James et al v. Venture Home Solar, LLC et al
Filing
48
RULING (see attached) denying 44 Plaintiffs' Motion for Reconsideration or, Alternatively, for Certification of Appeal to the Second Circuit. Signed by Judge Charles S. Haight, Jr. on February 6, 2024. (Dorais, L.)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
KURT JAMES, JULIE STEWART, and
ZAKER AHMED, on behalf of themselves
and all others similarly situated,
Civil Action No.
3:21 - CV - 1306 (CSH)
Plaintiffs,
v.
VENTURE HOME SOLAR, LLC, and
VENTURE SOLAR COMMERCIAL, LLC,
FEBRUARY 6, 2024
Defendants.
RULING ON PLAINTIFFS’ MOTION FOR RECONSIDERATION OR
ALTERNATIVELY, FOR CERTIFICATION OF APPEAL TO THE SECOND CIRCUIT
[Doc. 44]
HAIGHT, Senior District Judge:
I. INTRODUCTION
In this purported class action involving claims by residential homeowners against two
companies that marketed and installed solar panel systems, the principal claim is that Defendants’
solar panels did not produce the promised savings in electrical bills. Two named Plaintiffs, Julie
Stewart and Zaker Ahmed, assert claims against Defendants Venture Home Solar, LLC (“Venture
Home”) and Venture Solar Commercial, LLC (“Venture Solar”), on their own behalf with respect
to the homes they owned, and also as purported representatives of a class of similarly situated
homeowners and commercial entities in six states, including Connecticut, their state of citizenship,
and five contiguous states.1 Doc. 1 (“Complaint”), ¶¶ 1, 9.
1
The First Claim in the Complaint asserts a violation of the Connecticut Unfair Trade
Practices Act (“CUTPA”), Conn. Gen. Stat. § 42-110a, et seq., alleging that Venture Home “falsely
1
In a Ruling filed on June 8, 2022, and reported at 607 F.Supp.3d 182 (D. Conn. 2022) (“the
June 8 Ruling”), familiarity with which is assumed, the Court granted Defendants’ motion to
compel Plaintiffs Stewart and Ahmed to submit their legal disputes with Venture Home to binding
arbitration.2 Plaintiffs opposed that motion on the ground that they were not contractually bound
to arbitrate their disputes with Defendants. The Court held that Plaintiffs Stewart and Ahmed were
equitably estopped from avoiding arbitration of their individual claims against Venture Home,
compelled arbitration of those claims, and stayed the action (including the purported class action)
as to all other parties, pending completion of the arbitration proceedings. 607 F. Supp. 3d at 192.
Plaintiffs now move [Doc. 44] for reconsideration of the June 8 Ruling, under Local Civil
Rule 7( c), or, in the alternative, for certification of the June 8 Ruling for interlocutory appeal to the
Second Circuit, pursuant to 28 U.S.C. § 1292(b). Plaintiffs base their motion principally upon the
promised Plaintiffs and the members of the Class that by installing and using a solar panel system
marketed by Defendants their electricity usage bills would be fully or substantially offset and they
would pay little or no money for electricity usage to their incumbent electricity provider.” Doc. 1,
¶ 53. In addition to violation of CUTPA, the Complaint also asserts claims for negligent
misrepresentation (Second Claim) and unjust enrichment (Third Claim).
The states of citizenship of the purported class members include Connecticut, New York,
New Jersey, Rhode Island, Massachusetts, and New Hampshire. Id. ¶ 9.
2
As explained in the June 8 Ruling, Defendant Venture Solar allegedly “marketed solar
panel systems to commercial entities.” 607 F. Supp. 3d at 183 (emphasis in original) (quoting Doc.
1, ¶ 11). Therefore, that Defendant was “not involved in any way with the three individual
Plaintiffs, who are residential owners.” Id. at 183-84. “In consequence, [that] Ruling turn[ed]
upon the relationships between the . . . individual Plaintiffs and Defendant Venture Home.” Id. at
184.
Also, in the June 8 Ruling, the Court dismissed as moot Defendants’ “Motion to Compel
Arbitration” [Doc. 31] as against Plaintiff Kurt James because that Plaintiff had “conceded through
counsel that his claims against Defendants [were] subject to arbitration in the manner provided in
the arbitration agreement between Plaintiff James and Venture.” Id. at 192.
2
Supreme Court’s recent decision in Morgan v. Sundance, Inc., 596 U.S. 411 (2022), arguing that the
Court “failed to consider the import” of that decision. Doc. 44, at 1. Defendants oppose Plaintiffs’
motion for reconsideration based on Plaintiffs’ untimeliness in filing and failure to present a
sufficient basis for reconsideration. Doc. 46.
In an electronic order [Doc. 45], the Court granted Plaintiffs’ application to consider their
reconsideration motion, otherwise untimely, on its merits nunc pro tunc.
For the reasons that
follow, the motion for reconsideration will be denied on its merits.
II. STANDARD FOR RECONSIDERATION
“A motion for reconsideration is committed to the sound discretion of the court.” Sparano
v. JLO Auto., Inc., No. 3:19-CV-00681 (VAB), 2021 WL 4810577, at *1 (D. Conn. Oct. 15, 2021)
(citation omitted). “The standard for granting [a motion for reconsideration] is strict.” Shrader v.
CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)); see also D. Conn. Civ. R. 7(c)(1) (“Motions
for reconsideration shall not be routinely filed and shall satisfy the strict standard applicable to such
motions.”). The court should only grant reconsideration if “the moving party can point to
controlling decisions or data that the court overlooked—matters, in other words, that might
reasonably be expected to alter the conclusion reached by the court.” Shrader, 70 F.3d at 257 (citing
Schonberger v. Serchuk, 742 F. Supp. 108, 119 (S.D.N.Y. 1990)). See also Adams v. United States,
686 F. Supp. 417, 418 (S.D.N.Y.1988) (collecting cases). The three primary grounds “justifying
reconsideration are an intervening change of controlling law, the availability of new evidence, or
the need to correct a clear error or prevent manifest injustice.” Virgin Atl. Airways, Ltd. v. Nat'l
Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (citations and internal quotation marks omitted).
