Title: Debra Johnson v. Jefferson County Racing Association, Inc. d/b/a The Birmingham Race Course
Citation: N/A
Docket Number: 1061398
State: Alabama
Issuer: Alabama Supreme Court
Date: June 27, 2008

REL: 06/27/08
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2007-2008
_________________________
1061398
_________________________
Debra Johnson
v.
Jefferson County Racing Association, Inc., d/b/a The
Birmingham Race Course
Appeal from Jefferson Circuit Court
(CV-06-6921)
SEE, Justice.
Debra Johnson appeals a Jefferson Circuit Court order
compelling her to arbitrate her claims against the Jefferson
County Racing Association, Inc., d/b/a The Birmingham Race
1061398
Section 13A-12-27, Ala. Code 1975, provides:
1
"(a) A person commits the crime of possession of
a gambling device if with knowledge of the character
thereof he manufactures, sells, transports, places
or 
possesses, 
or 
conducts 
or 
negotiates 
any
transaction 
affecting 
or 
designed 
to 
affect
ownership, custody or use of:
"(1) A slot machine; or
"(2) Any other gambling device, with
the intention that it be used in the
advancement of unlawful gambling activity.
"(b) Possession of a gambling device is a Class
A misdemeanor."
Section 8-1-150(a), Ala. Code 1975, provides:
2
2
Course ("JCRA"), and dismissing her action. We affirm in part
and reverse in part.
Facts and Procedural History
Johnson brought the present action following this Court's
decision in Barber v. Jefferson County Racing Ass'n, Inc., 960
So. 2d 599, 604 (Ala. 2006), in which we determined that an
activity 
advertised 
as 
"Quincy's 
MegaSweeps" 
("the
MegaSweeps") initiated by Innovative Sweepstakes Systems,
Inc., at the Birmingham Race Course "involve[d] the use of
slot machines," a gambling device that is illegal in Alabama.1
Johnson sued JCRA pursuant to § 8-1-150(a), Ala. Code 1975,2
1061398
"(a) All contracts founded in whole or in part
on a gambling consideration are void. Any person who
has paid any money or delivered any thing of value
lost upon any game or wager may recover such money,
thing, or its value by an action commenced within
six months from the time of such payment or
delivery."
The relevant portions of the "Quincy's MegaSweeps
3
Official Sweepstakes Rules" provide:
"1. No Purchase Necessary to Win. A purchase
will not improve the chance of winning. Void where
prohibited by law.
".... 
"3. Rules Are Binding. Participation in the
Sweepstakes constitutes an entrant's understanding
of, and full and unconditional agreement to and
acceptance of, these Official Rules.
".... 
"8. Arbitration and Disputes. As a condition of
participating in this Sweepstakes, entrant agrees
3
on her own behalf and on behalf of a class of similarly
situated persons, seeking to recover money that she, and
others, had paid to participate in the MegaSweeps.
JCRA moved the trial court to compel Johnson to arbitrate
her claims and to dismiss Johnson's action.  JCRA argued that
by participating in the MegaSweeps, Johnson had assented to
the arbitration provision found in the "official rules" for
the MegaSweeps ("the MegaSweeps contract").   Johnson opposed
3
1061398
that any and all disputes which cannot be resolved
between the parties, claims and causes of action
arising out of or connected with this Sweepstakes,
or any prizes awarded, or the determination of
winners shall be resolved individually, without
resort to any form of class action and exclusively
by 
arbitration 
pursuant 
to 
the 
commercial
arbitration 
rules 
of the American Arbitration
Association, then effective.  Further, in any such
dispute, under no circumstances will entrant be
permitted to obtain awards for, and entrant hereby
waives all rights to claim[,] punitive, incidental
or consequential damages, including but not limited
to attorneys' fees, out-of-pocket expenses, costs
associated with entering the Sweepstakes, and/or any
other damages, and entrant further waives all rights
to have damages multiplied or increased. All issues
and questions concerning the construction, validity,
interpretation and enforceability of these Official
Rules, or the rights and obligations of entrant and
Sponsor in connection with this Sweepstakes, shall
be governed by, and construed in accordance with,
the laws of the State of Alabama, without giving
effect to the conflict of laws rules thereof, and
all proceedings shall take place in that State in
the City of Birmingham, County of Jefferson."
4
JCRA's motion, arguing that JCRA could not establish a valid
contract calling for arbitration.  Specifically, Johnson
argued that the MegaSweeps contract amounted to a contract
founded on a gambling consideration and that, therefore, the
contract is void and unenforceable under § 8-1-150(a), Ala.
Code 1975.  Johnson alternatively argued that, even if the
MegaSweeps contract is not void in its entirety, because one
of the MegaSweeps rules includes a void-where-prohibited-by-
1061398
5
law provision, the arbitration clause found in those rules is
void and unenforceable.
