ORDER GRANTING DEFENDANT SALLIE MAE'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO COMPEL ARBITRATION

VICTORIA A. ROBERTS, District Judge.

I. INTRODUCTION

On September 8, 2010, Defendant Sallie Mae filed a Motion to Dismiss Plaintiffs' Complaint as to Sallie Mae, or in the alternative, to stay proceedings before this Court, and compel Plaintiffs to submit their claims to arbitration. (Doc. # 33). Oral argument was heard on January 6, 2011.

For reasons explained below, the Court finds:

1. Utah law governs the initial inquiry: whether the parties agreed to arbitrate.

2. Plaintiffs fail to show that the ComputerTraining Defendants' default on allegations of unconscionability can be imputed to Sallie Mae through the FTC Holder Rule.

3. Plaintiffs fail to properly plead that the Class Action Waiver, or the Arbitration Agreement as a whole, are unconscionable, by not raising the issue until their Response to this Motion.

4. Any dispute involving the validity, enforceability or scope of the Arbitration Agreements has been delegated to the arbitration process.

5. The unavailability of the arbitration forum designated in the Arbitration Agreement does not preclude arbitration in the alternate forum designated in the Arbitration Agreement, given the plain meaning of the Arbitration Agreement terms.

6. Plaintiffs assert no statutory claims, so the Court need not, and cannot, consider Congress's intent that any claims should be nonarbitrable.

7. Even if the Plaintiffs' claims under the FTC Holder Rule could be considered federal statutory claims for the purpose of this analysis, there is no indication that the FTC intended claims brought under the FTC Holder Rule to be nonarbitrable.

8. All claims between Plaintiffs and Sallie Mae must be dismissed and submitted for arbitration.

The Court GRANTS Defendant's Motion to Dismiss.

II. BACKGROUND

Plaintiffs filed this action in April 2010, against Defendants ComputerTraining.com, Inc., ComputerTraining.edu, LLC (f/k/a ComputerTraining.com, LLC) and CTCI Corp. (ComputerTraining Defendants), after the abrupt closing of the ComputerTraining schools on December 31, 2009. (Doc. # 1). Defaults were entered against all of the ComputerTraining Defendants in May 2010, for failure to appear and defend. (Doc. # 18-20). Plaintiffs added Sallie Mae as a defendant in August 2010 through the Second Amended Class Action Complaint and Jury Demand. (Doc. # 26).

Plaintiffs entered into Enrollment Agreements with the ComputerTraining Defendants. (Doc. # 21, Ex. 4). Sallie Mae was not a party to those Agreements.

Plaintiffs are students who were enrolled in the ComputerTraining Defendants' schools when they closed, or are graduates of the schools. This Court certified two classes of Plaintiffs for the determination of damages between the ComputerTraining Defendants and Plaintiffs.

Generally, Plaintiffs seek a refund of their tuition and compensation for ongoing career placement services. Plaintiffs assert eleven counts against the ComputerTraining Defendants based on (1) negligence, (2) breach of fiduciary duty, (3) negligent misrepresentation, (4) innocent misrepresentation, (5) promissory estoppel, (6) unjust enrichment/breach of quasi-contract, (7) equitable estoppel, (8) breach of contract, (9) fraud, (10) civil conspiracy, and (11) concert of action. The Court has not certified a class in Plaintiffs' claims against Defendant Sallie Mae.

Plaintiffs bring all eleven of these counts against Sallie Mae through the Federal Trade Commission Holder Rule (FTC Holder Rule) Notice in certain Educational Loan Program Promissory Notes (Promissory Notes). (Doc. # 33, Ex. A-2). The Promissory Notes are the only written agreements directly between Plaintiffs and Sallie Mae. The ComputerTraining Defendants are not parties to the Promissory Notes. Under these Promissory Notes, Sallie Mae provided some of the Plaintiffs, and allegedly thousands of other ComputerTraining students, with loans to fund their education at the ComputerTraining schools.

