BigBen 1613, LLC v. Belcaro Group, Inc.

Filing 69

ORDER by Judge Philip A. Brimmer on 09/06/2018, re: 24 MOTION to Compel Arbitration and Dismiss the Complaint Under Federal Rules of Civil Procedure 9(b) and 12(b)(6) filed by Belcaro Group, Inc. is GRANTED in part and DENIED< /b> in part as stated in this order. ORDERED that the parties shall proceed with arbitration in accordance with the arbitration agreement. ORDERED that this case shall be administratively closed, subject to reopening by any party upon a showing of good cause, pursuant to D.C.COLO.LCivR 41.2. ORDERED that, not later than twenty days after the completion of the arbitration proceeding, the parties shall file a status report advising the Court whether they believe the case should be reopened for good cause for any further proceedings in this Court or whether the Case may be dismissed. (sphil, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 17-cv-00272-PAB-STV
BIGBEN 1613, LLC, a Florida limited liability company,
Plaintiff,
v.
BELCARO GROUP, INC., d/b/a ShopAtHome.com,
Defendant.

ORDER

This matter is before the Court on Defendant Belcaro Group, Inc.’s Motion to
Compel Arbitration and Dismiss the Complaint Under Federal Rules of Civil Procedure
9(b) and 12(b)(6) [Docket No. 24]. The Court has jurisdiction pursuant to 28 U.S.C.
§ 1332.
I. BACKGROUND
Defendant operates ShopAtHome.com, a website that provides consumers with
cash back on qualifying purchases made through participating online retailers. Docket
No. 1 at 2-3, ¶¶ 10-12. In order to take advantage of defendant’s cash-back portal, an
individual must create an account on ShopAtHome.com and “purchase items by linking
through [defendant’s] website to the applicable online store.” Id. at 3, ¶ 13.
Plaintiff has held an account on ShopAtHome.com since late 2014. Id. at 4,
¶ 21. On Friday, November 25, 2016, ShopAtHome.com advertised twelve percent
cash back on online purchases from Walmart made via ShopAtHome.com. Id. at 4,

¶ 22. Relying on this cash back offer, plaintiff purchased approximately $5,400,000 in
products from www.Walmart.com through the ShopAtHome.com website. Id., ¶ 23.
Shortly thereafter, defendant froze plaintiff’s ShopAtHome.com account. Id. at 4-5,
¶ 24. Defendant sent plaintiff an email stating that defendant would seize the unpaid
balance in plaintiff’s cash back account because plaintiff had violated
www.Walmart.com’s prohibition against “purchases made for resale or commercial use
of any kind.” Id. at 5, ¶ 26.
Plaintiff filed this lawsuit on January 27, 2017 asserting Colorado state law
claims for unjust enrichment, conversion, civil theft, and violation of the Colorado
Consumer Protection Act, Colo. Rev. Stat. § 6-1-101 et seq. Id. at 6-8. On March 8,
2017, defendant moved to compel arbitration or, alternatively, to dismiss the complaint
under Federal Rules of Civil Procedure 9(b) and 12(b)(6). Docket No. 24. Plaintiff filed
a response to the motion on March 29, 2017, Docket No. 28, to which defendant replied
on April 12, 2017. Docket No. 31.
II. LEGAL STANDARD
Defendant moves to compel arbitration pursuant to an arbitration provision on
the Terms and Conditions (“T&C”) page of the ShopAtHome.com website. See Docket
No. 24 at 6. The Federal Arbitration Act (“FAA”) “manifests a liberal federal policy
favoring arbitration.” Comanche Indian Tribe v. 49, L.L.C., 391 F.3d 1129, 1131 (10th
Cir. 2004) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)). 1

