Leon Jordan, United States District Judge.
This matter is before the Court on Petitioner's Motion to Strike Respondent's Jury Demand [doc. 32], Petitioner's Brief in Support of the Motion [doc. 33], and Respondent's Response in Opposition [doc. 36]. For the reasons herein, the Court will grant the motion.
Respondent Patsy A. Holt ("Ms. Holt") opened several Individual Retirement Accounts with Petitioners ("MetLife") in Greeneville, Tennessee, four of which are at issue in this action. [Pet. to Compel Arbitration, doc. 1, ¶¶ 1, 52; Holt Dep., doc. 1-9, at 8:4-8, 21-23, 9:17-20, 10:15-25, 11:1-3, 14:4-14; Woods Decl., doc. 4-1, ¶ 5].
According to Ms. Holt, Mr. Salyer went on to misappropriate her funds, which are now almost entirely gone. [Id. ¶¶ 28, 30]. As a result, she sued Mr. Salyer and MetLife in the Circuit Court of Sullivan County, Tennessee, for breach of contract, conversion, failure to supervise, fraud, and negligence, alleging that MetLife is responsible for Mr. Salyer's misconduct. [Id. ¶¶ 25-35]. In response, MetLife filed in the state court a motion to compel arbitration, arguing that Ms. Holt has to arbitrate her claims because the four account applications contain arbitration provisions. [See Pet. to Compel Arbitration ¶ 9; State Court Order, doc. 7-2, ¶ 2]. In each account application, the arbitration provision reads:
[Account Applications, doc. nos. 1-1, 1-2, 1-3, 1-4, at 3]. The court ruled that Ms. Holt's claims related to account number XXXXX9324 are subject to arbitration but reserved ruling on the arbitrability of the other claims until it could decide whether to allow discovery. [Woods Decl. ¶ 5]. Mr. Salyer, however, then filed for bankruptcy, and the court stayed the case for roughly three years. [Pet. to Compel Arbitration ¶ 9]. When the case resumed after the bankruptcy proceedings, the court permitted Ms. Holt to file a revised second amended complaint so she could allege that the arbitration provisions are unenforceable contracts of adhesion. [Woods Decl. ¶ 8; see Second Am. Compl. ¶ 22].
Around this same time, Ms. Holt claims that she and MetLife agreed to "a methodology" to resolve the case. [Woods Decl. ¶ 9]. According to Ms. Holt, the parties decided, in a series of e-mails, "to pursue a ruling from the state court judge on the issue of arbitration and then irrespective of who prevailed, they would mediate the underlying suit within sixty (60) days for the ruling." [Id.]. In pertinent part, the e-mails between the parties read:
After exchanging these e-mails, MetLife renewed its motion to compel arbitration, prompting the state court to allow discovery on whether all four arbitration provisions are unenforceable contracts of adhesion. [State Court Order at 2]. The state court reserved ruling on this issue until it could conduct an evidentiary hearing, [id.], and the parties proceeded to conduct some discovery, which included depositions, interrogatories, and requests for production, [Woods Decl. ¶ 12].
MetLife then petitioned this Court to compel Ms. Holt to arbitrate her claims, seeking this recourse under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-14. [Pet. to Compel Arbitration at 5-16]. Ms. Holt filed a Response in Opposition to MetLife's Petition [doc. 6], which she titled as a "Motion to Dismiss, or in the Alternative, Motion for Summary Judgment." [Resp't's Resp. in Opposition at 1]. Construing Ms. Holt's response as a motion for summary judgment, the Court granted MetLife's Petition to Compel Arbitration in part, requiring Ms. Holt to arbitrate her claims under Account Application 9324. [See Mem. Op., doc. 8, at 26-29, 35]. The Court ordered an evidentiary hearing to determine whether the arbitration provisions in Account Applications 3828, 9931, and 8578 are enforceable. [Id. at 30-35]. About a week later, Ms. Holt filed a Second Response to MetLife's Petition [doc. 10] — essentially in the form of an answer based on Federal Rule of Civil Procedure 12(a)(4)(A) — and contemporaneously filed a Motion to Alter or Amend Judgment [doc. 11] under Federal Rule of Civil Procedure 59(e). Around this time, she also made a Jury Demand [doc. 18] under Federal Rule of Civil Procedure 38.
To resolve Ms. Holt's Motion to Alter or Amend Judgment, the Court canceled the evidentiary hearing, [Order, doc. 22, at 1], which overlapped with the parties' Stipulated Briefing Schedule for the motion [doc. 20]. While the Court considered the motion, MetLife proceeded to file a Motion to Compel Arbitration of the Remaining Claims [doc. 26], which the Court denied. [Order on Renewed Mot., doc. 30, at 1-3].