Where a consumer takes out a loan to purchase goods or services, the FTC Holder Rule Notice must be incorporated into the loan contract. 16 C.F.R. § 433.2. The FTC Holder Rule Notice allows consumers to assert any claims or defenses against the creditor that they have against the seller. For purposes here, since Plaintiffs have claims against the ComputerTraining Defendants (seller), the conduit through which Sallie Mae (creditor) made loans to Plaintiffs, the FTC Holder Rule Notice in the Promissory Notes is the vehicle through which Plaintiffs can bring the same claims they have against the ComputerTraining Defendants, against Sallie Mae.

This motion concerns only those Plaintiffs, or those in the classes they seek to represent, who entered into Promissory Notes with Sallie Mae. It is alleged that named Plaintiffs Andrew Smith, Andrew LaPorte, Jason Lowe, John Maher, Elizabeth Spafford, David Ayotte, Michael Chunn, Jason Colter, Alex Ferguson, Jason Frans, Amy Gamble, James Marshall, Dennis Parker, Aldin Sabanovski, Bruce Vang, Mehmed Vejnikovic, Nathan Waddell, and Senad Zukic signed such Promissory Notes.

Defendant Sallie Mae moves to dismiss all claims against it for lack of subject matter jurisdiction under Rule 12(b)(1). Fed.R.Civ.P. 12(b)(1). Sallie Mae argues that this Court does not have jurisdiction over any of the claims between it and Plaintiffs, because the parties agreed to arbitrate all claims. Sallie Mae claims this is true despite the FTC Holder Rule.

The Promissory Notes between Plaintiffs and Sallie Mae contain an Arbitration Agreement ("Arbitration Agreement"). (Doc. # 33, Ex. A-2, § XVII). Sallie Mae claims that the current dispute falls within the scope of the Arbitration Agreement. Defendant argues that Utah state contract law governs the Promissory Notes and the Arbitration Agreement language, and that no grounds exist for revoking the Arbitration Agreement under Utah law.

Sallie Mae argues also, that even if the Court is not convinced that the claims fall within the Arbitration Agreement, the parties contracted to have an arbitrator make that decision. Defendant says that when all of the issues raised in a district court must be submitted to arbitration, the case should be dismissed. If the Court declines to dismiss the case, Sallie Mae requests that it compel Plaintiffs to arbitrate, and to stay proceedings pending arbitration.

Plaintiffs argue that Michigan law applies, rather than Utah law. They claim that under Michigan law, the Class Action and Multi-Party Waiver (Class Action Waiver) in the Arbitration Agreement is unconscionable, which renders the entire Agreement invalid. Plaintiffs also claim that it would be unconscionable for the Court to enforce the Arbitration Agreement because the forum designated in the Arbitration Agreement is no longer available. They argue that the unavailability of the forum under the terms of the Arbitration Agreement, precludes arbitration in any other forum.

Plaintiffs also say that Sallie Mae essentially defaulted on any unconscionability arguments. Plaintiffs argued in the Second Amended Complaint that the arbitration clause in the Enrollment Agreements (between Plaintiffs and ComputerTraining Defendants) was unconscionable. (Doc. # 26, ¶¶ 109-113). Since the ComputerTraining Defendants defaulted, Plaintiffs make the leap and argue that their allegation that the arbitration clause in the Enrollment Agreements is unconscionable, should be deemed true. Plaintiffs further argue that the ComputerTraining Defendants' default on the issue of unconscionability should be imputed to Sallie Mae via the FTC Holder Rule.

Defendant Sallie Mae says in its Reply (Doc. # 38) that the FTC Holder Rule does not apply to a procedural default. Sallie Mae contends that class action waivers in consumer credit agreements are explicitly enforceable under Utah law. Sallie Mae also argues that the unavailability of the designated forum does not preclude arbitration altogether. Sallie Mae claims that a number of provisions in the Arbitration Agreement demonstrate an overriding intent to arbitrate, even if the first choice is not available.

III. STANDARD OF REVIEW

Congress enacted the Federal Arbitration Act (the FAA), 9 U.S.C. § 1 et seq., "to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). The FAA expresses a strong public policy favoring arbitration in a broad range of disputes, and provides that agreements to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Thus arbitration clauses "may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability." Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 2777, 177 L.Ed.2d 403 (2010) (internal quotations and additional citations omitted). But, if a claim is governed by a valid arbitration agreement, a court must compel arbitration. 9 U.S.C. §§ 3-4.