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There appears to be no dispute that the FAA governs the arbitration agreement
in this case. See Docket No. 24 at 6-7 (citing rules under FAA). The arbitration
provision expressly provides that, “[b]ecause the Service(s) provided . . . by
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Consequently, the Court must “resolve ‘any doubts concerning the scope of arbitrable
issues . . . in favor of arbitration.’” P & P Industries, Inc. v. Sutter Corp., 179 F.3d 861,
866 (10th Cir. 1999) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24-25 (1983)). “In addition, this liberal policy ‘covers more than simply the
substantive scope of the arbitration clause,’ and ‘encompasses an expectation that
[arbitration] procedures will be binding.’” Id. (citation omitted).
“[A]lthough the presence of an arbitration clause generally creates a presumption
in favor of arbitration, this presumption disappears when the parties dispute the
existence of a valid arbitration agreement.” Bellman v. i3Carbon, LLC, 563 F. App’x
608, 613 (10th Cir. 2014) (unpublished) (citations om itted). Determining whether a
dispute is subject to arbitration “is similar to summary judgment practice.” Id. at 612
(quoting Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1261 (10th Cir. 2012)). T he
party moving to compel arbitration must present “evidence sufficient to demonstrate the
existence of an enforceable agreement.” Id. The burden then shifts to the nonmoving
party “to raise a genuine dispute of material fact regarding the existence of an
agreement.” Id.
Defendant also moves to dismiss plaintiff’s claims under Federal Rules of Civil
Procedure 9(b) and 12(b)(6). See Docket No. 24 at 9. To survive a motion to dismiss
under Rule 12(b)(6), a complaint must allege enough factual matter that, taken as true,
makes the plaintiff’s “claim to relief . . . plausible on its face.” Khalik v. United Air Lines,
671 F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
ShopAtHome.com concerns interstate commerce, the [FAA], not state arbitration law,
shall govern the arbitrability of all Disputes.” Docket No. 24-2 at 13.
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570 (2007)). “[W]here the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged–but it has not shown–that
the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal
quotation marks and alteration marks omitted); see also Khalik, 671 F.3d at 1190 (“A
plaintiff must nudge [his] claims across the line from conceivable to plausible in order to
survive a motion to dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint’s
allegations are “so general that they encompass a wide swath of conduct, much of it
innocent,” then plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191
(quotations omitted). Thus, even though modern rules of pleading are somewhat
forgiving, “a complaint still must contain either direct or inferential allegations respecting
all the material elements necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (alteration m arks
omitted ).
III. ANALYSIS
The Court begins by considering whether plaintiff’s claims are subject to
arbitration. To meet its initial burden of demonstrating an enforceable arbitration
agreement, defendant has attached copies of the Terms and Conditions from the
ShopAtHome.com website, Docket Nos. 24-2, 31-2, along with declarations from
defense counsel Luke Connelly and Belcaro Group’s Chief Financial Officer, Rebecca
L. Shepherd, attesting to the copies’ authenticity. Docket Nos. 24-1, 31-1. Defendant
argues that plaintiff consented to the Terms and Conditions when it registered an
account on the ShopAtHome.com website. Docket No. 24 at 6-8; Docket No. 24-2 at 1

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(“By using the ShopAtHome.com Site . . . , you agree that you have read and you
understand, and consent to the following Terms and Conditions . . . .”); see also Docket
No. 1 at 4, ¶ 21 (alleging that plaintiff has maintained an account on
www.shopathome.com since late 2014).
Plaintiff opposes defendant’s motion to compel arbitration on two grounds. First,
plaintiff argues that the motion is procedurally defective because it relies on extrinsic
evidence that was not properly authenticated or referenced in the complaint. Docket
No. 28 at 3-7. Second, plaintiff contends that the arbitration agreement is
unenforceable. Id. at 7.
A. Terms and Conditions
Plaintiff asserts that defendant’s motion to compel lacks evidentiary support
because the Terms and Conditions submitted by defendant have not been properly
authenticated and are otherwise inadmissible to support a Rule 12(b)(6) motion to
dismiss. Docket No. 28 at 3-6. The Court finds both arguments unpersuasive.
In conjunction with its motion to compel arbitration, defendant filed a declaration
from one of its attorneys, Luke Connelly, stating that the attached copy of
ShopAtHome.com’s Terms and Conditions was a “true and correct copy” of the terms
and conditions “in effect at the time of the alleged conduct described in the Complaint.”
Docket No. 24-1 at 1, ¶ 3. Plaintiff argues that this declaration is insufficient to
authenticate the Terms and Conditions because it constitutes inadmissible hearsay and
is not based on personal knowledge. Docket No. 28 at 3-4. Although the Court agrees
that Mr. Connelly’s declaration lacks foundation, defendant has submitted a second
copy of the Terms and Conditions along with a declaration from its Chief Financial
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Officer, Rebecca Shepherd, attesting to the document’s authenticity. See Docket Nos.
31-1, 31-2. Ms. Shepherd’s declaration is expressly “based on personal knowledge,”
Docket No. 31-1 at 1, and thus does not suf fer from the same lack of foundation as the
Connelly declaration.
Plaintiff argues that it is “inappropriate” for defendant to “attempt to remedy the
defects of the Connelly [Declaration] in its reply.” Docket No. 28 at 3 n.2. The Court
disagrees for two reasons. First, it is not clear that defendant was required to
authenticate the Terms and Conditions at all, given that plaintiff does not challenge the
authenticity of the copy submitted with defendant’s motion to compel. See Docket No.
28 at 2 n.1 (“Plaintiff does not, through this response, suggest that the Terms and
Conditions are not binding upon it, merely that the Defendant is using improper
procedural tactics to introduce it . . . .”); id. at 7 (reiterating that plaintiff objects to the
Terms and Conditions “solely on procedural grounds”); see also Umbenhower v.
Copart, Inc., 2004 WL 2660649, at *6 (D. Kan. Nov. 19, 2004) (holding that defendants
were not required to authenticate copy of arbitration agreement where plaintiff “ha[d]
not submitted any evidence disputing the authenticity of the agreement that defendants
have submitted with their motion to compel”); cf. GFF Corp. v. Associated Wholesale
Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997) (court m ay consider a document
referred to in the complaint in resolving a motion to dismiss where the document is
central to the plaintiff’s claim and the parties do not dispute the docum ent’s
authenticity). Second, the only case that plaintiff relies upon to support its argument
does not establish that a party may never authenticate a document through a