Additionally, “a motion to reconsider should not be granted where the moving party seeks
3
solely to relitigate an issue already decided.” Shrader, 70 F.3d at 257. In other words, a motion for
reconsideration is “not a vehicle for relitigating old issues, presenting the case under new theories,
securing a rehearing on the merits, or otherwise taking a ‘second bite at the apple’....” Analytical
Survs., Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (quoting Sequa Corp. v. GBJ
Corp., 156 F.3d 136, 144 (2d Cir.1998)), as amended (July 13, 2012). See also, e.g., Doe v.
Winchester Bd. of Educ., No. 10-CV-1179 (VAB), 2017 WL 662898, at *2 (D. Conn. Feb. 17, 2017)
(“A motion for reconsideration is not a means to reargue those issues already considered when a
party does not like the way the original motion was resolved.”) (citation omitted).
“A motion for reconsideration is committed to the sound discretion of the court.” Dingwell
v. Cossette, No. 3:17-CV-01531(KAD), 2021 WL 413619, at *1 (D. Conn. Feb. 5, 2021) (citation
and internal quotation marks omitted). Therefore, “[d]enials of motions for reconsideration are
reviewed only for abuse of discretion.” Analytical Survs., 684 F.3d at 52 (quoting Empresa Cubana
del Tabaco v. Culbro Corp., 541 F.3d 476, 478 (2d Cir. 2008) (per curiam)). “Reconsideration
motions are ‘a mechanism for extraordinary judicial relief invoked only if the moving party
demonstrates exceptional circumstances.’ ” Wachovia Mortg., FSB v. Toczek, 841 F. App'x 267, 272
(2d Cir. 2021) (quoting Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008)). See also
Mirlis v. Greer, No. 3:18-CV-2082 (MPS), 2021 WL 1711649, at *2 (D. Conn. Apr. 30, 2021).
III. DISCUSSION
A. Morgan v. Sundance, Inc., 596 U.S. 411 (2022)
In seeking reconsideration in the case at bar, Plaintiffs regard the Supreme Court’s decision
in Morgan v. Sundance, Inc., 596 U.S. 411 (2022), as a “controlling decision” this Court
“overlooked,” in that “the Court failed to consider the import” of Morgan and “otherwise failed to
4
properly apply the relevant standards for determining whether a party should be compelled to
arbitration against a party.” Doc. 44, at 1.
In Morgan, the Supreme Court issued “[a] directive to a federal court to treat arbitration
applications ‘in the manner provided by law’ for all other motions,” which “is simply a command
to apply the usual federal procedural rules, including any rules relating to a motion’s timeliness.”
596 U.S. at 419. “Or put conversely, it is a bar on using custom-made rules, to tilt the playing field
in favor of (or against) arbitration.” Id.
As summarized by Justice Kagan for a unanimous Court:
The policy is to make “arbitration agreements as enforceable as other contracts, but
not more so.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404,
n. 12 (1967). Accordingly, a court must hold a party to its arbitration contract just as
the court would to any other kind. But a court may not devise novel rules to favor
arbitration over litigation. See Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213,
218–221 (1985). If an ordinary procedural rule—whether of waiver or forfeiture or
what-have-you—would counsel against enforcement of an arbitration contract, then
so be it. The federal policy is about treating arbitration contracts like all others, not
about fostering arbitration.
Id. at 418 (lateral citations omitted).
In the Morgan case, petitioner Robyn Morgan was employed as an hourly employee at a
Taco Bell franchise owned by respondent Sundance. In applying for employment, Morgan signed
an agreement to arbitrate any employment dispute. Thereafter, Morgan filed a nationwide collective
action against Sundance for violating federal law regarding overtime payment. Failing to invoke the
arbitration contract, Sundance defended against Morgan’s action in court, filed an unsuccessful
motion to dismiss, and engaged in failed mediation. Then, eight months after Morgan commenced
the action, Sundance moved to stay the litigation and compel arbitration under the Federal
Arbitration Act (“FAA”). Morgan opposed the stay, asserting that Sundance had waived its right
5
to arbitrate by litigating for such a lengthy period. The District Court applied Eighth Circuit
precedent, which held that “a party waives its contractual right to arbitration if it knew of the right;
acted inconsistently with that right; and . . . prejudiced the other party by its inconsistent actions.”
596 U.S. at 415 (quoting Erdman Co. v. Phoenix Land & Acquisition, LLC, 650 F.3d 1115, 1117
(8th Cir. 2011)) (internal quotation marks omitted). As recounted by the Supreme Court, the District
Court in Morgan then found the prejudice requirement satisfied and held that a waiver had occurred.
Id.
On appeal, the Eighth Circuit reversed and sent Morgan’s case to arbitration. 992 F.3d at
715.3 The panel majority found that “Morgan was not prejudiced by Sundance's litigation strategy”
where the parties had neither conducted formal discovery nor contested any matters going to the
merits. Id. In the dissent, Judge Colloton raised doubts regarding the Eighth Circuit’s “prejudice
requirement,” noting that “in ordinary contract law, a waiver normally is effective without proof of
consideration or detrimental reliance.” Id. at 716 (citations omitted). He also observed that “some
circuits allow a finding of waiver of arbitration without a showing of prejudice.” Id. at 716–17
(citations omitted).
Because other circuits had rejected the prejudice requirement, the Supreme Court granted
certiorari “to resolve that circuit split.”4 596 U.S. at 416. The Court explained that the “single
3
See Morgan v. Sundance, Inc., 992 F.3d 711 (8th Cir. 2021), cert. granted, 142 S. Ct. 482,
211 L. Ed. 2d 292 (2021), and vacated and remanded, 596 U.S. 411 (2022).
4
Nine circuits, including the Second Circuit, had “invoked ‘the strong federal policy
favoring arbitration’ in support of an arbitration-specific waiver rule demanding a showing of
prejudice.” Morgan, 596 U.S. at 416 n.1 (citing, inter alia, Carcich v. Rederi A/B Nordie, 389 F.2d
692, 696 (2d Cir. 1968)). Two circuits, the Seventh and District of Columbia Circuits, had rejected
the prejudice requirement. Id. n. 2.