Federal law creates "a general presumption of arbitrability, and any doubts are to be resolved in favor of arbitration `unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" Highlands Wellmont Health Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d 568, 576-77 (6th Cir.2003) (quoting AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)). "If parties contract to resolve their disputes in arbitration rather than in the courts, a party may not renege on that contract absent the most extreme circumstances." Stout v. Byrider, 228 F.3d 709, 715 (6th Cir.2000).

Although "ambiguities in the language of the agreement should be resolved in favor of arbitration, we do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the strong policy favoring arbitrations is implicated." EEOC v. Waffle House, Inc., 534 U.S. 279, 293-94, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (quotations and citations omitted). Arbitration clauses are governed by the consent and intentions of the parties:

Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., ___ U.S. ___, 130 S.Ct. 1758, 1774, 176 L.Ed.2d 605 (2010).

The Sixth Circuit articulated four tasks for a court considering a motion to compel arbitration under the FAA:

Stout, 228 F.3d at 714-15.

Federal courts apply state law to determine whether contract defenses may invalidate arbitration agreements. See, e.g., Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). However, questions concerning the interpretation and construction of arbitration agreements are governed by federal substantive law. See, e.g., Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The party opposing arbitration has the burden to show that the agreement is not enforceable. Green Tree Financial Corp.—Alabama v. Randolph, 531 U.S. 79, 91-92, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).

IV. APPLICABLE LAW AND ANALYSIS

A. The Parties Agreed to Arbitrate

1. Choice of Law

To determine which state's law governs the Arbitration Agreement in the Promissory Notes, the inquiry begins with Michigan's choice of law rules. See, e.g., Ruffin-Steinback v. dePasse, 267 F.3d 457, 463 (6th Cir.2001) (stating that in a diversity case, a federal court should apply the choice of law rules for the state in which it sits) (citations omitted). Under Michigan law, a contractual choice of law provision is presumed valid unless "the chosen state has no substantial relationship to the parties or the transaction," or the chosen state's law "would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state." Chrysler Corp. v. Skyline Industrial Services, Inc., 448 Mich. 113, 126, 528 N.W.2d 698 (1995) (citations omitted).

The Promissory Notes between Plaintiffs and Sallie Mae contain a choice of law provision:

Doc. # 33, Ex. A-2, § XIV, ¶ 2 [bold and underlined type in original]. The second sentence in each Truth in Lending Disclosure for each of the relevant Plaintiffs reads: "Lender refers to SALLIE MAE BANK, located in the state of UT." (Doc. # 38, Ex. A, Att. 1 at 1). Thus the parties contracted to have Utah law govern the Promissory Notes. Utah has a "substantial relationship" to Defendant Sallie Mae, as Sallie Mae is located in Utah. Chrysler Corp., 448 Mich. at 126, 528 N.W.2d 698. Utah also has a "substantial relationship" to the transaction; the Promissory Notes were entered into in Utah. Id.

Plaintiffs claim that nothing indicates that Utah law would govern. They contend that the Promissory Note "mentions no fewer than sixteen different states and makes clear that the relationship depends upon the state where the borrower resides." (Doc. # 35 at 16, fn. 13). Plaintiffs cite to Section XI of the Promissory Notes, which appears to provide additional terms for default under state laws for residents of six different states. (Doc. # 33, Ex. A-2, § XI). Plaintiffs also point to a State Notices section in the Promissory Notes, which includes notices required for residents of certain states under the laws of those states. (Doc. # 33, Ex. A-2, § XII, ¶ 9). The State Notices section prefaces these notices with the following explanation:

Id. [bold and underlined type in original]. Plaintiffs do not cite to any authority or provide any compelling reason why the Court should expand the plain meaning of these provisions to hold that the entire Promissory Note is governed by the law of the state in which each debtor resides, or by Michigan law. Plaintiffs also do not cite to any authority or provide any reason that compels the Court to ignore the plain meaning of the Governing Law provision.

