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BOONE v. TOYOTA MOTOR CREDIT CORPORATION

March 31, 2003

ELSIE D. BOONE, PLAINTIFF,
v.
TOYOTA MOTOR CREDIT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Richard Conway Casey, United States District Judge

OPINION AND ORDER

I. Introduction

This case involves a class-action complaint against Toyota Motor Credit Corporation "TMCC" on behalf of Plaintiff Elsie Boone, and similarly-situated African-Americans, alleging a violation of the Equal Credit Opportunity Act. 15 U.S.C. § 1691. et seq. (the "ECOA"). Plaintiff alleges that TMCC's lease finance system encourages and authorizes the issuance of leases with terms based on racially discriminatory criteria. Defendant TMCC moves to dismiss this action for failure to state a claim under F.R.C.P. 12(b)(6) and to compel arbitration under the Federal Arbitration Act, 9 U.S.C. § 2.

For the reasons stated below, TMCC's motion to compel arbitration is granted. Therefore, the court need not address either TMCC's motion to dismiss for failure to state a claim or Plaintiff's motion to certify her complaint as a class action.

II. Background*fn1

Plaintiff is an African-American woman residing in New York City. According to the Complaint, she received a letter from TMCC on July 10, 2000, informing her that she had been pre-approved for a $29,000 automobile loan. Plaintiff visited Hudson Toyota on July 15, 2000. The salesperson, Mr. Garcia, asked Plaintiff for her social security number so that he could run a credit check and quote her prices on various cars. Mr. Garcia subsequently informed Plaintiff that she did not qualify for the $29,000 loan as stated in the letter, but that she did qualify for a $15,000 package with no money down. Plaintiff indicated that she would take the car and signed the loan papers given to her.

The lease terms given to Plaintiff by Hudson Toyota required her to make sixty monthly payments of $339.97 to TMCC, for a car valued at $16,567.00. Plaintiff was required to pay a total of $20,760.95 over a period of sixty months, in addition to $7,331.00 if she decided to exercise the purchase option at the end of the lease.

Plaintiff alleges that she also signed a document entitled "Spot Instant Delivery Conditions," which stated that Plaintiff must promptly return the car to Hudson Toyota should her credit be unsatisfactory for obtaining lease financing, and that Hudson Toyota would accept the return of the car. Pursuant to this provision, Plaintiff asserts that she attempted to return the car to Hudson Toyota on July 17 because she feared she could not afford the payments. When she arrived, Hudson Toyota allegedly refused to accept the proffered return of the car.

Plaintiff claims that on July 30, 2000, she received a letter from TMCC, dated July 25, 2000, informing her that her credit application had been denied. Plaintiff immediately returned to Hudson Toyota and demanded that the car be accepted for return in accordance with the provisions of the "Spot Instant Delivery Conditions." According to Plaintiff, Hudson Toyota again refused to take possession, asserting that Plaintiff's application for lease financing had indeed been accepted.

The Complaint also alleges that on or about August 2, 2000, Mr. Garcia telephoned Plaintiff and told her that she had to come back to Hudson Toyota to sign additional papers in order to have the registration and license plates issued. Ms. Boone returned to Hudson Toyota and signed what she assumed was a document relating to the registration of the vehicle. Plaintiff now claims that what she actually signed was a new lease containing different, but substantially similar, lease terms. Although this second lease was purportedly signed on August 2, 2000, the document was dated July 15, 2000, the date of the original lease.

Hudson Toyota received a payment for the full price of the Corolla from TMCC, and assigned all its interests under the lease to TMCC. As of the time of the filing of her Complaint, Plaintiff was two months behind on her monthly lease payments.

Plaintiff filed suit against TMCC on January 30, 2001, alleging that TMCC's actions violated the Equal Credit Opportunity Act. Defendant filed a motion to compel arbitration, arguing, inter alia, that Plaintiff's claim is subject to binding arbitration pursuant to an arbitration clause in the lease agreement. Plaintiff argues that she did not effectively waive her right to a judicial forum, and that the arbitration clause in the lease agreement does not apply to her ECOA claim.

III. Discussion

The Court first addresses whether New Jersey or federal law governs the arbitration provision in the lease agreement. After deciding the federal law governs, the Court next addresses whether Plaintiff's claim is ...


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