6
issue” it had set out to determine was whether the Courts of Appeals, like the Eighth, “may create
arbitration-specific variants of federal procedural rules, like those concerning waiver, based on the
FAA’s ‘policy favoring arbitration.’” Id. at 417 (quoting Moses H. Cone Memorial Hospital v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). The clear answer was, “They cannot.” Id. And
“[f]or that reason, the Eighth Circuit was wrong to condition a waiver of the right to arbitrate on a
showing of prejudice.” Id.
“Outside the arbitration context, a federal court assessing waiver does not generally ask
about prejudice.” Id. at 417. Therefore, by inserting a prejudice requirement into its waiver inquiry,
the appellate court had failed to treat the arbitration application in the “manner provided by law”
for all other motions. Id. at 419. Rather than inserting “a prejudice requirement” into the federal
rule of waiver, by stripping said prejudice requirement, “the Eighth Circuit’s current waiver inquiry
would focus on Sundance’s conduct” to determine whether Sundance had knowingly relinquished
the right to arbitrate by “acting inconsistently with that right.” Id. The Supreme Court thus
remanded the case back to the Court of Appeals to “resolve that question, or (as indicated above)
determine that a different procedural framework (such as forfeiture) is appropriate.” Id. In short,
the Supreme Court solely held that the Eighth Circuit “may not make up a new procedural rule based
on the FAA’s ‘policy favoring arbitration.’” Id.
B. June 8 Ruling and Doe v. Trump Corp., 6 F.4th 400 (2d Cir. 2021)
With respect to the case at bar, the Court did not run afoul of the Supreme Court’s ruling in
Morgan. No place in Morgan did the Supreme Court state that common law principles of contract
may not be applied to determine whether a dispute must be submitted to arbitration. Rather, the
Court barred pro-arbitration variants of federal procedural rules. The Eighth Circuit in Morgan
7
added the factor of “prejudice” to avoid finding waiver of a party’s right to arbitrate. 596 U.S. at
417-18. Citing Second Circuit authority in Carcich v. Rederi A/B Nordie, 389 F.2d 692, 696 (2d Cir.
1968), the Morgan Court explained that the Eighth Circuit had erroneously derived its prejudice
requirement from that “decades-old Second Circuit decision,” which expressly grounded the rule
in the “federal policy favoring arbitration.” Id. at 417. Quoting Carcich with disfavor , the Morgan
court plainly abrogated that court’s statement that “‘[m]ere delay’ in seeking a stay of litigation,
‘without some resultant prejudice’ to the opposing party, ‘cannot carry the day.’” Id. at 417-18
(quoting and abrogating Carcich, 389 F.2d at 696).
In contrast, Morgan did not state that the well-established contract doctrine of equitable
estoppel can never come into play in determining whether a non-signatory and a signatory may be
compelled to arbitrate. Rather, the Morgan Court created “[a] directive to a federal court to treat
arbitration applications ‘in the manner provided by law’ for all other motions . . . a command to
apply the usual federal procedural rules, including any rules relating to a motion’s timeliness.” Id.
at 419 (emphasis added).
Morgan did not, therefore, abrogate the Second Circuit’s holding in Doe v. Trump
Corporation, 6 F.4th 400 (2d Cir. 2021), and Choctaw Generation Limited Partnership v. American
Home Assurance Company, 271 F.3d 403, 404 (2d Cir. 2001)–decisions this Court followed in its
June 8 Ruling. In the June 8 Ruling, the Court applied two general factors, identified by Second
Circuit precedents, relating to equitable estoppel. Equitable estoppel may arise: first, if there exists
“intertwining of contractual obligations;” and second, if there is “a relationship between signatory
and non-signatory parties whose nature justifies the invocation of equitable estoppel as a bar to
8
avoiding arbitration of disputes between them.”5 James v. Venture Home Solar, LLC, 607 F. Supp.
3d 182, 191 (D. Conn. 2022). These typical considerations regarding estoppel are not barred by
Morgan. If anything, such factors provide normal contractual considerations to avoid an unjustified
basis to arbitrate. Put simply, the common law contract principle of estoppel is not enhanced or
altered to favor arbitration.6
As the Second Circuit emphasizes in Doe v. Trump Corporation, “[t]his does not mean . .
. that whenever a relationship of any kind may be found among the parties to a dispute and their
5
In the case at bar, both factors were present. Plaintiffs Julie Stewart and Zaker Ahmed
entered contracts with third-party solar companies with which Venture Home Solar, LLC had
contracted to install solar panels. Doc. 31-2, ¶¶ 6-7. On January 21, 2020, Stewart entered into a
contract with a company called Sunnova Energy Corporation (“Sunnova”) for the installation of
solar panels on her residence. Id. ¶ 7; Doc. 31-4, at 33. Stewart’s contract with Sunnova included
Venture Home Solar, LLC as a subcontractor/installer. Doc. 31-2 (Yackery Decl. ¶¶ 7-8). That
contract specifically stated that “Venture Home Solar, LLC and Sunnova will install a 6.650-kW
solar system on your home.” Doc. 31-4, at 2. The contract further specified that “Venture Home
Solar, LLC will complete the design and engineering drawings for your system, and Sunnova will
review the final design to ensure it meets our high quality standards.” Id.
Similarly, Plaintiff Zaker Ahmed entered into a contract with Sun Power Capital LLC (“Sun
Power”) on or about November 10, 2017, for the installation of solar panels on his residence. Doc.
31-2, ¶ 10; Doc. 31-5, at 28. That contract listed “Venture Solar” as the “Dealer/Installer” of the
solar panel system. Doc. 31-2, ¶ 11; Doc. 31-5, at 2, 16. However, one can logically infer that in
the context of installation of solar panels for residential customers, such as Ahmed,Venture Solar
would actually be “Venture Home Solar, LLC.” Furthermore, the Court takes judicial notice that
the street address for Venture Solar appearing on the contract, 240 Kent Avenue, Brooklyn, New
York [Doc. 31-5, at 16] is consistent with the address of “Venture Home Solar” published on the
internet. See https://www.unitedstatesbd.com/pro/venturehomesolar/venture-home-solar.
