction in fact involved interstate commerce, not that the parties contemplated it as such at the time of the agreement. Id. at 281, 115 S.Ct. 834.
The district court's analysis of whether the underlying transaction is solely intrastate in nature consists of one sentence: "There is no indication that Rota-McLarty's transaction involved interstate commerce, and the parties agree that Maryland law governs their relationship." J.A. 129. We are constrained to disagree.
The underlying transaction here is simply a consumer credit arrangement between a citizen of one state and a financing company in another. Although diversity of citizenship — or lack thereof — is not by itself enough to determine the nature of a transaction, see Maxum Founds., Inc. v. Salus Corp., 779 F.2d 974, 978 n. 4 (4th Cir.1985) ("[T]he mere circumstance of diversity of citizenship between [the parties] is not sufficient to command the application of the [FAA]."), we need not rely solely on it here. The financing, which originated from a foreign state, was integral to Rota-McLarty's purchase of the used car from Easterns. We agree with sister circuits, which have concluded that reliance upon funds from a foreign source in a transaction is sufficient to implicate the FAA. See, e.g., Jenkins v. First Am. Cash Advance of Georgia, 400 F.3d 868, 874-75 (11th Cir.2005) ("payday loan" completed by a Georgia consumer in the Georgia office of loan company involved interstate commerce where the funds were approved and disbursed by a national bank based in South Dakota). Therefore, the FAA applies.
Our conclusion is bolstered by two additional factors. First, we have held that the FAA does not impose a burden upon the party invoking the FAA to put forth specific evidence proving the interstate nature of the transaction. Maxum, 779 F.2d at 978 n. 4 ("Where ... the party seeking arbitration alleges that the transaction is within the scope of the [FAA], and the party opposing application of the [FAA] does not come forward with evidence to rebut jurisdiction under the federal statute, we do not read into the [FAA] a requirement of further proof by the party invoking the federal law."). Santander has made the requisite initial showing, which Rota-McLarty has failed to rebut. Indeed, she admits "the interstate nature of the transaction embodied in the RISC... should be hardly controversial," Appellee's Br. at 9, and we agree.
Second, in deciding to apply the FAA, we need not identify any specific
For these reasons, we find that the underlying transaction relates to interstate commerce, and that the district court erred in declining to apply the FAA. We are thus assured that federal law supplies not only our procedural framework, but also the substantive law regarding arbitration. Preston v. Ferrer, 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008).
We next address the narrower issue of whether Santander's motion adequately invoked §§ 3 or 4 of the FAA so as to create appellate jurisdiction under the statute's exception to the final judgment rule. Guided by our precedent in Wheeling, we find that it did.
Consonant with the approach taken by our sister circuits, Wheeling held that the proper inquiry focuses on substance rather than nomenclature. 683 F.3d at 586. In other words, we look to whether a motion evidences a clear intention to seek enforcement of an arbitration clause rather than on whether it adhered to a specific form or explicitly referenced §§ 3 or 4. Id. Of course, "[t]he first, simplest, and surest way to guarantee appellate jurisdiction under § 16(a) is to caption the motion in the district court as one brought under FAA §§ 3 or 4." Id. (quoting Conrad v. Phone Directories Co., 585 F.3d 1376, 1385 (10th Cir.2009)). But requiring such a caption "would violate the spirit of notice pleading embodied in our Federal Rules of Civil Procedure." Conrad, 585 F.3d at 1385. Instead, we
Id.
Specifically, in examining the four corners of the motion, our focus is on the
Guided by Wheeling, we conclude the denial of Santander's motion is immediately appealable. Although the caption — "motion to compel arbitration and stay proceedings" — does not specifically reference §§ 3 or 4, it clearly invokes the relief provided in those sections. Further, Santander's memorandum in support of that motion asks the court to "grant Santander's motion, compel non-class arbitration of Rota-McLarty's claims, and stay all other aspects of this action pending further order of the Court." J.A. 95. It does not, by contrast, request any "`judicial remedy that is inconsistent with the position that the issues involved may be decided only by the arbitrator.'" Wheeling, 683 F.3d at 586 (citation omitted). Rota-McLarty has not pointed to any authority other than the FAA upon which Santander could have intended to rely in seeking to compel arbitration and stay litigation, much less shown how the relief Santander sought is inconsistent with the position that Rota-McLarty's claims must be decided by an arbitrator.