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declaration submitted with a reply. In Hendrickson v. Doyle, 150 F. Supp. 3d 1233 (D.
Colo. 2015), the court declined to consider authentication af fidavits submitted with
plaintiff’s reply after finding that plaintiff’s counsel had committed several procedural
errors with respect to plaintiff’s summary judgment motion and exhibits. Id. at 1235. In
declining to consider the affidavits, however, the court noted that it would have been
willing to “forgive an isolated oversight corrected through a Reply brief (e.g., explicable
failure to submit the proper authentication for one or two exhibits).” Id. Defendant’s
failure in this case to properly authenticate the Terms and Conditions in its motion to
compel is more akin to an “isolated oversight” than to “[t]he haphazard way in which
[plaintiff’s counsel] went about filing the [summary judgment] motion and exhibits” in
Hendrickson. Id. at 1234-35. Accordingly, the Court declines to ignore the Terms and
Conditions on this basis alone.
Plaintiff argues in the alternative that a court may not rely on documents outside
the complaint to resolve a Rule 12(b)(6) motion to dismiss without converting the motion
into a motion for summary judgment. See Docket No. 28 at 4-5 & n.3. This may be a
correct statement of the law with regard to motions properly brought under Rule
12(b)(6). However, motions to compel arbitration are resolved under a summaryjudgment-type framework. See Hancock, 701 F.3d at 1261 (stating that the framework
applicable to motions to compel arbitration “is similar to summary judgment practice”);
Clowdis v. Colorado Hi-Tec Moving & Storage, Inc., No. 11-cv-00036-CMA-KMT, 2011
WL 5882191, at *4 & n.4 (D. Colo. Nov. 3, 2011) (declining to apply Rule 12(b)(6)
dismissal standard to motion to compel arbitration based on finding that courts in this

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district “approach[] disputes over whether the parties have agreed to arbitrate by
applying a standard similar to that governing motions for summary judgment” (internal
quotation marks omitted)), recommendation adopted, 2012 WL 895701 (D. Colo. Mar.
15, 2012). Under that framework, the Court may consider the Terms and Conditions
submitted by defendant in determining whether there is a valid and enforceable
agreement to arbitrate. See Hancock, 701 F.3d at 1261-64 (considering declarations
from AT & T employees to determine whether plaintiffs agreed to terms of service
containing forum selection and arbitration clauses); Davis v. USA Nutra Labs, 303 F.
Supp. 3d 1183, 1191 (D.N.M. 2018) (relying on screenshots, Groupon’s Terms of Use,
and declaration regarding screenshots and Terms of Use to find that plaintiff had
agreed to arbitration); Patel v. Jack in the Box Inc., 2017 WL 541532, at *2 (S.D. Cal.
Jan. 27, 2017) (finding that defendant had “satisfied its initial burden of showing an
arbitration agreement exist[ed]” by producing an arbitration agreement signed by the
plaintiff in conjunction with its motion to compel); see also Nelson v. Tamko Building
Prods., Inc., 2015 WL 3649384, at *2 (D. Kan. June 11, 2015) (den ying motion to
compel arbitration where defendant had not “submitted evidence sufficient to establish
an enforceable agreement to arbitrate”).
The Court therefore finds that neither of the “procedural defects” identified by
plaintiff is fatal to defendant’s motion to compel arbitration.
B. Enforceability
Plaintiff argues that, even if defendant’s motion is not procedurally defective,
defendant cannot demonstrate an enforceable arbitration agreement. Docket No. 28 at