Plaintiffs do not address Michigan choice of law rules or cite to any Michigan cases on the choice of law issue. Instead, Plaintiffs claim that "the application of Utah law was recently rejected in nearly identical circumstances by the Third Circuit in G.R. Homa v. American Express Co., 558 F.3d 225 (3rd Cir.2009)." (Doc. # 35 at 16, fn. 13). In G.R. Homa, the Third Circuit declined to apply Utah law after conducting a New Jersey choice of law analysis, admittedly similar to Michigan's. However, the Third Circuit relied on a specific New Jersey Supreme Court case in "predict[ing] that the Supreme Court of New Jersey would find that the class-action waiver at issue violates the fundamental public policy of New Jersey." Id. at 228.

Plaintiffs do not cite to any authority showing that Michigan has a fundamental policy against class-action waivers. If anything, Michigan has a strong public policy favoring arbitration. See, e.g., Rembert v. Ryan's Family Steak Houses, Inc., 235 Mich.App. 118, 123, 596 N.W.2d 208 (1999) (describing the Michigan Arbitration Act, M.C.L. § 600.5001 et seq., as "a strong and unequivocal legislative expression of Michigan's proarbitration public policy").

Plaintiffs also argue that the choice of law is irrelevant "because Utah, like Michigan, recognizes that arbitration clauses can be found unconscionable," citing to Powell v. Cannon, 179 P.3d 799 (Utah 2008). This is simply untrue. In Powell, the Supreme Court of Utah found that it lacked jurisdiction over the appeal, and never reached the substantive issues raised by the parties. Id.

Plaintiffs fail to argue or show that Utah does not have a substantial relationship to the parties or the transactions. They also fail to argue or show that Michigan has a materially greater interest in the action, or that Utah law violates a fundamental policy interest of Michigan, such that Utah law should not apply.

The Court finds no reason to override the Governing Law provision; Utah law governs the Promissory Notes.

2. Unconscionability and the FTC Holder Rule

Plaintiffs argue that this Court, not an arbitrator, must hear their claim that the Class Action Waiver in the Arbitration Agreement is unconscionable. (Doc. # 35 at 8). They cite to a provision in the Arbitration Agreement which stipulates that "`Claim' does not include any challenge to the validity and effect of the Class Action and Multi-Party Waivers, which must be decided by a court." (Doc. # 33, Ex. A-2, § XVII, ¶ 4 [defining "Claims" that either party may elect to arbitrate; bold type in original]).

Plaintiffs contend that the entire Arbitration Agreement will be void if the Class Action Waiver is found to be invalid:

Doc. # 33, Ex. A-2, § XVII, ¶ 10 [Survival, Severability, Primacy].

The Class Action Waivers are as follows:

Id. ¶ 2 [capitalization and bold type in original].

Plaintiffs say in their Response, that this Class Action Waiver is unconscionable, but they did not raise this argument in their complaint. This raises the issue of whether Plaintiffs properly pled unconscionability. The Second Amended Complaint does claim that an arbitration clause in a separate contract, the Enrollment Agreements (Doc. # 21, Ex. 4), is unconscionable, but Sallie Mae is not a party to those Agreements. This is where Plaintiffs make their argument that the ComputerTraining Defendants' default is imputed to Sallie Mae.

The arbitration clause in the Enrollment Agreements reads:

Doc. # 21, Ex. 4 at 3 [capitalization and bold type in original; format altered for clarity]. In the Second Amended Complaint, Plaintiffs claim that the "Baltimore-only arbitration clause is unconscionable and unenforceable," and that the class action waiver in the Enrollment Agreement is also unconscionable and unenforceable. (Doc. # 26, ¶¶ 109-113). Plaintiffs say that since the ComputerTraining Defendants failed to appear and defend, they defaulted on all claims, including Plaintiffs' allegations of unconscionability, and the unconscionability argument is deemed true.

Plaintiffs contend that the effect of the FTC Holder Rule is that their allegation that the Class Action Waiver in the Promissory Notes is unconscionable, should also be deemed true. In other words, Plaintiffs claim that the ComputerTraining Defendants' default on allegations of unconscionability, can be imputed to Sallie Mae through the FTC Holder Rule. Plaintiffs contend that this is true despite the fact that Sallie Mae is not a party to the Enrollment Agreements. Plaintiffs also contend that this is true despite the fact that the arbitration provisions at issue contain different terms, are in different contracts, and involve different parties.