Under the plain language of the FAA, a party opposing arbitration is entitled to a
9 U.S.C. § 4 (emphasis added); see Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5th Cir. 1992) ("The party resisting arbitration bears `the burden of showing that he is entitled to a jury trial under § 4 of the Arbitration Act.'" (quotation and footnote omitted)); see also Mazera v. Varsity Ford Mgmt. Servs., LLC, 565 F.3d 997, 1001-03 (6th Cir. 2009) (concluding that the party opposing arbitration did not show that the record contained a material issue of fact and therefore had no right to a jury trial under § 4); cf. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (stating that the party challenging a petition to compel arbitration has the onus of proving that the claims at issue are not arbitrable). The FAA does not define the language "on or before the return day of the notice of application."
MetLife first argues that the Court should strike Ms. Holt's demand for a jury trial because Ms. Holt failed to make her demand "on or before the return day of the notice of application." [Pet.'s Mot to Strike at 2-4 (quoting § 4)]. MetLife interprets the language the "return day of the notice of application" to mean the due date of Ms. Holt's response to MetLife's Petition. [Id. at 2]. Because nearly four months lapsed between Ms. Holt's response to MetLife's Petition and Ms. Holt's demand for a jury trial,
Ms. Holt argues that the Court should look to Rule 38 to determine the timeliness of her demand for a jury trial because "[n]o case law exists defining the phrase `on or before the return day of the notice of application." [Id. at 2]. This is not
To deaden the impact of these cases, Ms. Holt maintains that her original Response in Opposition to MetLife's Petition was merely "jurisdictional," and therefore she contends that Rule 12(a)(4)(A)
[Id.]. Ms. Holt's argument is a familiar one — she previously raised it, unsuccessfully, in her Motion to Alter and Amend Judgment — and it continues to puzzle the Court. In retesting this argument here, free from the difficult standard under Rule 59(e), Ms. Holt relies on Guidotti v. Legal Helpers Debt Resolution, L.L.C., No. 11-1219 (JBS/KMW), 2016 WL 4163547 (D.N.J. Aug. 4, 2016).
In Guidotti, the respondent demanded a jury trial on the issue of whether the parties had entered into a valid agreement to arbitrate under the FAA. Id. at *1. The respondent made the demand under Rule 38, and the petitioner challenged the demand as untimely under § 4. Id. In considering the petitioner's challenge, the court addressed "the interlocking nature of Section 4 of the FAA and Rule 38." Id. at *2. The court described the issue before it as whether § 4 "can be harmonized with Rule 38 ... or whether [it] prescribes a separate and exclusive path for demanding a jury." Id. The court recognized that Rule 38 preserves an "inviolate" right of trial by jury, id. at *1, and partly because the petitioner cited no authority showing that § 4 supersedes Rule 38, it concluded that § 4 is not a respondent's exclusive means for demanding a jury under the FAA, id. at *2-3. Rather, § 4 is another procedure for demanding a jury and is "parallel" to Rule 38. Id. at *2; but see Star Elec., 586
The court in Guidotti, however, did not attempt to reconcile Rule 38 with the precise mandate under § 4 that requires a party to demand a jury "on or before the return day of the notice of application." Also, although the Federal Rules of Civil Procedure can "govern proceedings under the [FAA]" in some instances, they are inoperative when "the[] [FAA] provide[s] other procedures." Fed. R. Civ. P. 81(6)(B); see Webster v. A.T. Kearney, Inc., 507 F.3d 568, 571-72 (7th Cir. 2007) ("[T]he Federal Rules [of Civil Procedure] do not preempt the FAA," and they "apply only to the extent that matters of procedure are not provided for in the [FAA]" (citation and quotation omitted)); Booth v. Hume Publ'g, Inc., 902 F.2d 925, 931 (11th Cir. 1990) ("It is only where the [FAA] is silent that the Federal Rules of Civil Procedure become applicable." (citation omitted)). Section 4 provides a procedure by which a respondent may demand a jury trial in a specific circumstance — namely when the validity of an arbitration agreement is at issue — and it is separate from the procedure under Rule 38. The timeliness of a demand under § 4 depends on when a respondent has filed the demand in relation to the "application," see § 4, whereas the timeliness of a demand under Rule 38 depends on when a party has filed the demand in relation to the "last pleading," see Rule 38. Section 6 of the FAA defines an "application" to be a filing that is "made and heard in the manner provided by law for the making and hearing of motions."
