Vlad v. DGI Trucking Inc

CourtDistrict Court, N.D. Ohio
DecidedNovember 24, 2021
Docket1:19-cv-02024
StatusUnknown

This text of Vlad v. DGI Trucking Inc (Vlad v. DGI Trucking Inc) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vlad v. DGI Trucking Inc, (N.D. Ohio 2021).

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

ADRIAN VLAD, ET AL., ) CASE NO.1:19CV2024 ) Plaintiffs, ) SENIOR JUDGE ) CHRISTOPHER A. BOYKO ) vs. ) ) DGI TRUCKING, INC., ) OPINION AND ORDER ) Defendant. ) CHRISTOPHER A. BOYKO, SR. J: This matter is before the Court on the Motion to Stay Pending Arbitration (ECF # 5) by Defendant DGI Trucking, Inc. The Court found the parties’ arbitration clauses were not substantively unconscionable due to arbitration costs but held that there were issues of fact regarding whether the parties agreed to delegate to the arbitrator questions of arbitrability. The Court then referred the issue to the Magistrate Judge to hold an evidentiary hearing and issue a Report and Recommendation. The Magistrate Judge has completed the hearing and has issued his Report, recommending the Court find that the parties agreed to delegate questions of arbitrability to the arbitrator. Plaintiffs have objected to the Magistrate Judge’s recommendation. For the following reasons, the Court adopts the Magistrate Judge’s Report and Recommendation, finds the parties agreed to delegate issues of arbitrability for the arbitrator, and stays the case to allow the parties to arbitrate their disputes. Factual Background According to Plaintiffs’ Complaint, Plaintiffs Adrian Vlad (“Vlad”) Lucian Solomon (“Solomon”), Daniel Varvaruc (“Varvaruc”) and Daniel Tarog (“Tarog”) are owner-operator, independent truck drivers who entered into Lease Agreements with Defendant DGI Trucking, Inc. (“DGI”), an authorized carrier. Under federal regulations, authorized carriers like DGI may

transport interstate using equipment it does not own so long as the equipment is covered by a written lease that conforms to the requirements of 49 CFR § 376. Plaintiffs entered into multiple Lease Agreements with DGI. According to Plaintiffs, DGI failed to include several provisions in the Lease Agreements required under law. Plaintiffs further contend DGI breached these Lease Agreements, causing injury to Plaintiffs. Defendant moved to stay the action to allow the parties the opportunity to arbitrate their disputes per arbitration clauses in their Lease Agreements. Plaintiffs opposed the motion, contending that the arbitration agreements were substantively unconscionable and that the parties never clearly and unmistakably agreed to delegate questions of arbitrability to the arbitrator.

In its ruling, in part on the Motion, the Court determined Plaintiffs had failed to offer sufficient evidence to show that the arbitration clause was substantively unconscionable due to the costs of arbitration. However, the Court determined there were issues of fact concerning whether the Plaintiffs understood they were delegating questions of arbitrability to an arbitrator based on their alleged limited understanding of English and AAA Commercial Arbitration rules. Magistrate Judge’s Report and Recommendation The Magistrate Judge conducted an evidentiary hearing and recommends that the Court find the parties clearly and unmistakably agreed to delegate questions of arbitrability to the

arbitrator. In reaching this conclusion, the Magistrate Judge first considered the language of the 2 arbitration clauses found in each Plaintiff’s Lease Agreement. Each of the Plainiff’s arbitration clauses are identical and read as follows: Any controversy or claim arising out of this lease, or the breach thereof, shall be settled by arbitration to be held in Cleveland, Ohio or other mutually acceptable location in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and a judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In addition, Section 5(B) of the Lease Agreements reads, “[t]his lease shall be governed by Federal Law and regulations where applicable, and wherever there is not applicable Federal Law this lease shall be governed by the laws of the state of Ohio.” The Magistrate Judge noted that no one disputes the Lease Agreements contain arbitration clauses. Rather, Plaintiffs dispute the enforceability of the same due to their limited English language comprehension, inability to negotiate the terms of the lease agreements and lack of sufficient time to review the terms of the Lease Agreements before signing. The Magistrate Judge and parties all agree that Ohio substantive law on contracts governs disputes over whether the parties agreed to delegate arbitrability issues to an arbitrator. The Magistrate Judge considered the arbitration clause and found that it contains no express language delegating issues of arbitrability to the arbitrator. However, it does expressly state that the arbitration will be governed by the Commercial Arbitration Rules of the American Arbitration Association. Rule 7 of the AAA Commercial Arbitration Rules reads: R-7. Jurisdiction- (a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim. 3 (b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause. (c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award. Thus, the Rules themselves expressly reserve the authority to determine issues of arbitrability for the arbitrator. Moreover, the Magistrate Judge determined that “ Ohio law provides that incorporation by reference of industry-wide rules for arbitration that include delegation language is evidence that the parties clearly and unmistakably vested the arbitrator with the authority to decide the issue of arbitrability.” (R & R pg. 8. ). The Magistrate Judge noted that eleven out of twelve Circuit Courts agree that incorporation of arbitration rules clearly an unmistakably demonstrate agreement of the parties to delegate. The Magistrate Judge then considered the evidence produced at the hearing before him.1 All four Plaintiffs testified at the hearing as did a representative of Defendant. The testimony revealed that the Lease Agreements were drafted in standard size print and each required a signature on the last page. No Romanian translation was provided nor was any requested by Plaintiffs. The arbitration clause is written in plain English. Defendant did not pressure Plaintiffs to sign the Lease Agreements before they had a chance to review them and Defendant made its representatives available to Plaintiffs to discuss any questions they had prior to signing. Defendant did not prevent Plaintiffs from consulting anyone on the Lease Agreements prior to 1 In light of the Covid pandemic, the Magistrate Judge conducted the evidentiary hearing via the Zoom teleconferencing application. 4 signing and no Plaintiff indicated a desire to consult with an attorney prior to signing. Each Plaintiff testified to a lack of fluency in English but acknowledged they understood basic English and further understood the basics of the Lease Agreements. However, the Magistrate Judge found that the evidence supported Defendant’s argument that the four Plaintiffs

have a greater understanding of English than their testimony would indicate.

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Bluebook (online)
Vlad v. DGI Trucking Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vlad-v-dgi-trucking-inc-ohnd-2021.