The trial court noted that "the crux of [Johnson]'s
complaint is that the agreement as a whole, including the
arbitration provision, was rendered void or invalid by the
Court's holding in Barber [v. Jefferson County Racing Ass'n,
Inc., 960 So. 2d 599 (Ala. 2006)]."  Relying on the United
States Supreme Court's decision in Buckeye Check Cashing, Inc.
v. Cardegna, 546 U.S. 440 (2006), the trial court then
determined that because Johnson's challenge was to the
MegaSweeps contract as a whole, rather than the arbitration
clause specifically, the issue of the validity of the contract
was to be decided by the arbitrator.  The trial court then
dismissed Johnson's action and ordered that she arbitrate her
claims.
Johnson moved the trial court to alter, amend, or vacate
its order under Rule 59(e), Ala. R. Civ. P.  In her motion,
Johnson reasserted and clarified the arguments she had made in
her brief opposing JCRA's motion to compel arbitration, but
she also argued that the trial court should have stayed the
action pending arbitration instead of dismissing it.  The
trial court denied her motion.  Johnson now appeals, arguing
1061398
6
that neither the MegaSweeps contract nor the arbitration
clause itself is valid or enforceable.  Alternatively, Johnson
argues that, even if we conclude that the arbitration clause
is valid and enforceable, the trial court should have stayed,
rather than dismissed, her action pending the outcome of
arbitration.
Analysis
I. Order Compelling Arbitration
Johnson argues that the trial court erred when it
compelled her to arbitrate her claims against JCRA because,
she says, the MegaSweeps contract is void ab initio and
because, she argues, the arbitration clause itself is void.
A. Standard of Review
"We review the trial court's grant or denial of a motion
to compel arbitration de novo." McKay Bldg. Co. v. Juliano,
949 So. 2d 882, 884 (Ala. 2006) (citing Bowen v. Security Pest
Control, 
Inc., 
879 
So. 
2d 
1139, 
1141 
(Ala. 
2003)).
"'Initially, the party seeking to compel arbitration must
prove 1) the existence of a contract calling for arbitration,
and 2) that the contract "is 'a contract evidencing a
transaction involving commerce' within the meaning of the
Federal Arbitration Act (FAA)."'" Owens v. Coosa Valley Health
1061398
7
Care, Inc., 890 So. 2d 983, 986 (Ala. 2004) (quoting Hudson v.
Outlet Rental Car Sales, Inc., 876 So. 2d 455, 457 (Ala.
2003), quoting in turn Citizens Bank v. Alafabco, Inc., 539
U.S. 52, 53 (2003), quoting in turn 9 U.S.C. § 2).  "The
moving party 'must "'produce some evidence which tends to
establish its claim.'"'" Edwards v. Costner, 979 So. 2d 757,
761 (Ala. 2007) (quoting Wolff Motor Co. v. White, 869 So. 2d
1129, 1131 (Ala. 2003), quoting in turn Jim Burke Auto., Inc.
v. Beavers, 674 So. 2d 1260, 1265 (Ala. 1995), quoting in turn
In re American Freight Sys., Inc., 164 B.R. 341, 345 (D.Kan.
1994)).  Finally, "[o]nce the moving party has supported his
or her motion to compel arbitration, the nonmovant then has
the burden to present evidence tending to show that the
arbitration agreement is invalid or inapplicable to the case."
McKay, 949 So. 2d at 884 (citing Polaris Sales, Inc. v.
Heritage Imports, Inc., 879 So. 2d 1129, 1132 (Ala. 2003)).
B. Existence of a Contract
Johnson argues that JCRA cannot meet its initial burden
of demonstrating the existence of a contract calling for
arbitration because, she argues, "under this Court's unanimous
decision in Barber[ v. Jefferson County Racing Ass'n, Inc.,
960 So. 2d 599 (Ala. 2006)], the MegaSweeps contracts relied
1061398
JCRA notes that "[a]t no time has Johnson ever disputed
4
that she assented to [the] terms [of the MegaSweeps
contract]."  JCRA's brief at 9.  Although Johnson argues that
the MegaSweeps contract is "void" because it was founded on a
gambling consideration, Johnson does not otherwise dispute the
existence of the contract or that she assented to it.
Additionally, Johnson does not argue that JCRA cannot meet its
burden of demonstrating that the MegaSweeps contract involves
interstate commerce.
The dissent argues that "[h]ad the Legislature intended
5
that some provisions of those [gambling] contracts [addressed
in § 8-1-150] not be void, it could have said so in clear
terms, but its language is all-encompassing and unmistakable."
___ So. 2d at ___.  The dissent continues that "[t]he
Legislature has clearly provided that the customer's remedy
for losses in an illegal gambling activity is an action in
court, not arbitration provided by a clause in a contract that
is void ab initio." ___ So. 2d at ___.  However, whether the
arbitration clause in the MegaSweeps contract is severable is
not a question of state law, but one of federal law.
In Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
445 (2006), the Supreme Court of the United States said that
"the [Federal Arbitration Act] 'create[d] a body of federal
substantive law,' which [is] 'applicable in state and federal
courts.'" (quoting Southland Corp. v. Keating, 465 U.S. 1, 12
(1984)).  The Supreme Court noted that it had previously
8
on by the JCRA are void ab initio."  Johnson's brief at 15
4
(emphasis in the original).