6
In general,“[e]quitable estoppel is grounded on notions of fair dealing and good conscience
and is designed to aid the law in the administration of justice where injustice would otherwise
result.” In re Vebeliunas, 332 F.3d 85, 93 (2d Cir. 2003) (quoting In re Ionosphere Clubs. Inc., 85
F.3d 992, 999 (2d Cir.1996)). “The doctrine of equitable estoppel is properly invoked where the
enforcement of the rights of one party would work an injustice upon the other party due to the
latter’s justifiable reliance upon the former’s words or conduct.” Id. (quoting Kosakow v. New
Rochelle Radiology Assocs., P.C., 274 F.3d 706, 725 (2d Cir. 2001)).
9
dispute deals with the subject matter of an arbitration contract made by one of them, that party will
be estopped from refusing to arbitrate.” 6 F.4th at 412 (quoting Ragone v. Atl. Video at Manhattan
Ctr., 595 F.3d 115, 127 (2d Cir. 2010)). Rather than favoring arbitration, the Second Circuit in Doe
applies federal contract principles of equitable estoppel, invoking estoppel where the enforcement
of the rights of one party would work an injustice upon the other party due to the latter’s justifiable
reliance upon the former’s words or conduct. In conducting this analysis, Doe makes arbitration no
more or less likely.
In Morgan, the Supreme Court’s goal was “[t]he policy . . . to make arbitration agreements
as enforceable as other contracts, but not more so.” 596 U.S. at 418 (citation and internal quotation
marks omitted). Specifically, “a court must hold a party to its arbitration contract just as the court
would to any other kind.” Id. The Court’s “sole holding [was] that it may not make up a new
procedural rule based on the FAA’s ‘policy favoring arbitration.’” Id. at 419 (emphasis added). In
fact, the Morgan Court recognized that the Eighth Circuit had attempted to resolve the arbitration
question “as a matter of federal law, using the terminology of waiver,” and “assume[d] without
deciding that they [were] right to do so.” Id. at 416-17. However, it was only the Eighth Circuit’s
“next step in [its] reasoning” – the creation of an arbitration-specific variant based on the FAA’s
policy “favoring arbitration” – that led the Supreme Court to conclude that “the Eighth Circuit was
wrong.” Id. at 417.
In the June 8 Ruling at issue, I explained that even though “a party ... cannot be required to
submit to arbitration any dispute which it has not agreed to submit,” there are “a number of common
law principles of contract law that may allow non-signatories to enforce an arbitration agreement,
including equitable estoppel.” 607 F. Supp. 3d at 186 (quoting Doe v. Trump Corp., 6 F.4th at 412).
10
To invoke equitable estoppel, the non-signatory must satisfy two criteria: (1) “the claims that the
nonsignatory sought to arbitrate were intimately founded in and intertwined with the underlying
contract obligations,” id. at 187 (quoting Doe, 6 F.4th at 412, and Choctaw Generation Ltd., 271
F.3d at 406); and (2) “there must also be a relationship among the parties of a nature that justifies
a conclusion that the party which agreed to arbitrate with another entity should be estopped from
denying an obligation to arbitrate a similar dispute with the adversary which is not a party to the
arbitration agreement,” id. (quoting Doe, 6 F.4th at 412-13).
C. Plaintiffs’ Arguments [Doc. 44-1]
In their Memorandum in support of reconsideration, Plaintiffs point out that it is undisputed
that the arbitration agreements at issue “do not identify [Defendant] Venture Home as a party to any
agreement to arbitrate.” Doc. 44-1, at 3. Therefore, they assert, absent the application of equitable
estoppel in the arbitration context, “there would be no room or occasion to otherwise apply equitable
estoppel here.” Id. at 3-4.
Plaintiffs note that in Morgan, “the Supreme Court held that [a] court must hold a party to
its arbitration contract just as the court would to any other kind of contract[;] [b]ut a court may not
devise novel rules to favor arbitration over litigation.” Id. at 4 (quoting Morgan, 596 U.S. at 412).
Accordingly, the Court “abrogated the Second Circuit’s decision in Carcich v. Rederi A/B Nordie,
389 F.2d 692, 696 (2d Cir. 1968), which the Supreme Court cited as the decision that first engrafted
the nontraditional requirement of prejudice onto a claim of waiver in the arbitration context based
on the ‘overriding federal policy favoring arbitration.’” Id. (quoting Morgan, 596 U.S. at 417).
Plaintiffs note that the “perceived federal policy favoring arbitration has been the central
rationale for courts invoking equitable estoppel in the arbitration context.” Id. at 4 (internal
11
quotation marks omitted) (citing, inter alia, Atricure, Inc. v. Meng, 12 F.4th 516, 529 (6th Cir.
2021)). Furthermore, Plaintiffs believe that Morgan controls the present case because “the courts
invoking equitable estoppel to foster the federal policy favoring arbitration have, in doing so,
jettisoned the element of detrimental reliance, traditionally required for common law equitable
estoppel.”7 Id. at 5 (quoting Atricure, 12 F.4th at 529). After Morgan, Plaintiffs assert, “this is no
longer permissible.” Id.
Plaintiffs conclude that Morgan has, “in effect, abrogated the Second Circuit’s equitable
estoppel arbitration jurisprudence,” which is “similar to its abrogation of the waiver case Carcich.”
Id. at 6. Therefore, they contend that the Court should examine the plain language of the contracts
at issue and hold that Plaintiffs should not be “forced to arbitrate against someone who is ‘not a
party.” Id. at 7. To them, Venture Home is the “wrongdoer”–the one whose “false language or
conduct led another to do that which the other party would not otherwise have done”–and is being
awarded a “get-out-of-jail-free” pass by the Court’s application of the principle of estoppel. Id. at
8 & n. 3 (citations omitted).
