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November 1st, 2017
securities
THE ALABAMA SUPREME COURT CONFIRMS DISCOVERY MUST BE LIMITED IN STATE COURT WHILE A MOTION TO COMPEL ARBITRATION IS PENDING

In Ex parte Locklear Chrysler Jeep Dodge, LLC and Locklear Automotive Group, Inc., the Alabama Supreme Court granted a Petition for Writ of Mandamus (“Petition”), finding that the trial court exceeded its discretion when it granted a Motion to Compel discovery on issues unrelated to arbitration while a Motion to Compel arbitration was presently pending.

Plaintiffs in the case allege that they were victims of identity theft by a Locklear Chrysler Jeep Dodge, LLC (“Locklear”) employee and brought suit against the dealership in Alabama state court.  At the time Plaintiffs were shopping for cars, they completed credit applications with Locklear, each of which contained a Binding Pre-Dispute Arbitration Agreement (“Arbitration Agreement”). 

Based on the Arbitration Agreements, Locklear filed a Motion to Compel arbitration and requested the action stayed.  The trial court held a hearing on the motions, but did not rule on them. 

Meanwhile, Plaintiffs served interrogatories, requests for production of documents, requests for admission, and notices of deposition.  While the Motion to Compel arbitration was pending, the Plaintiffs filed a Motion to Compel Locklear’s responses to their discovery responses and to deem admitted their requests for admissions.  The trial court granted the Motion to Compel.

In granting Locklear’s Petition, the Alabama Supreme Court confirmed that although discovery may be allowed while a Motion to Compel arbitration is pending, that discovery is limited to whether the parties to the arbitration agreement must arbitrate their claims.  Because the Plaintiffs did not request discovery on any issue related to the Arbitration Agreement or enforcement of the arbitration provision, but instead sought general discovery regarding the merits of their claims, the trial court’s grant of the Motion to Compel discovery was reversed.

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