Bennett et al v. TransUnion, LLC et al
ORDERED: Defendant's Unopposed Motion for Judicial Notice (Doc. 9) is GRANTED.Defendants' Motion to Compel Arbitration and Stay the Proceedings (Doc. 73) is GRANTED. The parties are DIRECTED to arbitrate this case promptly--in acc ordance with the contract and its arbitration clause. This case is STAYED until the parties advise the Court that (1) arbitration has been completed and (2) the stay should be lifted or the case should be dismissed. The parties are DIRECTED to noti fy the Court of such matters within seven (7) days of the arbitration concluding. The parties are DIRECTED to file a joint report on the status of arbitration on or before August 4, 2022, and every ninety (90) days after until arbitration concludes. The Clerk is DIRECTED to add a stay flag on the docket. Signed by Judge Sheri Polster Chappell on 5/10/2022. (AEH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
MARK BENNETT and PAULETTE
Case No.: 2:21-cv-770-SPC-NPM
SYSTEMS & SERVICES
TECHNOLOGIES, INC. and
OPINION AND ORDER1
Before the Court is Defendants Systems & Services Technologies, Inc.
(“SST”) and Truist Bank’s Motion to Compel Arbitration (Doc. 73). Plaintiffs
Mark and Paulette Bennett responded in opposition (Doc. 79). Also here is
Truist’s Unopposed Motion for Judicial Notice (Doc. 9). The Court grants both.
This is a consumer-credit case. The Bennetts took out a loan for an RV
A bank (“Bank”) issued the Debt.
A loan agreement (“Note”)
memorializes the parties’ relationship. Eventually, Bank transferred the Debt
Disclaimer: Documents hyperlinked to CM/ECF are subject to PACER fees. By using
hyperlinks, the Court does not endorse, recommend, approve, or guarantee any third parties
or the services or products they provide, nor does it have any agreements with them. The
Court is also not responsible for a hyperlink’s availability and functionality, and a failed
hyperlink does not affect this Order.
to SST for servicing. It is unclear whether the Bennetts defaulted. At any
rate, they eventually agreed with SST to settle the Debt for a lesser amount.
Later, Bank sold the Debt to Truist. SST then sent the Bennetts a
collection letter about the Debt.
So the Bennetts reviewed their credit
Eventually, the Bennetts sued Defendants for
violating the Fair Credit Reporting Act (“FCRA”) and the Florida Consumer
Collection Practices Act (“FCCPA”) (together, “Claims”).
It is a “fundamental principle that arbitration is a matter of contract.”
Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010). Since once cannot
force another to arbitrate matters on which they did not agree, courts must
determine validity, enforceability, and scope of an arbitration clause. Anders
v. Hometown Mortg. Servs., Inc., 346 F.3d 1024, 1027 (11th Cir. 2003). These
are “gateway questions” judges must resolve before sending a case to the
arbitrators.2 JPay, Inc. v. Kobel, 904 F.3d 923, 929 (11th Cir. 2017) (cleaned
up). Where state-law governs the Note, Utah law controls. (Doc. 73-1 at 3);
Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (2009); Dasher v. RBC
There is an exception. Arbitrators must decide gateway issues if the parties’ intent is “clear
and unmistakable.” Rent-A-Center, 561 U.S. 69 & n.1. Neither party contends the Note
contains a delegation clause. Nor does the Court find the language clear enough to infer one.
Bank (USA) (Dasher 2), 882 F.3d 1017, 1023 (11th Cir. 2018) (“State contract
law determines the existence and contours of parties’ agreements.”).
Before tackling the merits, the Court grants Truist’s unopposed request
to take judicial notice of a state-court case. Federal courts can usually take
notice of state-court dockets. Paez v. Sec’y, Fla. Dep’t of Corr., 947 F.3d 649,
651-53 (11th Cir. 2020). And the Court grants this Motion. With that settled,
the Court turns to the dispute—whether to compel arbitration.
To start, the Bennetts do not challenge the Note’s validity or existence
(i.e., formation). Instead, they challenge Defendants’ contractual standing.
The Note is between the Bennetts and Bank. Neither Defendant signed the
Note, but they seek to enforce its arbitration clause (“Clause”).
A “litigant who was not a party to the relevant arbitration agreement
may invoke § 3 if the relevant state contract law allows him to enforce the
agreement.” Carlisle, 556 U.S. at 632; Lawson v. Life of the S. Ins., 648 F.3d
1166, 1170 (11th Cir. 2011). Traditionally, states “allow a contract to be
enforced by or against nonparties to the contract through assumption, piercing
the corporate veil, alter ego, incorporation by reference, third-party beneficiary
theories, waiver and estoppel.” Carlisle, 556 U.S. at 631 (cleaned up). Utah is
almost identical. Inception Minding, Inc. v. Danzig, Ltd., 311 F. Supp. 3d 1265,
1274 (D. Utah 2018).
