Mo. SC won't order arbitration in class action suit

Jessica M. Karmasek Sep. 8, 2010, 2:56pm


ST. LOUIS (Legal Newsline) - The Missouri Supreme Court has affirmed a lower court ruling that denied a motion to compel arbitration in a class action lawsuit against a Honda automobile dealership.

Ashlee Ruhl, who purchased and financed a new vehicle from Lee's Summit Honda, filed a lawsuit against the dealership, alleging an unauthorized practice of law and deceptive practices connected with the sale of merchandise under the state's Merchandising Practices Act.

Ruhl signed a retail purchase agreement, describing her total purchase price to include a "cash price of vehicle," "other goods/services" and a "dealership administrative fee" of $199.95. She also signed an arbitration agreement that waived her opportunity to participate in a class action.

However, Ruhl, on behalf of herself and others who paid the fee as part of the purchase price, sued the dealership for damages on two counts and sought class certification.

According to the Court's majority opinion, as written by Judge Richard B. Teitelman, the first count alleged Honda engaged in the unauthorized practice of law or conducted legal business because it charged a fee separate from other sale costs for preparing "legal instruments" to finance the transactions.

The second count alleged Honda engaged in unfair and deceptive practices connected with the sale of merchandise under the state's merchandising laws based on the same alleged conduct.

Ruhl sought damages, attorneys fees and costs, costs for class notice and administration, and punitive damages.

In return, Honda filed an answer and motion to compel arbitration. But the trial court overruled Honda's motion to compel, finding the claim of unauthorized practice of law is not subject to arbitration because the courts "exclusively decide what constitutes the unauthorized practice of law."

The trial court also found the arbitration agreement to be "procedurally and substantively unconscionable."

Honda claims that the trial court, in its judgment denying its motion to compel Ruhl to arbitrate her individual claims against it, "erred in failing to compel arbitration because the claims were within scope of the parties' arbitration agreement, the unauthorized practice of law claim was subject to arbitration, and the arbitration agreement was valid."

The Court, in its Aug. 31 opinion, affirmed the trial court's judgment and ordered the case to be remanded.

"The underlying allegation for Ruhl's claims is that Honda unlawfully is charging a fee to prepare legal documents to finance vehicles," Teitelman wrote. "Therefore, any damages for Ruhl's claims are based on refunding the charged fee, which is a component of the total purchase price listed in the contract.

"Ruhl's claim is within the scope of the arbitration agreement because her claims challenging the fee constitute a dispute regarding the purchase of the vehicle."

The Court goes on to say there was "substantial" evidence to support the trial court's judgment that the class arbitration waiver in this case was unconscionable.

"The trial court determined correctly that Ruhl should not be required to submit to arbitration," Teitelman wrote.

Fellow Supreme Court Judge C.J. Price dissented, writing in a separate opinion that "the majority misstates the law."

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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