For these reasons, we find that the four corners of Santander's motion make it abundantly clear Santander sought enforcement of the arbitration agreement. Denial of that motion is therefore immediately appealable.
Turning now to the substantive issues on appeal, we examine whether a valid arbitration agreement exists between the parties, and, if so, whether Santander was in default of its right to enforce that agreement.
The question of whether an enforceable arbitration agreement exists between Rota-McLarty and Santander is a matter of contract interpretation governed by state law, which we review de novo. FindWhere Holdings, Inc. v. Sys. Env't Optimization, LLC, 626 F.3d 752, 755 (4th Cir.2010).
We must first determine whether Santander, as an assignee only to the RISC, which contains an integration clause providing that it is the complete agreement between the parties, and not the Buyer's Order, which includes the arbitration language, could invoke arbitration. Relying on Maryland cases instructing courts to look to the intent of the parties to determine the preclusive effect of an integration clause, the district court found that the circumstances surrounding the transaction here indicated that the parties did not intend the RISC to be a final and complete integration of their agreement. Rather, they intended that the two agreements should be interpreted together. Further, the court concluded that Rota-McLarty's claims fell within the scope of the arbitration provision. Rota-McLarty challenges both conclusions. We consider each in turn.
With respect to the integration clause, Rota-McLarty essentially repeats her arguments
We disagree with Rota-McLarty that the circumstances in that case mirror those in the case at hand. Far from indistinguishable, Hartford is inapposite because Santander does not rely on language in the RISC, but instead points to language in the Buyer's Order itself, which states that it applies to the assignee of the RISC, including several times in the arbitration provision.
The facts in this case support the district court's finding that the Buyer's Order and RISC were made as part of a single transaction, and should be interpreted together under Maryland law. See Shoreham Developers, Inc. v. Randolph Hills, Inc., 248 Md. 267, 235 A.2d 735, 739 (1967) (explaining that the coverage of an integration clause is a matter of interpretation, and does not "exclude reading the instruments together [where] the parties did not intend the sales contract standing by itself to be a final and complete integration of the agreed upon terms"); Jaguar Land Rover North America, LLC v. Manhattan Imported Cars, Inc., 738 F.Supp.2d 640, 648 (D.Md.2010) ("Whether an agreement is integrated and the effect of an integration clause are preliminary questions of interpretation determined by the court." (citing Shoreham)), aff'd, 477 Fed.Appx. 84 (4th Cir.2012). The Buyer's Order, which is expressly "conditioned upon approval of [the] retail installment sale contract," J.A. 132, and defines the "Agreement" collectively with other documents made in connection with the Buyer's Order, is insufficient on its own to "explain the full extent of the parties' obligations," Jaguar Land Rover, 738 F.Supp.2d at 649. For these reasons, we find Rota-McLarty has failed to establish that the RISC's integration clause prevents reading both contracts together as a single agreement.
Rota-McLarty's second argument, that Santander should not be able to enforce the arbitration agreement because it contains a carve-out for assignees of the RISC, is similarly unconvincing.
J.A. 18 (enumeration added). Basic principles of contract interpretation instruct us to look first to the plain meaning of the contract's terms, and also to give meaning to each word used and avoid constructions that render language meaningless, superfluous, or contradictory. See DIRECTV, Inc. v. Mattingly, 376 Md. 302, 829 A.2d 626, 637 (2003).
Here, the parenthetical phrase that constitutes the carve-out follows, and modifies, a list of three types of monetary claims that are subject to arbitration. The parenthetical exempts the forced arbitration of any "purely monetary claim greater than $1,000" by an assignee of that claim. It does not pertain to assignees of the RISC in particular; rather, it indicates that a person to whom an otherwise-qualifying monetary claim has been assigned cannot enforce arbitration. Santander is not the assignee of any monetary claim, but instead is the assignee of the entire agreement embodied in the RISC. The interpretation advanced by Rota-McLarty not only ignores the structure of the sentence containing the carve-out, but it also operates at odds with the remainder of the arbitration provision, which contemplates the binding nature of the agreement on Santander by equating the "Dealer" and the "assignee of any [RISC]" in several places. See, e.g., J.A. 18 ("[A]ll disputes ... shall be resolved by binding arbitration by one arbitrator located in the Dealer's area in the state of Maryland selected by the Dealer (or the assignee of any [RISC]) with the consent of the Purchaser."). We thus find nothing in the language of the arbitration provision to indicate it was not intended to be enforceable by Santander as assignee of the RISC.