Defendants say they can enforce the Clause under theories of
assumption, agency, or equitable estoppel. The Court takes each in turn.
First, Truist can compel arbitration by assumption.
“The theory of
assumption involves subsequent conduct by the non-signatory indicating the
non-signatory is assuming an obligation to arbitrate, despite being a nonsignatory.” Hopkins v. Genesis FS Card Servs., Inc., No. 3:19-cv-00157-AC,
2020 WL 466636, at *10 (D. Or. Jan. 9, 2020) (applying Utah law), report and
recommendation adopted, 2020 WL 437544 (Jan. 28, 2020). Truist bought the
Debt from Bank. In doing so, it assumed the Note’s obligations. Even the
Note’s language contemplates Bank assigning the Debt to someone else. (Doc.
73-1 at 1 (“The words ‘we,’ ‘us,’ ‘our,’ and ‘Lender’ refer to . . . Bank . . . and its
assignees.”), 4 (“ANY HOLDER OF THIS CONSUMER CREDIT NOTE IS
SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR
COULD ASSERT AGAINST THE SELLER.”)).
The Bennetts do not dispute that logic. Instead, they attack whether
Truist ever bought the Debt. They latch onto Truist’s Answer, which asserts
the Debt was “inadvertently included in a bulk purchase” of loans from Bank.
(Doc. 41 at 16-17). So the Bennetts say Truist never assumed the Debt and
any argument to the contrary is disingenuous. This, however, does not defeat
Truist’s assumption theory. Whether the sale was inadvertent is irrelevant
because—as the Complaint and its exhibits show—Truist did buy the Debt.
(Doc. 22-3 at 2 (“This notice is to advise you that . . . [Truist] has purchased the
above referenced account from . . . Bank.”), 22-5 at 5 (reporting the Debt as
owed to “SST/TRUIST”)). According to Truist, it later sold the Debt back to
Bank. (Doc. 73 at 3). But intended or not, it owned the Debt for at least a few
years—during which the conduct giving rise to the Claims occurred.
As much as the Bennetts challenge the lack of an affidavit, it falls short.
They say there must be “direct and specific evidence of an agreement between
the parties.” Mason v. Midland Funding LLC, No. 1:16-CV-2867-WMR, 2021
WL 3017993, at *8 (N.D. Ga. Jan. 18, 2021) (citation omitted), report and
recommendation adopted, 2021 WL 3017990 (Mar. 23, 2021). That statement
(made is a different context) changes nothing. Everyone agrees the Note was
a valid agreement between the parties (i.e., the Bennetts and Bank). At issue
is whether nonsignatories may enforce that agreement.
enforceability are separate matters. E.g., Mason, 2021 WL 3017990, at *7.
So Truist assumed the Debt and can enforce the Clause.
Second, SST can compel arbitration by agency. Via “agency, an agent
can assume the protection of the contract which the principal has signed.”
Inception, 311 F. Supp. 3d at 1275 (citation omitted). Many “courts have
applied this principal to allow for non-signatory agents to avail themselves of
the protection of their principal’s arbitration agreement.” Id. (cleaned up).
Under this theory, “it matters whether the party resisting arbitration is a
signatory or not.”
Id. (citation omitted).
Nonsignatories (like SST) “may
compel a signatory to arbitrate.” Id. Even “one-way protection of agents
through arbitration may be enforced.” Seaborn v. Larry H. Miller Mercedes
Benz, No. 2:19-CV-941 TS, 2020 WL 1550789, at *3 (D. Utah Apr. 1, 2020).
According to the Amended Complaint, SST was an agent of both Truist
and Bank to service the Debt. As an agent, therefore, SST can enforce the
Clause. The Bennetts do not challenge this conclusion much. Rather, they say
SST cannot compel arbitration because it was an agent of Truist (who never
owned the Debt). Again, the Court disagrees as to ownership. What’s more,
even if Truist never owned the Debt, SST was Bank’s agent too. (Doc. 22 at 4).
So SST could enforce the Clause even if Truist couldn’t.
And third, Defendants contend each could invoke the Clause under
equitable estoppel. There is no need to address this alternative rationale given
the conclusions above.
In short, Defendants have contractual standing to enforce the Clause.