Section 8-1-150(a), Ala. Code 1975, provides:
"All contracts founded in whole or in part on a
gambling consideration are void. Any person who has
paid any money or delivered any thing of value lost
upon any game or wager may recover such money,
thing, or its value by an action commenced within
six months from the time of such payment or
delivery."5
1061398
"rejected the view that the question of 'severability' was one
of state law, so that if state law held the arbitration
provision not to be severable a challenge to the contract as
a whole would be decided by the court." 546 U.S. at 445.  This
Court is bound by decisions of the Supreme Court of the United
States.  See Ex parte Procom Servs., Inc., 884 So. 2d 827, 834
(Ala. 2003) ("'"This Court may rely on a decision of any
federal court, but it is bound by the decisions of the United
States Supreme Court."'" (quoting Weems v. Jefferson-Pilot
Life Ins. Co., 663 So. 2d 905, 913 (Ala. 1995), quoting in
turn Ex parte Gurganus, 603 So. 2d 903, 908 (Ala. 1992)));
Ingram v. American Chambers Life Ins. Co., 643 So. 2d 575, 577
(Ala. 1994) ("Under Article VI of the United States
Constitution, we are bound by the decisions of the United
States Supreme Court."). 
9
Johnson contends that the MegaSweeps contract is void under §
8-1-150 because, she says, this Court in Barber "held that, as
a matter of Alabama law, playing the MegaSweeps involved the
payment of consideration to gamble."  Johnson's brief at 17.
Johnson thus concludes that the arbitration clause in the
MegaSweeps contract is unenforceable because, she argues,
under Alabama law "'when a contract is utterly void, it does
not have any existence even for the protection of one who
relied and acted upon it without notice of its infirmity.'"
Johnson's brief at 15 (quoting Metropolitan Life Ins. Co. v.
Bramlett, 224 Ala. 473, 475, 140 So. 752, 753 (1932)).  JCRA,
however, argues that Johnson cannot avoid arbitration by
1061398
The Paragon decision was released after the parties to
6
this appeal submitted their briefs.
The relevant portion of § 34-14A-14, Ala. Code 1975,
7
provides: "A residential home builder, who does not have the
license required, shall not bring or maintain any action to
enforce the provisions of any contract for residential home
building which he or she entered into in violation of this
chapter."  
10
challenging the validity or legality of the MegaSweeps
contract as a whole, rather than the arbitration clause
itself.  JCRA is correct.
Recently, in Paragon Ltd., Inc. v. Boles, [Ms. 1061255,
December 21, 2007] ___ So. 2d ___, ___ (Ala. 2007), this Court
rejected an argument similar to the one Johnson now makes.6
In that case Emily Boles sued Paragon alleging that Paragon
had breached a construction contract by failing to complete
the construction of a house and overcharging Boles for the
work it had completed.  Paragon responded by arguing "that the
construction contract contained a valid and enforceable
arbitration clause, which required that any dispute related to
the contract be settled by arbitration." ___ So. 2d at ___.
Boles argued in response that, "under § 34-14A-14, Ala. Code
1975,[ ] Paragon [could] not maintain an action to enforce any
7
provision of the contract, including the arbitration clause,
1061398
11
because ... Paragon admitted [to the Alabama Home Builders
Licensure Board] that it had engaged in the construction of
Boles's residence without holding a required license."
Paragon, ___ So. 2d at ___. 
This Court first noted in Paragon that Boles's argument,
like Johnson's argument in the case now before us, "clearly
attacks Paragon's ability to enforce the contract as a whole
and does not specifically attack the arbitration clause within
the contract." ___ So. 2d at ___.  This Court also stated that
"[i]t is well established that challenges to the validity of
the contract as a whole and not specifically to the
arbitration clause within the contract must go to the
arbitrator, not a court." Paragon, ___ So. 2d at ___; see also
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,
403-04 (1967) ("Accordingly, if the claim is fraud in the
inducement of the arbitration clause itself -- an issue which
goes to the 'making' of the agreement to arbitrate -- the
federal court may proceed to adjudicate it.  But the statutory
language does not permit the federal court to consider claims
of fraud in the inducement of the contract generally."
(footnotes omitted)).  Relying on the United States Supreme
Court decision in Buckeye Check Cashing, Inc. v. Cardegna, the
1061398
The dissent argues that Buckeye Check Cashing is
8
distinguishable from this case because in Buckeye Check
Cashing a decision had not yet been made as to whether the
contract at issue was, in fact, void.  See Cardegna v. Buckeye
Check Cashing, Inc., 894 So. 2d 860, 863 (Fla. 2005) ("In the
case before us today, however, the underlying contract at
issue would be rendered void from the outset if it were
determined that the contract indeed violated Florida's usury
laws."), rev'd, Buckeye Check Cashing, 546 U.S. 445-46.
Justice 
Parker 
asserts 
that 
in 
this 
case 
"[t]he
illegality of the MegaSweeps scheme is ... not an issue on the
12
same decision relied on by the trial court here, this Court in
Paragon concluded that "the arbitration clause in the contract
between Paragon and Boles is enforceable, and it is irrelevant
whether Paragon's actions render the contract as a whole void.