The FTC Holder Rule requires that consumer credit contracts contain the following notice:

Doc. # 33, Ex. A-2, § XIII [capitalization and bold type in original]; see also 16 C.F.R. § 433.2.

The Federal Trade Commission ("the FTC") enacted the FTC Holder Rule to address the situation in which a consumer purchase is made with credit from a third party, so "the obligation to pay for goods or services is not conditioned upon the seller's corresponding duty to keep his promises." 41 Fed. Reg. 20022 [Guidelines of Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses] (1976). For example, if a consumer takes out a loan to buy a car and it turns out to be a lemon, the consumer must still pay back the loan. The FTC said that this requirement means the debtor would be "robbed of the only realistic leverage he possessed that might have forced the seller to provide satisfaction— his power to withhold payment." Id. Thus, the FTC Holder Rule was specifically designed to "protect the consumer's right to assert against the creditor any legally sufficient claim or defense against the seller. The creditor stands in the shoes of the seller." Id. at 20024. The FTC Holder Rule was intended to transfer the cost of seller misconduct, which would normally fall on a buyer or debtor, to the creditor. Id. The logic is that creditors are in a better position to assess the legitimacy of a seller, and to externalize the costs of seller misconduct. Id.

a. Plaintiffs misinterpret the FTC Holder Rule

Plaintiff relies on Lozada v. Dale Baker Oldsmobile, Inc., for their position that under the FTC Holder Rule, Sallie Mae stands in the shoes of the ComputerTraining Defendants in their default on unconscionability arguments. See Lozada v. Dale Baker Oldsmobile, Inc., 91 F.Supp.2d 1087 (W.D.Mich.2000); (Doc. # 35 at 15). As the Court has established, however, Utah law, not Michigan law, governs the Promissory Notes.

Even if Michigan law and Lozada applied, both the sellers and the assignee of the loan in that case were active parties to the suit. Lozada, 91 F.Supp.2d at 1087. The Lozada court simply held that the plaintiffs could use the FTC Holder Rule to bring affirmative claims against the assignee of their contracts for violations of the Truth in Lending Act (TILA) and various Michigan consumer protection laws, for damages less than recission. Id. Lozada then held that the class action waiver was unconscionable for reasons unrelated to the FTC Holder Rule. Id.

Plaintiffs cite no authority to support their interpretation of the FTC Holder Rule. Plaintiffs fail to cite any authority suggesting that the FTC Holder Rule could put Sallie Mae in the shoes of the ComputerTraining Defendants, such that Sallie Mae defaulted on the unconscionability arguments Plaintiffs raised in the Second Amended Complaint against the ComputerTraining Defendants only.

b. Plaintiffs failed to properly plead unconscionability

Plaintiffs failed to properly plead that the Class Action Waiver in the Promissory Notes is unconscionable; they did not raise the argument until their response to this motion. Even if they had raised the issue appropriately, class action waivers are expressly allowed in consumer credit agreements under Utah law. Utah Code Ann. § 70C-3-104 (1953) (stating that a consumer contract may include "a waiver by the debtor of the right to initiate or participate in a class action related to the closed-end consumer contract"). Even if Plaintiffs had raised the issue appropriately, and even if Michigan law and Lozada applied, Plaintiffs have not proved the criteria for finding procedural and substantive unconscionability as set out in Lozada. Lozada, 91 F.Supp.2d at 1100-1106. The Plaintiffs make a number of other arguments regarding unconscionability, all of which the Court either does not reach or finds that they lack merit.

B. Scope of the Arbitration Agreement

1. Arbitrability has been delegated to arbitration

Plaintiffs dispute the validity of the Arbitration Agreement in its entirety for a variety of reasons. However, Defendant argues that any dispute regarding the validity of the Arbitration Agreement must be determined in arbitration, not by this Court. The Arbitration Agreement defines what a "Claim" is, that "either party may elect to arbitrate—and require the other party to arbitrate":

Doc. # 33, Ex. A-2, § XVII, ¶ 4.