Next, the parties dispute whether the claims are subject to arbitration
(i.e., whether they fall within the scope of the Clause). The Clause allows
either side to invoke binding arbitration on “any dispute arising under this
Note.” (Doc. 73-1 at 4). According to the Bennetts, the Claims might relate to
the Note, but they don’t arise under it. Defendants disagree.
1. Choice of Law
Before getting to that, the Court notes an unbriefed, sticky choice-of-law
issue. The Bennetts say substantive federal law governs this scope dispute,
citing cases that say as much. Defendants offer no position one way or the
But appellate courts are wishy-washy on this question.
Entrekin v. Internal Med. Assocs. of Dothan, P.A., 689 F.3d 1248, 1251 (11th
Cir. 2012) (“Because arbitration is a matter of contract, determining whether
a claim falls within the scope of an arbitration agreement is generally a matter
of state law.” (cleaned up)), with Lawson, 648 F.3d at 1170 (“To determine
which disputes between the parties to an enforceable arbitration agreement
are covered by the language of the arbitration clause, we apply the federal
substantive law of arbitrability.” (cleaned up)). At times, the Supreme Court
suggested state law controls. Carlisle, 556 U.S. 624, 630-31 (The Federal
Arbitration Act (“FAA”) doesn’t “alter background principles of state contract
law regarding the scope of agreements (including the question of who is bound
What seems probable is state law governs scope as a simple matter of
contract interpretation; but lurking in the background is the federal preference
for arbitration, which courts must consider. See Volt Info. Sci., Inc. v. Bd. of
Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475-76 (1989) (When
“applying general state-law principles of contract interpretation to the
interpretation of an arbitration agreement within the scope of the Act, due
regard must be given to the federal policy favoring arbitration, and ambiguities
as to the scope of the arbitration clause itself resolved in favor of arbitration.”
(internal citation omitted)). No matter the answer, resolving that issue is far
outside the briefing. And where relevant, Utah perhaps favors arbitration
even more than federal courts. Cent. Fla. Invs., Inc. v. Parkwest Assocs., 40
P.3d 599, 606, 608 (Utah 2002) (“It is the policy of the law in Utah to interpret
contracts in favor of arbitration . . . Furthermore, given the strong policy of the
law in Utah in favor of arbitration, there is also a strong presumption against
waiver of the right to arbitrate.” (cleaned up)); HITORQ, LLC v. TCC
Veterinary Servs., Inc., 502 P.3d 281, 286 (Utah 2021) (“When the language is
ambiguous, there is a presumption in favor of arbitration.” (cleaned up)). As
the parties rely on general federal law regarding scope—and the difference
appears irrelevant—the Court does too.3
At bottom, the parties disagree whether the Claims are within the
Clause’s scope. For support, Defendants list cases with broader arbitration
The Court will not, however, rely on Florida law, which the Bennetts impliedly argue for.
Even if state law governs scope, it is undisputed the state would be Utah—not Florida.
provisions. They concerned arbitration for claims “related to” or “connected
with” a contract (or some similar language).4
Hearn v. Comcast Cable
Commc’ns, LLC, 992 F.3d 1209 (11th Cir. 2021). If the relevant language here
had those types of broad phrases, the Court would probably agree with
Defendants on scope without much fuss.
See id. at 1215-16 (compelling
arbitration of FCRA claim that “relates to” contract).5
The Clause, however, is narrower—it only encompasses “any dispute
arising under” the Note.
(Doc. 73-1 at 4); Telecom, 248 F.3d at 1115
(differentiating “arising under” from “related to”).6 To be sure, “any means all.”
Don’t Look Media LLC v. Fly Victor Ltd., 999 F.3d 1284, 1299 (11th Cir. 2021)
(cleaned up). Put different, that word widens the scope. Nailcare Acad. LLC
v. Medinails, Inc., No. 2:21-cv-405-SPC-NPM, 2022 WL 61196, at *5 (M.D. Fla.
Most judges see little difference between variations of the same phrase. For example,
“arising out of” and “arising under” generally mean the same thing. See Telecom Italia, SpA
v. Wholesale Telecom Corp., 248 F.3d 1109, 1115 (11th Cir. 2001); Gregory v. Electro-Mech.
Corp., 83 F.3d 382, 386 (11th Cir. 1996); John Wyeth & Bro. Ltd. v. CIGNA Int’l Corp., 119
F.3d 1070, 1074-75 (3d Cir. 1997) (Alito, J.).