Plaintiffs further assert that “in the event this Court is of the view that this [equitable
estoppel] test continues to apply post-Morgan, reconsideration is still warranted because the Court
failed to properly apply the standards for equitable estoppel as it requires detrimental reliance, which
is lacking here and because such a ruling would result in the unfair and absurd result that is contrary
to the very terms of the Sun Power and Sunnova contracts” with Plaintiffs. Id. at 3.
7
Plaintiffs argue that the Court has “fail[ed] to properly apply the reliance requirement that
the courts of the states at issue in this case require for equitable estoppel.” Doc. 44-1, at 7-8
(collecting state law cases from New York, Connecticut, Rhode Island, Massachusetts, and New
Hampshire).
12
Lastly, in the alternative, Plaintiffs state that interlocutory appeal is warranted under 28
U.S.C. § 1292(b) due to the presence of a “controlling question of law.” Id. at 9. In Plaintiffs’
words –
Morgan constitutes an intervening change in the law. The propriety of injecting a
pared-down equitable estoppel doctrine to arbitration agreements is a “pure” question
of law susceptible to interlocutory appeal as “controlling.” See Balintulo v. Daimler
AG, 727 F.3d 174, 186 (2d Cir. 2013). There is substantial ground for difference of
opinion about whether equitable estoppel should ever be applied to compel
arbitration against nonsignatories, and, if so, whether the traditional element of
reliance is required.
Id.
Finally, as to “advanc[ing] the ultimate termination of the litigation,” 28 U.S.C. § 1292(b),
Plaintiffs argue that the Court’s decision “effectively terminates” their ability to “get any effective
relief” in either arbitration (due to the bar against non-parties in the Sun Power agreement) or in
federal court in a class action. Id.
D. Defendant Venture Home’s Opposition [Doc. 46]
Defendants oppose Plaintiffs’ reconsideration motion on multiple grounds. First, they note
that “Plaintiffs rely on a Supreme Court opinion decided before the Court’s Ruling—which Plaintiffs
specifically brought to the Court’s attention in a “Notice of Supplemental Authority” [Doc. 42] a
week before the Court issued its Ruling — and which has nothing to do with the issue decided in
the Ruling.” Doc. 46, at 6 (emphasis added).
Thereafter, Plaintiffs “assert an argument they
already raised in opposition to Defendants’ Motion to Compel and an argument that they expressly
waived in opposition” to that motion. Id. Therefore, no argument presented by Plaintiffs provides
a valid basis for reconsideration of the Court’s June 8 Ruling. Id.
At the outset, Defendants frame the Supreme Court’s decision in Morgan v. Sundance, Inc.
13
as “irrelevant to the issue of estoppel.” Id. Not only did the Court receive Morgan prior to issuing
the June 8 Ruling, that case is “entirely inapplicable to the issue decided by the Court in its Ruling.”
Id. In Morgan, the main issue was whether the defendant had “waived its right to arbitrate a dispute
by engaging in litigation in Court” and, after failing to succeed, “switching tactics and moving to
compel arbitration.” Id. (citing Morgan, 596 U.S. at 413). The Supreme Court held that some of
the Circuits had “improperly imposed a requirement that the plaintiff demonstrate it was prejudiced
by the delay and change in tactics, explaining that ‘usual federal rule of waiver does not include a
prejudice requirement,’ so the rule for arbitration should not either.” Id. at 6-7 (citing Morgan, 596
U.S. at 419). However, the issue of “whether a party can be estopped from avoiding a demand for
arbitration by a non-party was not at issue in Morgan.” Id. at 7.
Furthermore, the Morgan holding provides “nothing new.” Id. The Morgan Court cited
Supreme Court precedent from 2010, Granite Rock Co. v. Teamsters, 561 U.S. 287, 302 (2010),
which had further quoted a Supreme Court case from 1989, Volt Information Sciences, Inc. v. Board
of Trustees, 489 U.S. 468, 474 (1989)). In citing these cases, the Supreme Court merely reminded
courts that the FAA “does not authorize federal courts to invent special, arbitration-preferring
procedural rules.” Doc. 46, at 7 (quoting Morgan, 596 U.S. at 418). In other words, Morgan was
“merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding
refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as
other contracts.’” Id. (quoting Morgan,596 U.S. at 418, which in turn quoted Granite Rock Co., 561
U.S. at 302).
As Defendants note, this Court relied on Doe v. Trump Corp., 6 F.4th 400, 412 (2d Cir. 2021)
in making the June 8 Ruling. Doc. 46, at 7. Doe was issued years after the principles discussed
14
in Morgan (as contained in both Granite Rock and Volt Information Sciences). Id.
E. Court’s Analysis
1. Reconsideration
Having reviewed the parties’ arguments in full, the Court has decided that reconsideration
is not warranted in the present case. The Morgan case reiterated a principle long recognized by the
Second Circuit that “[w]hile the FAA expresses a strong federal policy in favor of arbitration, the
purpose of Congress in enacting the FAA ‘was to make arbitration agreements as enforceable as
other contracts, but not more so.’” Ross v. Am. Express Co., 547 F.3d 137, 143 (2d Cir. 2008)
(quoting Cap Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360, 364 (2d Cir. 2003)). That
principle, as recited in Morgan, is not new to the Second Circuit so does not undermine its estoppel
precedents in cases like Doe and Choctaw.
Furthermore, even if Morgan had an impact on the application of federal estoppel, this Court
cannot disregard Second Circuit precedent on estoppel unless or until the Second Circuit overrules
such precedent. See, eg., Monsanto v. United States, 348 F.3d 345, 351 (2d Cir. 2003) (District
courts and even subsequent Second Circuit panels “are required to follow” Circuit precedent even
if it is in “tension” with subsequent Supreme Court precedent unless and until that case is
reconsidered by our court [the Second Circuit] sitting in banc (or its equivalent) or is rejected by a
later Supreme Court decision.”); see also In re Application of Hanwei Guo, No. 18-MC-561 (JMF),
2019 WL 917076, at *3 (S.D.N.Y. Feb. 25, 2019) (“A district court, however, must follow Second
Circuit precedent ‘unless and until it is overruled in a precedential opinion by the Second Circuit
itself or unless a subsequent decision of the Supreme Court so undermines it that it will almost
inevitably be overruled by the Second Circuit.’”), aff'd sub nom. In Re Guo, 965 F.3d 96 (2d Cir.
