IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. CROIX AGATHA DENNIS CANTON TOYOTA MOTOR CORPORATION TOYOTA MOTOR SALES USA, INC. TOYOTA MOTOR ENGINEERING & Plaintiff vs Defendant CASE NO. SX-10-CV-0000227 ACTION FOR: DAMAGES - CIVIL NOTICE OF ENTRY OF MEMORANDUM OPINION AND ORDER TO: JAMES A. EDWARDS. ESQ. SCOTT J. EDWARDS, ESQ. SIMONE R.D. FRANCIS, ESQ. LEE J. ROHN, ESQ. CHARLES S. RUSSELL, ESQ. & U. JESSICA CHUNG JUDGES OF THE SUPERIOR COURT MAGISTRATES OF THE SUPERIOR COURT ORDERBOOK, LAW CLERKS, LAW LIBRARY, IT Please take noticethat on April 26,2011 a(n) MEMORANDUM OPINION AND ORDER dated April 20,2011 wasentered by theClerk in theabove-entitled matter. Dated: April 26,2011 Venetia KVelazquez, -E Clerk of theCburt IRIS D. CINTRON COURT CLERK II IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. CROIX Agatha Canton and Mario Canton, Plaintiff, v. Toyota Motor Corporation, Toyota Motor Sales USA, Inc., Toyota Motor Engineering and Manufacturing North America, Inc., Toyota of St. Crodc, and Toyota De Puerto Rico, Defendants. Civil No. SX-10-CV-227 Action for Damages Jury Trial Demanded ORDER THIS MATTER is before the Court on Defendant Toyota of St. Croix's "Motion to Compel Arbitration and Stay Litigation Pending Arbitration on Behalf of Defendant Toyota of St. Croix", and Plaintiffs' Opposition thereto. For the reasons more fully set forth in the accompanying Memorandum Opinion, it is hereby ORDERED that Defendant's Motion is GRANTED in part and DENIED in part. It is further ORDERED that PlaintiffAgathaCanton is compelled to arbitrate her case pursuant to the Arbitration Agreement. ORDERED that Defendant's Motion to Stay Litigation Pending Arbitration is DENIED as to Plaintiff Mario Canton; and ORDERED that the clause limitingpunitivedamages to ten thousand dollars ($10,000) is SEVERED. Dated: April j^ ,2011. ATTEST: VENET1A H. VELAZQUEZ, ESQ. Clerk o/fte Court jurt Clerk SuperviiSOrf/^/// TULT07CT3RADY JUDGE CERTIFIED TO BE A TRUE COPY This^^fey oL^^_20_ZZ VENETIA H. VELAZQUEZ, ESQ. Court Clerj£Z^~ By IN THE SUPERIOR COURT OF THE VIRGIN ISLANDS DIVISION OF ST. CROLX AGATHA CANTON AND MARIO CANTON, PLAINTIFFS, TOYOTA MOTOR CORPORATION, TOYOTA Motor Sales USA, Inc., Toyota Motor Engineering and Manufacturing North America, Inc., Toyota of St. Crodc, and Toyota De Puerto Rico, Defendants. CIVILNO. SX-10-CV-227 Action for Damages Jury Trial Demanded MEMORANDUM OPINION THIS MATTER is before the Court on Defendant Toyota of St. Croix's "Motion to Compel Arbitration and Stay Litigation Pending Arbitration on Behalf of Defendant Toyota of St. Croix", and Plaintiffs' Opposition thereto. Forthe following reasons, Defendant's Motionto Compel Arbitration will begranted inpart and denied inpart. I. Case History Plaintiff Agatha Canton purchased a 2009 Toyota Rav-4 from Toyota of St. Croix (hereinafter TOSC) on October 28, 2009. On January 26, 2010, when exiting a parking space, both Plaintiffs were in the car when an alleged defective condition caused the car to accelerate uncontrollably. Applying the breaks did not stop the car, and subsequently, Plaintiffs were involved in an accident and suffered injuries. When Plaintiff Agatha Canton purchased the vehicle, as part of the paperwork, she signed an agreement toresolve any and all claims via binding arbitration. The document clearly Canton and Canton v. Toyota SX-10-CV-227 Memorandum Opinion Page 2 of6 stated that it was an agreement that affected the legal rights of the individual signing. In its Motion, Defendant seeks to enforce that clause. However, Plaintiffs argue that the agreement should not be enforced for several reasons. First, they state that the agreement is unenforceable against Plaintiff Mario Canton because he did not sign it. Plaintiffs also claim that it is unenforceable against Plaintiff Agatha Canton because it is substantively and procedurally unconscionable. II. Analysis Plaintiffs properly note that Mario