Sallie Mae cites the recent Supreme Court case Rent-A-Center, West, Inc. v. Jackson, which held that the only way arbitrability can be decided by a court when it has been delegated to arbitration, is if the delegation clause itself is specifically challenged. Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010).

In Rent-A-Center, the plaintiff argued that his claim should not be submitted to arbitration, even on the issue of arbitrability, because the arbitration agreement was both substantively and procedurally unconscionable under state law. Id. The Supreme Court said that it "need not consider that claim because none of Jackson's substantive unconscionability challenges was specific to the delegation provision." Id. at 2780. They held that unless the plaintiff "challenged the delegation provision specifically, we must treat it as valid under § 2 [of the Federal Arbitration Act], and must enforce it under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole for the arbitrator." Id. at 2779.

Plaintiffs have not challenged the validity of the delegation clause. Thus, the determination of the "validity, enforceability, arbitrability or scope of this Arbitration Agreement," must be decided in arbitration. (Doc. # 33, Ex. A-2, § XVII, ¶ 4).

2. The unavailability of NAF does not preclude arbitration

Plaintiffs say this dispute cannot be submitted to arbitration because the forum selection clause cannot be enforced. They claim that the forum selection clause is one of the "terms and conditions" that must be met before either party can enforce the Arbitration Agreement. (Doc. # 33, Ex. A-2, § XVII). Plaintiffs argue that the forum selection clause cannot be enforced because the National Arbitration Forum ("NAF") is the selected forum, and NAF no longer arbitrates disputes of this nature. (Doc. # 35 at 9). NAF was recently involved in litigation, the result of which was a consent decree prohibiting it from arbitrating consumer disputes. (Doc. #35, Ex. 2).

The Arbitration Agreement in the Promissory Notes sets out a process by which the Administrator, or forum, is selected:

Doc. # 33, Ex. A-2, § XVII, ¶ 3 [format altered for clarity].

It is undisputed that only Plaintiffs would normally have the power to choose NAF; they have not done so. It is also undisputed that NAF is not an available Administrator, and that none of the conditions have been fulfilled under which the American Arbitration Association ("AAA") would be selected.

Defendant Sallie Mae argues that the Arbitration Agreement can still be enforced and that the parties should arbitrate under AAA. (Doc. #33 at 1-4). Sallie Mae notes that the Arbitration Agreement contains a severability clause to ensure that the impossibility of any of its terms or conditions does not endanger the validity of the rest of the Agreement. The severability clause in the Arbitration Agreement says: "1[i]f any portion of this Arbitration Agreement cannot be enforced, the rest of the Arbitration Agreement will continue to apply." (Doc. # 33, Ex. A-2, § XVII, ¶ 10 [Survival, Severability, Primacy]). The Promissory Note contains another severability clause, outside of the Arbitration Agreement, in Section XIV:

Doc. # 33, Ex. A-2, § XIV [Additional Agreements], ¶ 5 [underlined type in original]. Defendant argues that the forum selection clause can simply be severed and the rest of the Arbitration Agreement will remain enforceable.

Sallie Mae contends that the definition of "Administrator" also demonstrates an overriding intent to arbitrate:

Doc. # 33, Ex. A-2, § XVII, ¶ 3.

Sallie Mae argues that the consent decree has caused NAF to "have in place a formal or informal policy that is inconsistent with and purports to override the terms of this Arbitration Agreement." Id. It also claims that this definition demonstrates that the selection of AAA or NAF is subordinate to the parties' overriding intent to arbitrate.

Plaintiffs contend that when a selected forum cannot arbitrate a claim, a court cannot enforce the arbitration agreement. They rely largely on Walker v. Ryan's Family Steak Houses and Roney & Company v. Goren, both of which involve arbitration agreements that designated an exclusive forum. See Walker v. Ryan's Family Steak Houses, 400 F.3d 370 (6th Cir.2005); and Roney & Company v. Goren, 875 F.2d 1218 (6th Cir.1989). Plaintiffs characterize Walker as "refusing to order plaintiffs to arbitration or rewrite the arbitration clause where the selected arbitrator could not give Plaintiffs an effective hearing." (Doc. # 35 at 12). In Walker the court refused to enforce the arbitration agreement for a number of reasons, including that there was only one forum indicated and it was clearly biased towards one of the parties. See Walker, 400 F.3d at 385-386. Likewise, the arbitration agreement in Roney named an exclusive forum, so the court held that the plaintiff waived her right to be heard in any other forum. See Roney, 875 F.2d at 1223.