Several courts have interpreted this language to mean that an application, or a petition, under the FAA qualifies as a motion and not a pleading under the Federal Rules of Civil Procedure. Cf. ISC Holding AG v. Nobel Biocare Fin. AG, 688 F.3d 98, 112 (2d Cir. 2012) ("Pursuant to 9 U.S.C. § 6, petitions to compel are `made and heard in the manner provided for by law for the making and hearing of motions.' [T]he civil rules ... draw a clear and consistent distinction between pleadings and motions. This distinction simply precludes treating the one as the other." (quotations omitted)); Questar Capital Corp. v. Gorter, 909 F.Supp.2d 789, 803 (W.D. Ky. 2012) ("Where § 6 of the FAA instructs that applications shall be made and heard in the manner of motions, the clear intent was to remove ... the FAA from the ambit of pleadings and their attendant rules of civil procedure. The proceedings therefore would not be subject to the rules that apply specifically to pleadings, such as Rules 8 and 12[.]"); see Aames Funding Corp. v. Sharpe, No. Civ.A.04-4337, 2004 WL 2418284, at *2 n.1 (E.D. Pa. Oct. 28, 2004) ("Under the FAA, a petition to compel arbitration is treated procedurally as a motion." (citing § 6)), vacated on other grounds by Aames Funding Corp. v. Sharpe, No. Civ.A.04-4337, 2004 WL 2980407 (E.D. Pa. Dec. 22, 2004); Albany Ins. Co. v. Almacenadora Somex, S.A., 5 F.3d 907, 910-11 (5th Cir. 1993) (noting that motions are not pleadings under the Federal Rules of Civil Procedure). Because proceedings under the FAA are not "subject to the rules that apply specifically to pleadings," Gorter, 909 F.Supp.2d at 803, Ms. Holt's demand in response to the "last pleading" under Rule 38 is impracticable, and the Court is unable to recognize it, see Star Elec., 586 F.Supp. at 967.
This fault line between the Federal Rules of Civil Procedure and the FAA also undercuts Ms. Holt's argument that the
IFC Interconsult, AG v. Safeguard Int'l Partners, LLC, 438 F.3d 298, 307-08 (3d Cir. 2006) (footnote omitted); cf. Webster, 507 F.3d at 571 (stating that a party who files a motion to vacate an award under the FAA must "provide[] the Court with all matters that it desires the Court to consider in support" of the motion (emphasis added) (quotation omitted)); Productos Mercantiles E Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41, 46 (2d Cir. 1994) ("Appellants contend that the court erred in reaching the merits of [the] petition.... [and] effectively granted ... summary judgment[.] Appellants further contend that the court's failure to provide them with notice that it was treating [the] petition as a motion for summary judgment precluded them from fully pleading their claims in accordance with Fed. R. Civ. P. 12(b). We disagree. The court properly treated [the] petition as a motion in accordance with the express provision of the FAA.").
In short, Ms. Holt's Second Response in Opposition — which, again, is effectively a responsive pleading — is a nullity in the record. See ISC Holding AG v. Nobel Biocare Invs. N.V., 759 F.Supp.2d 294, 296 (S.D.N.Y. 2010) ("Petitioner initiated this proceeding to compel arbitration.... [u]nder the FAA" and "[t]hus, the respondent must oppose the petition as it would a motion, not by serving an answer" (emphasis added) (citations omitted)); Nat'l Cas. Co. v. OneBeacon Am. Ins. Co., No. 12-11874-DJC, 2013 WL 3335022, at *6 (D. Mass. July 1, 2013) (stating that the respondent "unquestionably could not have
Ms. Holt argues that she has a right to a jury trial because issues of material fact are present in the record. [Resp't's Br. at 3]. Once again, § 4 provides that "[w]here ... an issue [of fact] is raised, the party alleged to be in default may ... on or before the return day of the notice of application, demand a jury trial of such issue[.]" Ms. Holt claims that the Court has already determined that the burden under § 4 rests with MetLife, that this burden requires MetLife to show that no factual dispute exists in the record as to whether the remaining arbitration provisions are valid, and that MetLife has not relieved itself of this burden. [Resp't's Br. at 3]. This is not what the Court determined. The Court was clear that the burden under § 4 belongs to Ms. Holt and that she had not yet discharged it:
[Memo. Op. at 33]. See Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002) (recognizing that the party opposing arbitration under the FAA must show that a genuine issue of material fact exists as to the arbitration agreement's validity); see also Green Tree, 531 U.S. at 91, 121 S.Ct. 513 (stating that the party challenging arbitration has the burden of proving that the claims at issue are not arbitrable); cf. Mazera, 565 F.3d at 1001-03 (concluding that the party opposing arbitration did not establish a material factual dispute and therefore did not justify the need for a jury trial under § 4). The question of whether Ms. Holt can satisfy her burden under § 4 is the precise matter that the Court intends to resolve at the evidentiary hearing. At this point, MetLife's contention that Ms. Holt has not raised factual issues that necessitate a jury trial is therefore premature, and the Court will not strike her demand on this basis.
Ms. Holt argues that the Court should rely on its discretion under § 4 to "call a
Ms. Holt's demand for a jury trial is untimely under § 4 of the FAA, and the Court must therefore strike it. MetLife's Motion to Strike Respondent's Jury Demand [doc. 32] is