Canton cannot be compelled to arbitrate his claim as he is not a party to the Arbitration Agreement. Furthermore, Defendants have not argued that he is subject to the Arbitration Agreement and have not attempted to arbitrate the claim with him. Thus, this Court does not see the need to further analyze this issue as to Plaintiff Mario Canton; his claim will be settled under the purview ofthis Court, not in arbitration. a. TOSC's Arbitration Agreement Is Not Both Procedurally And Substantively Unconscionable It is well established that for an Arbitration Agreement to be unenforceable on grounds of unconscionabihty, it must be both procedurally and substantively unconscionable. Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 265 (3d Cir. 2003). Procedural unconscionabihty is concerned with the process by which the agreement is reached and the form of the agreement. Id. Substantive unconscionabihty "refers to terms that unreasonably favor one party to which the -disfavored party does not truly, assent." Id, (emphasis^dded) (citing Harris vrGreen Tree~Fin.- Corp., 183 F.3d 173,178 (3d Cir. 1999)). Procedural unconsionability is "generally satisfied ifthe agreement constitutes a contract of adhesion." Id. at 255. A contract of adhesion "is one which is prepared by the party with Canton and Canton v. Toyota SX-10-CV-227 Memorandum Opinion Page 3 of6 excessive bargainingpowerwho presents it to the other party for signature on a take-it-or-leave- it basis." Trailer Marine Transp. Corp. v. Charley's Trucking, Inc., 20 V.I. 282, 284 (Terr. Ct. 1984).In the instantcase,it appears that the contract presented was a standardform contract,and that Plaintiff Agatha Canton, like the Court found in Alexander, "may have [had] no realistic abilityto modifyits terms."Alexander, 341 F.3dat 266. However, a contract is "not unconscionable merely because the parties to it are unequal in bargaining position." Restatement (Second) of Contracts § 208 (1981) cmt. d. Thus, Plaintiff must show that "the provisions ofthe contract are unreasonably favorable to the drafter and mat there is no meaningful choice on the part of the other party regarding acceptance of the provisions." Harris, 183 F.3d at 181 (internal citations omitted). Plaintiffs identify four (4) separate issues that they claim renders theagreement substantively unconscionable. Theyare: (1) that the agreement contains a purportedly unconscionable delegation clause, (2) a purportedly unconscionable limiton punitivedamages, (3) a purportedlyunconscionable waiveroflegitimate consumer claims, and (4) a purportedlyunconscionable ban on class action claims. This Court will address each ofthese issues in turn. (i) The Delegation Clause Is Not Unconscionable Plaintiffs' opposition begins by claiming that the delegation clause contained in the Arbitration Agreement is unconscionable, arguing that there is no clear and unmistakable evidence that Plaintiffs agreed to send the question of arbitrability to an arbitrator. However, a quick review of the document reveals language stating exactly that. That Defendant TOSC choseto use seventy-two wordsas opposed to thirtyis inconsequential. Plaintiffcannotpossibly be asking this Court to impose a bright-line rule on word count for Arbitration Agreements. Cantonand Canton v. Toyota SX-10-CV-227 Memorandum Opinion Page 4 of6 Furthermore, a reviewof the document in question shows that PlaintiffAgathaCantonchose to sign the document. Thus, inthe absence offraud, even if Plaintiffwas ignorant ofthe language oftheagreement, she will still bebound byhersignature. Morales v. Sun Constructors, Inc., 541 F.3d 218,222 (3d Cir. 2008). Thus, to prove unconscionability, Plaintiff must prove the following elements: "(1) a misrepresentation of fact, opinion, intention or law; (2) knowledge by the maker of the representation that it was false; (3) ignorance ofthe falsity bythe person to whom it was made; (4) an intention that the