15
2020) (citations omitted).
Here, the Court carefully applied the two conditions of estoppel set forth in Doe v. Trump
Corp., which was not abrogated by Morgan. As other district courts within this Circuit have
repeatedly held post-Morgan, this Court must adhere to relevant Second-Circuit precedent which
remains in effect. See, e.g., Greene v. Kabbalah Ctr. Int’l, Inc., 625 F. Supp. 3d 3, 20 (E.D.N.Y.
2022) (“Under principles of estoppel, a non-signatory to an arbitration agreement may compel a
signatory to that agreement to arbitrate a dispute where a careful review of ‘the relationship among
the parties, the contracts they signed ..., and the issues that had arisen’ among them discloses that
‘the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement
that the estopped party has signed.’ ”) (quoting Ragone, 595 F.3d at 126-27); Padula v. eBay, No.
21-CV-05391 (MKB) (SJB), 2022 WL 18456614, at *6 (E.D.N.Y. Dec. 29, 2022) (applying Doe
v. Trump Corp. estoppel factors), report and recommendation adopted, No. 21-CV-5391 (MKB)
(SJB), 2023 WL 375554 (E.D.N.Y. Jan. 24, 2023); Silent Gliss Inc. v. Silent Gliss Int’l Ltd., No.
22-CV-522 (EK)(MMH), 2023 WL 1863362, at *4 (E.D.N.Y. Feb. 9, 2023) (“Under principles of
estoppel,” the court applies the “two conditions” set forth in Doe v. Trump Corp. to determine if “a
non-signatory to an arbitration agreement may compel a signatory to that agreement to arbitrate a
dispute.”) (citing Sokol Holdings, Inc. v. BMB Munai, Inc., 542 F.3d 354, 358 (2d Cir. 2008) and
Doe v. Trump, 6 F.4th at 412-13).
Furthermore, Plaintiffs’ argument that the Court failed to properly apply the “reliance
requirement” for equitable estoppel, arising under state law, lacks merit. The Morgan case
expressly addressed federal rules regarding waiver and vocally declined to decide the role of state
16
law in this matter.8 Morgan, 596 U.S. at 416.
Moreover, Plaintiffs essentially conceded their argument regarding reliance on state law
estoppel principles when they argued in opposition to Defendants’ Motion to Compel that federal
law, as opposed to state law, applies in this case. Doc. 38 (Plaintiffs’ Opposition), at 11. In
particular, Plaintiffs wrote:
Although ‘state law governs whether a non-signatory may enforce an arbitration
clause,’ where, as here, the parties do not contend a particular state’s law applies,
this Court may apply Second Circuit precedent.
Doc. 38, at 11 (emphasis added) (quoting Doe. v. Trump Corp., 6 F.4th at 412 n.8). Having failed
to make their argument regarding state law in their original Opposition, Plaintiffs have waived that
argument. See, e.g., Packer v. SN Servicing Corp., 250 F.R.D. 108, 112 (D. Conn. 2008) (“It is well
settled that a failure to brief an issue is grounds to deem the claim abandoned.”) (citations omitted);
In re Ethylene Propylene Diene Monomer (EPDM) Antitrust Litig., 681 F. Supp. 2d 141, 181 (D.
Conn. 2009) (“Motions for reconsideration are not designed to allow parties to make arguments that
they could have and should have made before the court ruled.”) (citation omitted).
Furthermore, even if Plaintiffs were allowed to present their “detrimental reliance” factor,
the facts suggest that Defendants relied on Plaintiffs’ agreement to arbitrate any disputes on an
individual basis. As this Court previously stated, “the specific identification of Venture Home in
8
The Morgan Court stated, in relevant part:
In their briefing, the parties have disagreed about the role state law might play in
resolving when a party’s litigation conduct results in the loss of a contractual right
to arbitrate. The parties have also quarreled about whether to understand that inquiry
as involving rules of waiver, forfeiture, estoppel, laches, or procedural timeliness.
We do not address those issues.
Morgan, 596 U.S. at 416.
17
Plaintiffs’ contracts with Sunnova or Sun Power as the ‘subcontractor,’ ‘dealer’ or ‘installer’ of the
solar panel systems, leads readily to the inference (which I draw) that in signing those contracts, the
Plaintiffs ‘had knowledge of, and consented to, the extension of their agreement to arbitrate to the
non-signatories.’” James, 607 F. Supp. 3d at 192 (quoting Doe, 6 F.4th at 414).
Additionally, the Court need not reconsider previously-made arguments such as Plaintiffs’
assertion in their Opposition to the “Motion to Compel” that Sunnova and Sun Power contracts
define the parties as the Sunnova and Sun Power companies and their “successors and assigns.” Doc.
38 (Pls.’ Opp. To Mot. to Compel), at 16-17 (arguing that “Venture Solar is neither Sunnova nor
an assignee of the Stewart- Sunnova agreement, and thus the arbitration agreement cannot apply to
it” and making the same argument based on the Ahmed-Sun Power Agreement). Plaintiffs may not
re-argue points in their prior briefs in an attempt to take a second bite at the apple. Analytical Survs.,
684 F.3d at 52. This Court previously considered and rejected those arguments in full.9
9
The Court specifically quoted the language in the Sunnova and Sun Power contracts and
recognized that “You” referred only to Stewart and Ahmed and “We” only to Sunnova and Sun
Power, respectively. 607 F. Supp. 3d at 185. Rather, the issue was whether Venture could enforce
the arbitration provision in the contracts with Sunnova and Sun Power against Stewart and Ahmed.
Id.