That question is for the arbitrator to decide, not this
Court." Paragon, ___ So. 2d at ___; see also Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. at 445-46 ("Prima Paint
and Southland [Corp. v. Keating, 465 U.S. 1 (1984)] ...
establish[ed] three propositions.  First, as a matter of
substantive federal arbitration law, an arbitration provision
is severable from the remainder of the contract.  Second,
unless the challenge is to the arbitration clause itself, the
issue of the contract's validity is considered by the
arbitrator in the first instance.  Third, this arbitration law
applies in state as well as federal courts.").   We
8
1061398
table for either an arbitrator or a trial court to decide"
because "in Barber ... this Court clearly and unanimously held
that the MegaSweeps scheme constitutes illegal gambling."  ___
So. 2d at ___.  This Court in Barber did address "the
MegaSweeps scheme" and declared it to be a gambling operation;
however, neither this Court, nor the trial court, addressed in
that decision what effect the decision would have on the
MegaSweeps contract in this case.  This case, therefore, is
legally indistinguishable from Buckeye Check Cashing.  Whether
this particular contract is void is a decision for the
arbitrator, and not for this Court or for the trial court (or,
as suggested by the dissent, for the legislature, whose
constitutional mandate is to pass general laws and which is
prohibited by the separation-of-powers doctrine from deciding
the effect of a statute on particular parties in particular
cases).  No matter how obvious we might consider the answer to
a question, we cannot answer that question with legal effect
absent the jurisdiction to do so.  Moreover, the question
whether the MegaSweeps contract may later be deemed void or
merely voidable under state law is not of consequence when
deciding whether the arbitration clause in that contract is
severable and enforceable.  See Buckeye Check Cashing, 546
U.S. at 446 ("In declining to apply Prima Paint [Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395 (1967)]'s rule of
severability, the Florida Supreme Court relied on the
distinction between void and voidable contracts. ...  Prima
Paint makes this conclusion irrelevant.  That case rejected
application of state severability rules to the arbitration
agreement without discussing whether the challenge at issue
would have rendered the contract void or voidable."). See also
Paragon, ___ So. 2d at ___ ("Therefore, the arbitration clause
in the contract between Paragon and Boles is enforceable, and
it is irrelevant whether Paragon's actions render the contract
as a whole void. That question is for the arbitrator to
decide, not this Court.").
13
concluded Paragon by stating that "the arbitration clause is
enforceable even if the contract as a whole is later found to
be void."  Paragon, ___ So. 2d at ___.
1061398
14
The case before us is closely analogous to Paragon.
Johnson emphasizes that in this case "there is no relevant
determination to be made as to the validity of the MegaSweeps
contracts under § 8-1-150(a) that has not already been finally
established as a matter of Alabama law in Barber [v. Jefferson
County Racing Ass'n, Inc., 960 So. 2d 599 (Ala. 2006)]."
Johnson's brief at 19.  She further contends that 
"[this] Court examined the MegaSweeps itself and
determined that, as a matter of Alabama law, the
MegaSweeps itself was illegal gambling and, more
specifically, 
that 
it 
involved 
gambling
consideration. 
 
And 
under 
§ 
8-1-150(a), 
the
existence of gambling consideration is the only
issue in the determination of whether the MegaSweeps
contracts were void ab initio."
Johnson's brief at 19 (emphasis in the original).  Similarly,
however, at the time Paragon asserted arbitration as a defense
to litigation, it had "entered into a consent agreement with
the Alabama Home Builders Licensure Board in which Paragon
admitted that it had engaged in the construction of Boles's
residence without holding a required license."  Paragon, ___
So. 2d at ___.  Thus, the sole question under § 34-14A-14 as
to whether Paragon could "bring or maintain any action to
enforce the provisions of any contract for residential home
building which he or she entered into" was already answered --
1061398
The dissent argues that the MegaSweeps contract is void
9
as a whole under § 8-1-150(a), Ala. Code 1975, because it is
founded on gambling consideration and, thus, that "the
arbitration clause is just as void as the rest of the
contract." ___ So. 2d at ___.  However, as noted above, no
court has made a determination as to the status of the
MegaSweeps contract; thus, as the United States Supreme Court
noted in Buckeye Check Cashing: "[U]nless the challenge is to
the arbitration clause itself, the issue of the contract's
validity is considered by the arbitrator in the first
instance."  546 U.S. at 445-46.
15
Paragon did not have the "license required."  Nevertheless, we
held in Paragon that arbitration was required.  Applying our
decision in Paragon to the facts of this case, we conclude
that, like the construction contract in Paragon, "the
arbitration clause in the [MegaSweeps] contract between [JCRA]
and [Johnson] is enforceable, and it is irrelevant whether
[JCRA]'s actions render the contract as a whole void.  That
question is for the arbitrator to decide, not this Court."9
Paragon, ___ So. 2d at ___.  Therefore the trial court did not
err in determining that a contract calling for arbitration
exists.