Plaintiffs cite numerous other cases in which one or more specific fora were indicated, and courts refused to compel arbitration in a forum not indicated in the arbitration agreement, or the court refused to redraft the agreement. (Doc. #35 at 12-14). Here, two forums are named, one of which is still available. This Arbitration Agreement also contains a severability clause, making rewriting it unnecessary.

Plaintiff says too, that AAA would not be able to hear this dispute because of its current moratorium on debt collection arbitrations. (Doc. # 35 at 13, fn. 11). AAA instituted this moratorium to assess the adequacy of its current procedures in protecting the rights of consumers in debt collections initiated by creditors. Arbitration or Arbitrary: The Misuse of Mandatory Arbitration to Collect Consumer Debts, Hearing Before the Subcomm. on Domestic Policy of the H. Comm. on Oversight and Government Reform, 11th Cong. (2009) (statement of Richard W. Naimark, Senior Vice President of AAA), available at http://www.adr.org/si.asp?id=5770 (last visited Feb. 9, 2011). For example, one of the central problems AAA wants to remedy is that very few consumers appear or participate in the arbitration process, which makes it difficult to protect their rights. Id. at 5.

According to AAA's website, the moratorium covers:

Notice on Consumer Debt Collection Arbitrations, http://www.adr.org/sp.asp?id=36427 (last visited Feb. 9, 2011).

This case is not covered by the moratorium. It does not involve a consumer debt collection, telecom bill, or consumer finance matter. Instead, this case constitutes a claim which would be filed by consumers against a business, which AAA's website explicitly says that it will hear. Id. Plaintiffs can demand arbitration before AAA.

For these reasons, the Court finds that it would not be improper to compel arbitration with AAA.

C. No statutory conflict

The third step in considering a motion to compel arbitration is applicable when federal statutory claims are asserted. Stout v. Byrider, 228 F.3d 709, 714-715 (6th Cir.2000). The Court is to consider whether Congress intended those claims to be nonarbitrable. Id.

Plaintiffs misleadingly argue that the Arbitration Agreement "would violate the FTC Holder Rule and the Federal Trade Commission Act." (Doc. # 35 at 18). They fail to explain how the Arbitration Agreement could violate the Federal Trade Commission Act ("the FTCA"), which is the statute creating the FTC and defining its powers. See 15 U.S.C. § 41 et seq. No federal statutory claims are asserted here. Plaintiffs assert state contract law claims against Sallie Mae through the FTC Holder Rule. (Doc. #26). The FTC Holder Rule is a federal regulation promulgated by the Federal Trade Commission, not a statute enacted by Congress. 16 C.F.R. § 433.2. Thus the third task in the Stout analysis is not implicated. Stout, 228 F.3d at 714-715. Even if the FTC Holder Rule could be considered a statute for these purposes, Plaintiff has not argued or otherwise shown that the FTC intended claims brought via the FTC Holder Rule to be nonarbitrable.

D. All claims against Sallie Mae should be submitted to arbitration

"[I]f the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration." Stout, 228 F.3d at 714-715. Defendants note that "(t)he weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration." Green v. Ameritech Corp., 200 F.3d 967, 973 (6th Cir.2000) (citations omitted).

Neither party argues that the Plaintiffs' claims against the ComputerTraining Defendants should be stayed pending the arbitration of the claims against Sallie Mae, and the Court finds no reason to stay proceedings pending arbitration between Plaintiffs and Sallie Mae, or to exclude any claims against Sallie Mae from arbitration.

V. CONCLUSION

Defendant Sallie Mae's Motion to Dismiss is GRANTED.

Plaintiffs may file any claims against Sallie Mae individually with the American Arbitration Association.

IT IS ORDERED.