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7. Specifically, plaintiff contends that the arbitration agreement is illusory because the
Terms and Conditions provide that “ShopAtHome.com reserves the right to revise these
Terms and Conditions, at its sole and absolute discretion, by updating this posting.” Id.
Defendant responds that it is the arbitrator, not the court, “w ho must decide whether the
contract as a whole is unenforceable.” Docket No. 31 at 3.
The parties’ dispute is resolved by the Tenth Circuit’s decision in In re Cox
Enterprises, Inc. Set-top Cable Television Box Antitrust Litigation , 835 F.3d 1195 (10th
Cir. 2016). There, the court declined to resolve the plaintiffs’ argument that the
defendant’s promise to arbitrate was illusory “because the argument amount[ed] to a
challenge to the contract as a whole.” In re Cox, 835 F.3d at 1199. Relying on
Supreme Court precedent for the proposition that “a challenge to the validity of the
contract as a whole, and not specifically to the arbitration clause, must go to the
arbitrator,” the court determined that the plaintiffs’ “illusory” argument challenged the
entire Internet-service agreement because, under general contract law principles, “the
arbitration provision would be unenforceable only if the entire agreement [was]
unenforceable.” In re Cox, 835 F.3d at 1210-11. 2
Like in In re Cox, it is “undeniable that [plaintiff’s] ‘illusory’ argument attacks [the
Terms and Conditions in their entirety], rather than just the arbitration provisions,

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The court recognized an exception to this general rule where a state’s laws
require each provision of a contract to “be supported by consideration expressed in that
provision.” In re Cox, 835 F.3d at 1212. In such circumstances, “a plaintiff’s “‘illusory’
argument could apply to the arbitration agreement alone and [a] court would not be
precluded by [Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395
(1967)] from addressing the argument.” In re Cox, 835 F.3d at 1212. Like the plaintiffs
in In re Cox, however, plaintiff has not shown that Colorado law compels such a result.
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because the argument is based on language outside those provisions.” 835 F.3d at
1211. Specifically, plaintiff relies on language found in the introductory section of the
Terms and Conditions. See Docket No. 28 at 7 (quoting Docket No. 24-2 at 1).
Because this language applies to the parties’ agreement as a whole and not merely to
the arbitration agreement, plaintiff’s “illusory” argument “must be resolved by the
arbitrator.” In re Cox, 835 F.3d at 1211 (finding that plaintiffs’ “illusory” argument was
subject to arbitration where the language upon which plaintiffs relied in making their
argument was contained in the introduction to the parties’ agreement).3
C. Application of Arbitration Agreement to Plaintiff’s Claims
Because defendant has presented “evidence sufficient to demonstrate the
existence of an enforceable [arbitration] agreement,” Bellman, 563 F. App’x at 612, the
Court need only determine whether plaintiff’s claims fall within the scope of that
agreement.4 “To determine whether a particular dispute falls within the scope of an
agreement’s arbitration clause, a court should undertake a three-part inq uiry.”
Cummings v. FedEx Ground Package Sys., Inc., 404 F.3d 1258, 1261 (10th Cir. 2005)
(quoting Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc. , 252 F.3d 218,

