The Tenth Circuit recently affirmed a district court’s decision partially compelling arbitration. Jesse Romero took out three title loans with TitleMax of New Mexico, Inc. Romero used his third loan to pay off his second loan and his second loan to pay off his first loan. Each loan was related to the same car and each loan agreement contained an identical arbitration clause. The clause was broadly worded to cover “Disputes.” However, the clause stated it did not apply to “disputes about the validity, coverage, or scope of” the arbitration clause. The loan agreements also contained an opt-out provision allowing the party to opt out of the arbitration clause if the borrower provided notice to TitleMax within 60 days of taking out the loan. Romero did not opt out of the arbitration clause in his first or second loan agreements, but elected to opt out of the clause in his third agreement. He then filed a putative class action asserting that TitleMax’s practices violated various New Mexico consumer protection statutes.

TitleMax removed the case to federal court and sought to invoke the arbitration provision and compel all of Romero’s claims to be arbitrated. The district court agreed that arbitration was proper with respect to Romero’s first and second loan agreements because Romero had not opted out of the arbitration clauses in those agreements. The court concluded, however, that Romero had properly opted out of the arbitration clause in the third agreement and accordingly, declined to compel arbitration with respect to Romero’s claims based on that agreement. The district court declined to rule on arbitration with respect to putative class members who were not before the court.

The Tenth Circuit affirmed. It first noted that the provision covered disputes broadly but also that the clause gave the court broad authority to interpret the clause. The court rejected TitleMax’s argument that Romero did not properly opt out of the clause in the third agreement and that the third agreement was a refinancing of the second agreement, which Romero had not opted out of and therefore required an arbitrator to determine whether Romero’s claims regarding his third agreement were subject to arbitration. The court explained that the arbitration clause gave the court the authority to interpret the arbitration provision. The court noted that each agreement was separate and contained its own (identical) arbitration clause.

Romero v. TitleMax of New Mexico, Inc., No. 18-2077 (10th Cir. Feb. 5, 2019)