C. Validity of the Arbitration Provision
Johnson argues alternatively that the trial court erred
when it compelled Johnson to arbitrate her claims against JCRA
because "the arbitration provision at issue is and always was
1061398
16
void under its own terms."  Johnson's brief at 21.  The
Supreme Court of the United States noted in Prima Paint that
a federal district court may adjudicate "an issue which goes
to the 'making' of the agreement to arbitrate," such as fraud
in the inducement. 388 U.S. at 403-04.  As the Supreme Court
made clear in Buckeye Check Cashing, "unless the challenge is
to the arbitration clause itself, the issue of the contract's
validity is considered by the arbitrator." 546 U.S. at 445-46.
Johnson asserts that the first provision in the MegaSweeps
"Official Rules," which Johnson characterizes as a "separate
addendum" 
to 
the 
MegaSweeps 
"contracts," 
"expressly 
provid[es]
that the Rules are void and unenforceable if the MegaSweeps is
'prohibited by law.'" Johnson's brief at 21.  Rule 1 of the
"Quincy's MegaSweeps Official Sweepstakes Rules" provides:
"1.  No Purchase Necessary to Win. A purchase
will not improve the chance of winning.  Void where
prohibited by law."
Thus, Johnson argues that the void-where-prohibited-by-law
language renders the arbitration clause itself void and
unenforceable.
JCRA responds, first, that the void-where-prohibited-by-
law language should apply only to the rule in which it
appears, i.e., Rule 1, and not to all the official rules as
1061398
17
argued by Johnson.  JCRA's brief at 48.  Alternatively, JCRA
argues that even if Rule 1 were applicable to all the official
rules, 
the 
rules 
themselves 
constitute the MegaSweeps
contract; thus, JCRA contends, this "alternative" argument
does nothing more than rehash Johnson's original argument that
the MegaSweeps contract as a whole is void.  JCRA is correct.
Even though Johnson characterizes the official rules as
"a separate addendum to the MegaSweeps contract allegedly
available on the [I]nternet and posted at the MegaSweeps
facility," Johnson provides no citation to the record to
support this proposition, nor does she clarify what, if
anything, is included in the MegaSweeps contract, other than
the "Official Rules."  Moreover, as JCRA notes, Rule 1 does
not refer directly to the arbitration provision contained in
Rule 8.  In fact, Rule 1 does not refer to any of the other
rules, individually or collectively.  Thus, it appears that if
the void-where-prohibited-by-law language were to apply to
anything outside Rule 1, it would appear to apply to the
MegaSweeps contract as a whole.  
Johnson does not argue that she was unaware of the
arbitration agreement, that she was fraudulently induced to
enter into the arbitration agreement, that the arbitration
1061398
18
agreement itself is unconscionable, or any other "issue that
goes to the 'making' of the agreement to arbitrate."  Prima
Paint, 388 U.S. at 403-04.  Instead, Johnson in effect argues
again that the contract containing the arbitration agreement
is void.  It is the role of the arbitrator, however, and not
of the court, to determine whether the contract as a whole is
void. Buckeye Check Cashing, supra.  Therefore, the trial
court did not err in ordering Johnson to arbitrate her claims.
II.  Dismissal of Johnson's Action
After the trial court ordered Johnson to arbitrate her
claims against JCRA and dismissed her action, Johnson moved
the trial court to alter, amend, or vacate its order under
Rule 59(e), Ala. R. Civ. P.  In her motion, Johnson reasserted
the arguments she had made in her brief opposing JCRA's motion
to compel arbitration and also argued that the trial court
should have stayed the action instead of dismissing it.  The
trial court denied her motion.  Johnson now argues that, even
if this Court determines that the trial court was correct in
ordering Johnson to arbitrate her claims, the trial court
exceeded its discretion when it refused to stay her action
pending the outcome of arbitration.  We agree.
A.  Standard of Review
1061398
We recognize that in other cases, this Court has applied
10
a de novo standard of review; however, in those cases, this
Court was reviewing a trial court's denial of a party's motion
to stay, not reviewing a postjudgment motion in which a party,
for the first time, asks the trial court for a stay.  See
Liberty Nat'l Life Ins. Co. v. Douglas, 826 So. 2d 806, 809
(Ala. 2002) ("We review de novo a trial court's denial of a
motion to stay pending arbitration."); Lee v. YES of
Russellville, Inc., 784 So. 2d 1022, 1025 (Ala. 2000) ("A
trial court's denial of a motion to stay proceedings pending
arbitration is reviewable by direct appeal....  Our review of
that decision is de novo.").
Section 3 of the FAA provides:
11
"If any suit or proceeding be brought in any of the
courts of the United States upon any issue referable
19
Our standard of review for rulings on postjudgment
motions is well settled.10
"'In general, whether to grant or to
deny a posttrial motion is within the sound
discretion of the trial court, and the
exercise of that discretion will not be
disturbed on appeal unless by its ruling
the court abused some legal right and the
record plainly shows that the trial court
erred.'"  
Hitt v. State of Alabama Pers. Bd., 873 So. 2d 1080, 1085
(Ala. 2003) (quoting Flagstar Enters., Inc. v. Foster, 779 So.
2d 1220, 1221 (Ala. 2000)).