Similarly, the Court previously considered and chose not to credit Plaintiffs’ argument
regarding the language in the Ahmed-Sun Power agreement that an arbitrator shall not “award relief
for or against anyone who is not a party.” Doc. 44-1, at 6-7; see also Doc. 38, at 6. Such a provision
only bars the arbitrator from awarding relief to someone who is not a party to the arbitration. In this
case, where Venture seeks to compel arbitration, it cannot argue that the dispute is not arbitrable or
question the arbitrator’s authority to grant relief. See ConnTech Dev. Co. v. Univ. of Connecticut
Educ. Properties, Inc., 102 F.3d 677, 685 (2d Cir. 1996) (“One who voluntarily participates in
arbitration will not thereafter be heard to complain that the arbitrator was without authority to act.”)
(quoting Int’l Longshoremen’s Ass’n, AFL-CIO v. W. Gulf Mar. Ass’n, 594 F. Supp. 670, 674
(S.D.N.Y. 1984)).
18
2. Certification
Finally, Plaintiffs have failed to meet the requirements for certification to the Second Circuit.
Section 16(b) of the the Federal Arbitration Act (“FAA”) provides generally that “an appeal may
not be taken from an interlocutory order ... granting a stay of any action under section 3 of this title,”
9 U.S.C. § 16(b)(1), or “compelling arbitration under section 206 of this title,” id. § 16(b)(3).
However, Section 16(b) permits appellate review of orders that a district court certifies for
interlocutory appeal pursuant to 28 U.S.C. § 1292(b). See 9 U.S.C. § 16(b); Murray v. UBS Sec.,
LLC, No. 12 CIV. 5914 (KPF), 2014 WL 1316472, at *2 (S.D.N.Y. Apr. 1, 2014).
Pursuant to 28 U.S.C. § 1292(b) of the FAA, “[w]hen a district judge, in making in a civil
action an order not otherwise appealable under this section, shall be of the opinion that such order
involves a controlling question of law as to which there is substantial ground for difference of
opinion and that an immediate appeal from the order may materially advance the ultimate
termination of the litigation, he shall so state in writing in such order.” Then, upon certification as
an interlocutory appeal from the district court, the relevant Court of Appeals may, “in its discretion,
permit an appeal to be taken from such order.” Id. Accordingly, a party may receive appellate
review of an order compelling arbitration and staying an action if the district court certifies the order
for interlocutory review.
Specifically, in order to certify an order for interlocutory appeal, the district court must
determine and state in writing that such order “[1] involves a controlling question of law [2] as to
which there is substantial ground for difference of opinion and that [3] an immediate appeal from
the order may materially advance the ultimate termination of the litigation . . . .” 28 U.S.C.A.
§ 1292 (b). Because the statute is strictly construed, all three criteria must be met for the district
19
court to certify an order. See, e.g., Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir.
1990) (“[T]he power [to grant an interlocutory appeal] must be strictly limited to the precise
conditions stated in the law.”) (citation omitted). See also Casey v. Long Island R.R. Co., 406 F.3d
142, 146 (2d Cir. 2005) (“To warrant our granting leave to appeal pursuant to [§ 1292(b)], (a) the
appeal must concern a question ‘of law,’ (b) that question must be one that is ‘controlling,’ and (c)
that controlling question of law must be one ‘as to which there is substantial ground for difference
of opinion.’”).
As discussed infra, in their motion for certification, Plaintiffs have failed to establish the
necessary criteria to obtain interlocutory appeal. Moreover, “[e]ven where these criteria are met,
the Court retains discretion to deny permission for interlocutory appeal, mindful that ‘[i]t is a basic
tenet of federal law to delay appellate review until a final judgment has been entered.’” Kuzinski v.
Schering Corp., 614 F. Supp. 2d 247, 249 (D. Conn. 2009) (quoting Koehler v. Bank of Bermuda
Ltd., 101 F.3d 863, 865 (2d Cir. 1996)). “Interlocutory appeals are disfavored, and, because the
procedure was not intended as a vehicle to provide early review of difficult rulings in hard cases,
a party seeking to appeal must demonstrate exceptional circumstances justifying it.” Id. (citation and
internal quotation marks omitted).
As to the first statutory factor of § 1292(b), in the case at bar, there is no “controlling
question of law”—one upon which “reversal of the district court’s order would terminate the action.”
Klinghoffer, 921 F.2d at 24. Here, a reversal would have the opposite effect by returning the case
to federal court to proceed with litigation, not end it.
Similarly, in deciding whether there is a controlling question of law, a district court may
“consider whether ‘reversal of the district court’s opinion, even though not resulting in dismissal,
20
could significantly affect the conduct of the action; or, the certified issue has precedential value for
a large number of cases.’” Murray, 2014 WL 1316472, at *3 (quoting Dev. Specialists, Inc. v. Akin
Gump Strauss Hauer & Feld LLP, No. 11 Civ. 5994 (CM), 2012 WL 2952929, at *4 (S.D.N.Y. July
18, 2012)). As in the case at bar, “[t]o be sure, reversal could affect the ‘conduct’ of the action by
eliminating the arbitration, but such a consequence is not sufficient to warrant certification.” 2014
WL 1316472, at *4. “Indeed—and as certainly contemplated by Congress in enacting, and then
clarifying, Section 16(b)—courts in this Circuit have denied motions for certification where
reversals of the orders at issue would have allowed the parties to forgo arbitration entirely.” Id. at
*4 (collecting cases). Furthermore, Plaintiffs have failed to present any other cases for which the
certified issue would have precedential value. Absent the first of the three criteria, there is no
“controlling question of law.”
Second, there appears to be no “substantial ground for difference of opinion” on the present
issue, 28 U.S.C. § 1292(b). To fulfill this element, Plaintiffs must show that “(1) there is conflicting
authority on an issue or (2) the case is particularly difficult and of first impression within this
Circuit.” U.S. ex rel. Drake v. NSI, Inc., 736 F. Supp. 2d 489, 503 (D. Conn. 2010) (citing Consub
Del. LLC v. Schahin Engenharia Limitada, 476 F. Supp. 2d 305, 308-09 (S.D.N.Y. 2007)).