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In arguing that the arbitration agreement is illusory, plaintiff cites Grosvenor v.
Qwest Corp., 854 F. Supp. 2d 1021 (D. Colo. 2012). As def endant points out, however,
both Grosvenor and the Tenth Circuit case on which it relies have been superseded by
In re Cox. See Docket No. 31 at 5; see also In re Cox, 835 F.3d at 1212 (noting that
Dumais v. American Golf Corp., 299 F.3d 1216 (10th Cir. 2002), was not binding
precedent on the issue of whether a court may consider “illusory” arguments going to a
contract as a whole because the case did not “consider[], or even cite[], Prima Paint or
[Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)]”).
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Plaintiff does not argue that its claims fall outside the scope of the arbitration
agreement. The Court undertakes this inquiry in the interest of completeness.
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224 (2d Cir. 2001)). First, “a court should classify the particular clause as either broad
or narrow.” Louis Dreyfus Negoce S.A., 252 F.3d at 224. If the arbitration clause is
narrow, “the court must determine whether the dispute is over an issue that is on its
face within the purview of the clause, or over a collateral issue” that will generally not be
arbitrated. Id. “Where the arbitration clause is broad, there arises a presum ption of
arbitrability and arbitration of even a collateral matter will be ordered if the claim alleged
implicates issues of contract construction or the parties’ rights and obligations under it.”
Id. “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor
of arbitration, whether the problem at hand is the construction of the contract language
itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
The arbitration agreement in this case applies to any “Dispute” between the user
and ShopAtHome.com. Docket No. 24-2 at 12, ¶ 12(a). “Dispute” is defined as
any dispute, claim, or controversy between you and ShopAtHome.com
regarding any aspect of your relationship with ShopAtHome.com, whether
based in contract, statute, regulation, ordinance, tort (including, but not
limited to, fraud, misrepresentation, fraudulent inducement, negligence, or
any other intentional tort), or any other legal and equitable theory, and
includes the validity, enforceability or scope of this Dispute Resolution
provision (with the exception of the enforceability of the class action
waiver clause provided in this paragraph).
Id., 12(b).5 Because the arbitration provision does not impose any limits on the types of
claims that may be subject to arbitration, the Court finds it to be broad. See Sanchez v.
Nitro-Lift Techs., L.L.C., 762 F.3d 1139, 1146 (10th Cir. 2014) (f inding clause requiring
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The arbitration clause further states that “‘ShopAtHome.com’ means Belcaro
Group, Inc., d/b/a ShopAtHome.com and its parents, subsidiaries and affiliated
companies . . . .” Id.
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arbitration of “[a]ny dispute, difference or unresolved question between” the parties to
be broad); Louis Dreyfus Negoce S.A., 252 F.3d at 225 (noting that “expansive
language will generally suggest a broad arbitration clause”). Accordingly, a
presumption of arbitrability applies that may be “overcome only if [the Court] can say
‘with positive assurance that the arbitration clause is not susceptible of an interpretation
that covers the asserted dispute.’” Soc’y of Professional Engineering Employees in
Aerospace v. Spirit Aerosystems, Inc., 681 F. App’x 717, 721 (10th Cir. 2017)
(unpublished) (quoting AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,
650 (1986)). Here, all of plaintiff’s claims relate to its use of ShopAtHome.com. The
Court therefore cannot “say with positive assurance” that the arbitration provision does
not cover the parties’ dispute. The Court will therefore administratively close this case
while plaintiff’s claims are resolved in arbitration.6
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendant Belcaro Group, Inc.’s Motion to Compel Arbitration
and Dismiss the Complaint Under Federal Rules of Civil Procedure 9(b) and 12(b)(6) is
GRANTED in part and DENIED in part as stated in this order. It is further
ORDERED that the parties shall proceed with arbitration in accordance with the
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Because plaintiff’s claims are subject to arbitration, the Court will not determine
whether they should be dismissed on the merits under Fed. R. Civ. P. 12(b)(6). In a
case involving a written arbitration agreement between the parties that encompasses
the disputes at issue in the litigation, section 3 of the FAA, 9 U.S.C. § 3, instructs courts
to stay the action “until such arbitration has been had in accordance w ith the terms of
the agreement.” The Tenth Circuit has described administrative closure as being “the
practical equivalent of a stay.” Quinn v. CGR, 828 F.2d 1463, 1465 & n.2 (10th Cir.
1987).
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arbitration agreement. It is further
ORDERED that this case shall be administratively closed, subject to reopening
by any party upon a showing of good cause, pursuant to D.C.COLO.LCivR 41.2. It is
further
ORDERED that, not later than twenty days after the completion of the arbitration
proceeding, the parties shall file a status report advising the Court whether they believe
the case should be reopened for good cause for any further proceedings in this Court or
whether the Case may be dismissed.

DATED September 6, 2018.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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