B. Analysis
Johnson argues that she is entitled to a stay as a matter
of right under § 3 of the Federal Arbitration Act ("the FAA")11
1061398
to arbitration under an agreement in writing for
such arbitration, the court in which such suit is
pending, upon being satisfied that the issue
involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on
application of one of the parties stay the trial of
the action until such arbitration has been had in
accordance 
with 
the 
terms 
of 
the 
agreement,
providing the applicant for the stay is not in
default in proceeding with such arbitration."
9 U.S.C. § 3.
Because we conclude that under Alabama law the trial
12
court exceeded its discretion in denying Johnson a stay
pending arbitration, we do not address the applicability of §
3 of the FAA to this case, and whether or when a trial court
has discretion under § 3 to dismiss an action instead of
granting a stay pending arbitration.  See Lloyd v. Hovensa,
LLC, 369 F.3d 263, 269 (3d Cir. 2004) ("Here, the plain
language of § 3 affords a district court no discretion to
dismiss a case where one of the parties applies for a stay
pending arbitration."); Choice Hotels, Inc. v. BSR Tropicana
Resort, Inc., 252 F.3d 707, 709 (4th Cir. 2001) ("[T]he FAA
requires a district court, upon motion by any party, to stay
judicial proceedings involving issues covered by written
arbitration agreements."); Adair Bus Sales, Inc. v. Blue Bird
Corp., 25 F.3d 953, 955 (10th Cir. 1994) ("[T]he Federal
20
or, alternatively, that even if she is not entitled to a
mandatory stay, a stay is nonetheless warranted in this case.
We pretermit discussion of whether Johnson is entitled to a
mandatory stay under § 3 of the FAA because we conclude that,
under Alabama law, the trial court exceeded its discretion
when it failed to grant Johnson's postjudgment motion to stay
the proceedings pending the outcome of arbitration.12
1061398
Arbitration Act provides the district court 'shall on
application of one of the parties stay the trial of the action
until such arbitration has been had in accordance with the
terms of the agreement.' 9 U.S.C. § 3.  Blue Bird did indeed
move the district court for a stay pending arbitration.  The
proper course, therefore, would have been for the district
court to grant Defendant's motion and stay the action pending
arbitration."). 
21
Johnson argues that the trial court exceeded its
discretion when it refused to grant her Rule 59(e), Ala. R.
Civ. P., motion, requesting the trial court to stay her action
pending the outcome of arbitration instead of dismissing it.
Although this Court has not squarely addressed how trial
courts should treat an action that has been compelled to
arbitration, this Court has instructed trial courts either to
stay or to dismiss an action in which the trial court has
compelled arbitration.  See CitiFinancial Corp., L.L.C. v.
Peoples, 973 So. 2d 332, 341 (Ala. 2007) ("On remand, the
trial court shall grant the motion to compel arbitration and
either issue a stay of these proceedings pending arbitration
or dismiss the case."); Ameriquest Mortgage Co. v. Bentley,
851 So. 2d 458, 462 (Ala. 2002) ("A trial court is required to
stay or dismiss proceedings and to compel arbitration if the
parties have entered into a valid contract containing an
arbitration agreement." (citing Ex parte Colquitt, 808 So. 2d
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22
1018, 1022 (Ala. 2001))).  Our previous decisions thus give
implicit support to the proposition that under Alabama law a
trial court has discretion to determine whether an action
compelled to arbitration should be stayed or dismissed, and
today we so hold.
Johnson asserts that a stay, rather than a dismissal, is
warranted in this case because, she notes, the arbitrator may
decline to hear the case if the arbitrator determines that a
valid contract does not exist.  Johnson's brief at 29.  In
support of this argument, she cites Lewis v. Oakley, 847 So.
2d 307, 330 (Ala. 2002), in which this Court recognized that
where an arbitrator may decline to accept a case "it is
prudent that the trial court retain jurisdiction pending a
decision by the [arbitrator] concerning whether it will accept
this dispute for arbitration."
Johnson also contends that a stay is justified in this
case because an action under § 8-1-150 must be "commenced
within six months from the time of such payment or delivery."
§ 8-1-150(a), Ala. Code 1975.  This short statute of
limitations, Johnson argues, "will make it difficult for
absentee class members to pursue their claims in court even if
1061398
See also Mostella v. N&N Motors, 840 So. 2d 877, 880
13
(Ala. 2002)(abrogation on other grounds recognized in Wolff
23
the arbitrator declines jurisdiction."  Johnson's brief at 30.
She further contends: 
"Because the statute of limitations as to the absent
class members' claims will toll only while the
action is pending ... even a short arbitration will
foreclose the possibility of recovery. ...  Because
the trial court dismissed the action instead [of]
staying it, even if Ms. Johnson wins in arbitration,
absentee class members may not be able to recover
against the JCRA."
Johnson's brief at 30.
She directs our attention to Porter v. Colonial Life &
Accident Insurance Co., 828 So. 2d 907, 908 (Ala. 2002), in
which this Court stated: 
"We note a potential for injustice. If a
plaintiff's court action be dismissed to enforce an
arbitration agreement, but, through no fault of the
plaintiff's, the arbitration be not concluded or
some of the plaintiff's claims be not arbitrated, a
statute of limitations could bar a refiling of the
unarbitrated 
claims 
in 
court. 