Plaintiffs have shown neither. “Substantial ground for a difference of opinion requires more than
a claim that the court’s ruling was wrong.” Drake, 736 F. Supp. 2d at 503 (citation omitted).
“Similarly, simply because a question is particularly difficult does not mean that there is a difference
of opinion.” Id. (citation omitted).
With respect to prong (1), there is no “conflicting authority” created by Morgan. As
explained supra, Morgan focuses on a different issue—one with no bearing on the estoppel issue
21
at bar. Morgan holds that “a court may not devise novel rules to favor arbitration over litigation.”
596 U.S. at 418. And language to that effect was quoted long ago, in both Granite Rock, 561 U.S.
at 302; and Volt Info Scis., 489 U.S. at 468.10 Both before and after Granite Rock and Volt, the
Second Circuit has decided numerous cases involving non-signatories to an arbitration agreement
with estoppel; and the Supreme Court’s reemphasis of the principle stated in Morgan has not
abrogated such precedent.11 See, e.g., Doe v. Trump, 6 F.4th at 412; Ragone, 595 F.3d at 126; Ross,
547 F.3d at 144-45; Choctaw, 271 F.3d at 406. See also Shepherd v. Belkin Int’l, Inc., No.
21-CV-5862 (BMC), 2023 WL 4745681, at *3 (E.D.N.Y. July 25, 2023) (The Second Circuit “has
recognized ‘a number of common law principles of contract law that may allow non-signatories to
enforce an arbitration agreement, including equitable estoppel.’”) (quoting Doe v. Trump, 6 F.4th
at 412).
As to prong (2) of the second factor – a case which is difficult or of first impression— as this
Court noted in its June 8 Ruling, in its decision in Doe, the Second Circuit “instruct[ed] district
courts on how to resolve other comparable cases”— i.e., those in which equitable estoppel has been
applied to determine whether arbitration is required between a signatory and non-signatory. James,
10
For example, in Granite Rock, the Supreme Court clarified that its “precedents hold that
courts should order arbitration of a dispute only where the court is satisfied that neither the
formation of the parties’ arbitration agreement nor (absent a valid provision specifically committing
such disputes to an arbitrator) its enforceability or applicability to the dispute is in issue.” 561 U.S.
at 299 (citation omitted). Moreover, in Volt, the Supreme Court stated that the FAA “simply
requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in
accordance with their terms.” 489 U.S. at 478. “[T]he purpose of Congress in enacting the FAA
was to make arbitration agreements as enforceable as other contracts, but not more so. ” Id. (citation
and internal quotation marks omitted).
11
See, e.g., Choctaw Generation Ltd. P'ship v. Am. Home Assur. Co., 271 F.3d 403, 406
(2d Cir.2001) (discussing principles of estoppel under which a non-signatory to an arbitration
agreement may compel a signatory to that agreement to arbitrate a dispute).
22
607 F. Supp. 3d at186 (citing Doe v. Trump, 6 F.4th at 412). Accordingly, the June 8 Ruling follows
Second Circuit precedent on how to decide the issue of estoppel in the context of a motion to compel
arbitration. See, e.g., Choctaw Gen. Ltd., 271 F.3d at 406; Ragone, 595 F.3d at 126-27. The issue
is not “of first impression within this Circuit.” Drake, 736 F. Supp. 2d at 503.
Lastly, as to the third factor, there is no clear indication that reversal of the Ruling would
advance the ultimate termination of the litigation. In the event of reversal, arbitration would not
proceed. However, as one court noted in Murray, it may be that “the appeal process will take much
longer than the arbitration, thereby extending the time in which a final decision on the merits is
rendered.” 2014 WL 1316472, at *7 (collecting cases). Also, if the appeal is lost or if the Second
Circuit declines to hear it, “the result will be that this action will have been unnecessarily delayed
by the interlocutory appeal.” Id. In such circumstances, “interlocutory appeal would only delay
adjudication of the merits of this action in the arbitral forum.” Id.
Finally, in addition to the three statutory factors, the Second Circuit has provided that “only
exceptional circumstances [will] justify a departure from the basic policy of postponing appellate
review until after the entry of a final judgment.” Klinghoffer, 921 F.2d at 25 (citation and internal
quotation marks omitted); see also Known Litig. Holdings, LLC v. Navigators Ins. Co., No.
3:12CV269 (JBA), 2013 WL 12284920, at *2 (D. Conn. Dec. 5, 2013) (same) (quoting Klinghoffer,
921 F.2d at 25); Williston v. Eggleston, 410 F. Supp. 2d 274, 276 (S.D.N.Y. 2006)) (“[T]he party
seeking an interlocutory appeal has the burden of showing ‘exceptional circumstances,” to overcome
the general aversion to piecemeal litigation, and to show that the circumstances warrant a departure
from the basic policy of postponing appellate review until after entry of a final judgment.”) (citations
and internal quotation marks omitted).
23
Plaintiffs have failed to show any exceptional circumstances in the present case. Indeed, their
primary argument for certification is their claim that “the Court’s decision effectively terminates the
ability for these consumer plaintiffs to get any effective relief . . . .” Doc. 44-1, at 9. That is not true.
Plaintiffs agreed in their Sunnova and Sun Power contracts to proceed in arbitration. Plaintiffs
merely need to proceed to arbitration as set forth in those agreements.
IV. CONCLUSION
Plaintiffs have presented no controlling decision or matter overlooked that would alter the
Court’s June 8 Ruling, 607 F.Supp.3d 182. Therefore, and for all of the foregoing reasons,
“Plaintiffs’ Motion for Reconsideration or, Alternatively, for Certification of Appeal to the Second
Circuit” [Doc. 44] is DENIED.
It is SO ORDERED.
Signed: New Haven, Connecticut
February 6, 2024
/s/Charles S. Haight, Jr.
CHARLES S. HAIGHT, JR.
Senior United States District Judge
24
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?