Finally, we examine the district court's finding that Santander waived its right to enforce the arbitration agreement. We review the district court's decision to deny Santander's arbitration request de novo, with deference to its underlying factual findings, Forrester v. Penn Lyon Homes, Inc., 553 F.3d 340, 342 (4th Cir. 2009), and conclude that the court made several errors.
Applying Maryland arbitration law, the district court found that whether a party has waived its right to arbitrate depends on "the extent of its participation in judicial proceedings, including whether an answer has been filed; whether there was a legitimate reason for the participation; and whether the delay in seeking arbitration
As a threshold matter, we note the district court erred by applying the wrong law. Under the FAA, a party may lose its right to compel arbitration if it "is in default in proceeding with such arbitration." 9 U.S.C. § 3. This principle of "default" is akin to waiver, but not identical. Unlike some waiver doctrines, "the circumstances giving rise to a statutory default are limited and, in light of the federal policy favoring arbitration, are not to be lightly inferred," Maxum, 779 F.2d at 981, and the party opposing arbitration bears a heavy burden to prove default, Am. Recovery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 95 (4th Cir.1996).
Generally, a litigant defaults on its right to invoke the FAA where it "`so substantially utiliz[es] the litigation machinery that to subsequently permit arbitration would prejudice the party opposing the stay.'" Forrester, 553 F.3d at 343 (citation omitted). "Where a party fails to demand arbitration during pretrial proceedings, and, in the meantime, engages in pretrial activity inconsistent with an intent to arbitrate, the party later opposing a motion to compel arbitration may more easily show that its position has been compromised, i.e., prejudiced." Fraser v. Merrill Lynch Pierce, Fenner & Smith, Inc., 817 F.2d 250, 252 (4th Cir.1987) (internal quotation marks omitted). The dispositive determination is whether the opposing party has suffered actual prejudice. MicroStrategy, Inc. v. Lauricia, 268 F.3d at 249 (citing Fraser, 817 F.2d at 252); see also Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc., 380 F.3d 200, 205 (4th Cir.2004). Two factors specifically inform our inquiry into actual prejudice: (1) the amount of the delay; and (2) the extent of the moving party's trial-oriented activity. MicroStrategy, 268 F.3d at 249. Notably, the moving party's reason for delay is not relevant to the default inquiry under our precedent.
First, in comparison to our decisions considering the issue, the length of delay in this case was relatively short. At most, Santander waited six and a half months — from the date Rota-McLarty filed her complaint in state court — to file its motion to compel arbitration and stay proceedings in federal court.
Here, nothing in the record supports a finding that Rota-McLarty was prejudiced by the length of the delay itself. Her general assertion that she "committed substantial resources to the case on the premise that the Court would have an opportunity to rule on a motion for class certification," Appellee's Br. at 29, is both unsubstantiated and unconvincing. Although incurring significant expense as a result of extended litigation can be part of actual prejudice, such cases usually involve resources expended specifically in response to motions filed by the party who later seeks arbitration. See, e.g., Fraser, 817 F.2d at 252 (prejudice found in part because opposing party "had to respond to a number of potentially damaging motions, including a motion for partial summary judgment and three motions to dismiss.") And where, as here, Rota-McLarty has provided no evidentiary support for her claimed "significant expense," this argument fails entirely. Patten, 380 F.3d at 208 (declining to base prejudice on costs incurred where the opposing party failed to adequately prove the expense). Consequently,
The second factor in our prejudice inquiry looks to the nature and extent of Santander's litigation activities. Here, Santander "utilized the litigation machinery" in a few — mostly minimal — ways: it removed the complaint to federal court, filed an answer, proposed a bifurcated discovery plan, took Rota-McLarty's deposition on both phase one and phase two issues, and waited for clarity in the law in order to avoid class arbitration. No dispositive motions were filed.
Like the district court, Rota-McLarty fails to tether her discussion of Santander's litigation activities to any actual prejudice. She does not explain how either her deposition or the document produced by Easterns would be to Santander's advantage, or unavailable, in arbitration. Neither the district court nor Rota-McLarty specified what aspect of Rota-McLarty's litigation strategy was revealed,
For the foregoing reasons, the order of the district court is
REVERSED.