representations should beacted upon; and (5) detrimental and justifiable reliance." Fitz v. IslandMechanical Contractor, Inc., 2010 WL 2384585, at *9 (D. V.I. 2009). All elements must be met for Plaintiff to prevail. However, as is evident from the record, Plaintiffs have failed to establish element number 1, in that Plaintiffs have not produced any evidence that therewas anymisrepresentation on the part ofDefendant TOSC. Plaintiff Agatha Canton merely states that "she was given a very general, one-sentence or so description ofeach document[,]" and asserts that she was told that the documents were routine in these types of purchase. However, as Defendant rightly points out, Plaintiffs do not demonstrate that these statements arein any way false or misleading. Thus, Plaintiffs have failed to meet their burden on this issue. (ii) TOSC's Arbitration Agreement Contains A Substantively Unconscionable Limit On Punitive Damages And Therefore Will Be Stricken Itisundisputed that the Arbitration Agreement limits punitive damages to amaximum of ten thousand dollars ($10,000). Defendant claims that this limit is reasonable, and should not render the agreement unconscionable. While the Court agrees that the entire agreement should Cantonand Cantonv. ToyotaSX-10-CV-227 Memorandum Opinion Page5 of6 not be rendered unconscionable, this particular provision certainly is. As the Alexander court properly notedinthe context ofanemployment contract: [Provisions limiting damages] prevent an employee from recovering not only his or her attorney's fees but also such potentially significant relief as punitive damages. An employee therefore is not entitled to complete compensation for any harm done and the company is able to evade full responsibility for its actions. Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 267 (3d Cir. 2003)(emphasis added). This Court finds that the limit in TOSC's agreement is similarly unconscionable, and therefore will be severed. (Hi) TOSC's Limit on Conversion Is Not Unconscionable Plaintiffs argue that the language in the Agreement that excuses TOSC from arbitrating a collectionclaim, but still requires the buyer to waive a counterclaim for wrongful conversion, is unconscionable. To support this claim,Plaintiffscite this language from the Third Circuit: Where, as here, an arbitration provision requires only one side to submit its claims (personal injury or otherwise) to arbitration, but does not alter or limit the rights and remedies available to that party in the arbitral forum, it cannot be said that the parties' agreement is substantively unconscionable. Edwards v. HOVENSA 497 F.3d 355,364 (3d Cir. 2007). However, this language clearly cuts against Plaintiffs' position. Language like the type in TOSC's Arbitration Agreement on this issue is not unconscionable according to prior case law. (iv) TOSC's Ban On Class Actions Is Irrelevant To This Case Because this^stseT^ot-proceeding^-ar^ on class actions to be irrelevant to the case, and therefore will not address it. Canton and Canton v. Toyota SX-10-CV-227 Memorandum Opinion Page 6 of6 III. Conclusion Upon review of the record, it is clear to this Court that Plaintiff Agatha Canton entered into a valid agreement to arbitrate, as evidenced byher signature. The Arbitration Agreement is not unconscionable, except in regards to the clause limiting recovery of punitive damages to ten thousand dollars ($10,000). Thus, the Court will sever this provision, and order this case to be sent to arbitration as mandated by the Arbitration Agreement. Furthermore, as stated above, as Plaintiff Mario Canton is not subject to the Arbitration Agreement, his case will be allowed to continue in this Court. An appropriate Order and Judgment will accompany this Memorandum Opinion. Dated: April ^O ,2011. ATTEST: VENETIA H. VELAZQUEZ, ESQ. Clerk of the Court *ourt Clerk Supervisov//^ . II, JULIO A: BRADY JUDGE CERTIFIED TO BE A TRUE COPY This^£fey of J^4