Sometimes, 
for
instance, an arbitrator's first duty under an
arbitration 
agreement 
is 
to 
determine 
the
arbitrability of a plaintiff's claims.  In such a
case, the arbitrator could rule that some or all of
the plaintiff's claims should be litigated and not
arbitrated.  Moreover, a stay, as distinguished from
a dismissal, would likely better conserve the time
and resources of the parties and the trial court
even in the event of a successful arbitration,
inasmuch 
as 
the 
winner 
commonly 
wants 
the
arbitration award reduced to a judgment."13
1061398
Motor Co. v. White, 869 So. 2d 1129, 1135 n. 7 (Ala. 2003))
("When a trial court enters an order compelling arbitration,
a stay of the proceedings in the trial court during the
pendency of the arbitration protects the plaintiff from facing
the prospect of the expiration of an applicable statute of
limitations or from paying another filing fee in the event
future legal proceedings become necessary.  An order
compelling arbitration should not constitute an adjudication
on the merits; therefore, a trial court should not dismiss
with prejudice a case in which arbitration is ordered.").
24
JCRA asserts that "Johnson's argument is not that she
herself would be harmed or prejudiced in any way by the trial
court's dismissal of her case, but that other persons who she
wishes to represent ... might be harmed if the arbitrator
ultimately declined jurisdiction."  JCRA's brief at 64.  JCRA
notes that no class has been certified in this action and that
"no notice of Johnson's putative class action suit was
provided to any other MegaSweeps customers and thus no one has
relied on her lawsuit to resolve any potential [MegaSweeps]
claims."  JCRA's brief at 64. 
Although no class has been certified, we recognize that
in this case, as there was in Porter, there is a real
potential for injustice.  The statute of limitations in § 8-1-
150(a), Ala. Code 1975, is a short one, and, if "through no
fault of [Johnson], the arbitration be not concluded or some
1061398
25
of [Johnson's] claims be not arbitrated, a statute of
limitations could bar a refiling of the unarbitrated claims in
court."  Porter, 828 So. 2d at 908.  In the case before us, an
arbitrator may well decide that there is no valid contract
containing an arbitration clause and decline jurisdiction.
Then, because of the short statute-of-limitations period, both
Johnson's claims and the claims of the prospective class could
be time-barred.  For these reasons, we hold that the trial
court exceeded its discretion when it dismissed, rather than
stayed, Johnson's claims.  We, therefore, reverse the decision
of the trial court and remand this case for the trial court to
vacate its dismissal of Johnson's claims and to enter an order
staying her action pending the outcome of the arbitration
proceedings.
Conclusion
The trial court did not err in compelling Johnson to
arbitrate her claims; however, it did exceed its discretion
when it declined to stay Johnson's action pending the outcome
of the arbitration proceedings.  Therefore, we affirm the
trial court's order insofar as it compels Johnson to arbitrate
her claim against JCRA but reverse it insofar as it dismisses
Johnson's action, and we remand the case for the trial court
1061398
26
to enter an order staying this action pending the outcome of
the arbitration proceedings.
AFFIRMED IN PART; REVERSED IN PART; REMANDED.
Cobb, C.J., and Lyons, Woodall, Stuart, Smith, and Bolin,
JJ., concur.
Murdock, J., concurs in the result.
Parker, J., concurs in part and dissents in part.
1061398
27
PARKER, Justice (concurring in part and dissenting in part).
In § 8-1-150(a), Ala. Code 1975, the Legislature has
clearly articulated the position of the State of Alabama on
gambling: "All contracts founded in whole or in part on a
gambling consideration are void."  The language could hardly
be more explicit.  The statute declares that "[a]ll
contracts," not just some, are "void," not voidable, if those
contracts are founded "in whole or in part on a gambling
consideration."
The Jefferson County Racing Association, Inc. ("JCRA"),
argues that when a customer buys a cybertime card to engage in
the MegaSweeps activity, that customer enters into a contract
with JCRA.  The back side of the card states: "All rules and
regulations are available at Quincy's Cashier locations," and
"Your participation in this program is your acceptance and
agreement with these rules."  Rule 8 of those rules is an
arbitration clause.  However, the customer does not receive or
see this card until after he has purchased it and has thereby
entered into this alleged contract.
Even if a contract is formed between JCRA and the
customer, and even if that contract does include the posted
rules -- including the arbitration clause -- that contract is,
1061398
28
according to § 8-1-150(a), "void."  If, as JCRA insists, the
arbitration clause is part of that (void) contract, then the
arbitration clause is just as void as the rest of the
contract.  As distinguished from a voidable contract, a void
contract is the same as a nonexistent contract. Mason v.
Acceptance Loan Co., 850 So. 2d 289, 295 (Ala. 2002).  JCRA
insists that the arbitration clause in the contract confers
upon the arbitrator the authority to decide this dispute.  But
a void or nonexistent contract cannot confer any authority
upon anyone.
JCRA relies upon Buckeye Check Cashing, Inc. v. Cardegna,
546 U.S. 440 (2006), for the proposition that an arbitrator,
not a court, must decide a challenge to the validity and
enforcement of a contract containing an arbitration clause.
Buckeye Check Cashing involved an allegedly illegal payday
loan, but the illegality of the loan, including the rate of
interest actually charged, was the disputed issue.  There is
no dispute in this case as to the illegality of the MegaSweeps
scheme.  Only two years ago, in Barber v. Jefferson County
Racing Association, Inc., 960 So. 2d 599 (Ala. 2006), this
Court clearly and unanimously held that the MegaSweeps scheme
constitutes illegal gambling.  The illegality of the
1061398
29
MegaSweeps scheme is therefore not an issue on the table for
either an arbitrator or a trial court to decide.
The main opinion contends that, although the Court in
Barber held that the MegaSweeps scheme is an illegal gambling
operation, it did not address the effect of that determination
upon the legality or voidness of a MegaSweeps contract.  This
is a distinction with no significance.  The Court need not
specifically declare a gambling contract void, because the
Legislature has already done so.  Section 8-1-150(a) is clear:
"All contracts founded in whole or in part on a gambling
consideration 
are 
void." 
 
The 
logic 
is 
simple 
and
unmistakable: All gambling contracts are void; MegaSweeps
contracts are gambling contracts; therefore,  MegaSweeps
contracts are void.
JCRA contends that even if the contract to purchase a
MegaSweeps card is a void contract, the arbitration clause is
nonetheless severable from the rest of the contract.  JCRA's
position is internally inconsistent: It has strenuously argued
that the posted rules are part of the MegaSweeps contract, but
it now wants this Court to hold that some of the rules, but
not all of the rules, are part of the contract.  But § 8-1-
150(a) is explicit on this point.  It declares that "[a]ll
1061398
30
contracts founded in whole or in part on a gambling
consideration are void." (Emphasis added.) Had the Legislature
intended that some provisions of those contracts not be void,
it could have said so in clear terms, but its language is all-
encompassing and unmistakable.  And subsection (a) continues:
"Any person who has paid any money or delivered any
thing of value lost upon any game or wager may
recover such money, thing, or its value by an action
commenced within six months from the time of such
payment or delivery."
§ 8-1-150(a)(emphasis added).  The Legislature has clearly
provided that the customer's remedy for losses in an illegal
gambling activity is an action in court, not arbitration
provided by a clause in a contract that is void ab initio.
Nevertheless, the main opinion insists that the United
States Supreme Court noted in Buckeye Check Cashing that
"unless the challenge is to the arbitration clause itself, the
issue of the contract's validity is considered by the
arbitrator in the first instance."  546 U.S. at 445-46.
However, Buckeye Check Cashing did not extend to a fact
situation like the one here.  In determining what kinds of
contracts must be submitted to arbitration, the Supreme Court
stated that "[t]here can be no doubt that 'contract' as used
this last time [referring to its use in Prima Paint Corp. v.
1061398
31
Flood & Conklin Mfg. Co., 388 U.S. 395. 412-13 (1967),] must
include contracts that later prove to be void." Buckeye Check
Cashing, 546 U.S. at 448.  In this case, the MegaSweeps
contract has already been proven void by the legislative
declaration followed by the judicial determination.  I
therefore believe that this case can be distinguished from
Buckeye Check Cashing. 
Finally, I note that the posted Quincy's MegaSweeps
Official Sweepstakes Rules declare themselves to be "[v]oid
where prohibited by law."  This declaration is found at the
beginning of the rules in Paragraph 1 and appears to apply to
the entire rules.  Paragraph 2 provides that "[t]he
Sweepstakes is subject to all federal, state and local laws
and regulations, including without limitation Ala. Code § 8-
19D-1 et seq. and Ala. Atty. Gen. Ops. 1999-28 and 2005-173."
The rules contain no severability clause or any other language
that would suggest that the void-where-prohibited-by-law
provision applies to anything less than the entire set of
rules.  If, as JCRA insists, the rules are part of the
contract, then by operation of the rules themselves, the
arbitration clause is void.
1061398
32
Because I believe that a void and illegal contract cannot
confer authority upon an arbitrator, and because I believe
that the facts of this case –- a "contract" consisting of a
card the customer receives only after paying for it, a
contract that allegedly incorporates rules that declare
themselves "[v]oid where prohibited by law," and a statute
that not only declares such contracts void but also provides
that an action in court is the customer's remedy -- present a
situation not contemplated in Buckeye Check Cashing, I dissent
as to that holding of the majority.  
However, when a trial court orders a case to arbitration,
the court should stay the proceedings rather than dismiss the
case, so that the court can reassume jurisdiction if the
parties change their minds about arbitration, if the
arbitration process breaks down, or if a party needs to
enforce an arbitration agreement or award in court, or to toll
the statute of limitations.  Accordingly, I concur with the
majority's ruling that the trial court exceeded its discretion
in dismissing Johnson's complaint, and I agree with the
majority that the proper course would have been for the trial
court to stay the action pending arbitration.