See also Brown v. Midland Credit Mgmt., Inc., No. 20-CV-4239 (JMF), 2020 WL 5117975,
at *2 (S.D.N.Y. Aug. 31, 2020); Bailey v. Diversified Consultants, Inc., 444 F. Supp. 3d 1330,
1335-36 (N.D. Ala. 2020); Fialek v. I.C. Sys., Inc., No. 3:18-cv-136-J-39MCR, 2019 WL 660824,
at *3-6 (M.D. Fla. Jan. 24, 2019); Vanwechel v. Regions Bank, No. 8:17-CV-738-T-23AAS,
2017 WL 1683665, at *1 (M.D. Fla. May 3, 2017).
See also Coregis Ins. v. Am. Health Found., Inc., 241 F.3d 123, 128-29 (2d Cir. 2001)
(Sotomayor, J.); Azima v. RAK Inv. Auth., 926 F.3d 870, 877-78 (D.D.C. 2019); Phillips v.
Audio Active Ltd., 494 F.3d 378, 389 (2d Cir. 2007); Stephen E. Friedman, The Lost
Controversy Limitation of the Federal Arbitration Act, 46 Univ. of Rich. L. Rev. 1005, 103739 (2012) (“‘Arising out of” and ‘relating to’ are two very different concepts.”).
Jan. 6, 2022). At the same time, the Clause limits arbitration to disputes
“arising under” the Note. (Doc. 73-1 at 4).
“The term ‘arising out of’ is broad, but it is not all encompassing.” Doe v.
Princess Cruise Lines, Ltd., 657 F.3d 1204, 1218 (11th Cir. 2011). To decide if
disputes arise from a contract, courts focus on “whether the tort or breach in
question was an immediate, foreseeable result of the performance of
contractual duties.” Telecom, 248 F.3d at 1116; Hearn, 992 F.3d at 1213.
“Disputes that are not related—with at least some directness—to performance
of duties specified by the contract do not count as disputes ‘arising out of’ the
contract.” Telecom, 248 F.3d at 1116. Said another way, “‘Arising out of’
requires the existence of some direct relationship between the dispute and the
performance of duties specified by the contract.” Princess, 657 F.3d at 1218.
“A dispute does not arise out of . . . contract for the purposes of
arbitration just because the dispute would not have arisen if the contract had
never existed.” Calderon v. Sixt Rent a Car, LLC, 5 F.4th 1204, 1212-13 (11th
So but-for causation is not necessarily determinative.
Reading Health Sys. v. Bear Stearns & Co., 900 F.3d 87, 99 (3d Cir. 2018)
(Many “courts have resisted the siren call of equating the term arising out of
with the concept of but-for causation.” (cleaned up)).
Defendants contend their collection and credit-reporting efforts (which
underlie the Claims) were foreseeable results of performing contractual duties.
They point out places where the Note contemplates what happens in the event
of default, Truist’s rights and remedies upon default, and a warning that Truist
might send a negative credit report. As the argument goes, Defendants merely
responded to a perceived default in a way the Note anticipated.
resulting Claims, they say, arise under the Note.
For their part, the Bennetts counter. According to them, Defendants
violated FCRA and FCCPA, which are not contractual obligations. What’s
more, the Claims neither rely on the Note nor demand reference to it. So they
don’t think the Claims arise under.
The Bennetts’ point is well-taken. From the plain language, whether the
Claims all arise under the Note is a somewhat close call (especially as to SST).
While the Claims almost certainly relate to the Note, whether they arise under
it is less clear. Still, it is not difficult to tie the Claims flowing from Truist’s
conduct directly to specified duties. For SST, the connection is attenuated.
Neither side addresses this distinction though. And SST acted as Truist’s
agent to service the Debt. So taking the language in the Note together with
the facts, the Court concludes the Claims arise under it.
Even if there is ambiguity in the Clause, the Court must resolve all
doubts in favor of arbitration. In general, arbitration “should not be denied
unless it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute.”
Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986) (citation
omitted). “Stated differently, the FAA ‘establishes that, as a matter of federal
law, any doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration.’” Dasher v. RBC Bank (USA) (Dasher 1), 745 F.3d 1111,
1115 (11th Cir. 2014) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983)). If an “arbitration agreement is ambiguous
about whether it covers the dispute at hand,” a “presumption of arbitrability”
arises. Granite Rock Co. v. Int’l Brotherhood of Teamsters, 561 U.S. 287, 301
(2010); Dasher 2, 882 F.3d at 1022 (explaining when presumption “comes into
play”). Of course, courts cannot imagine ambiguity to apply the interpretive
dynamite of Moses H. Cone. Kobel, 904 F.3d at 929. But when—as here—true
ambiguity on scope exists, the rule applies. Dasher 1, 745 F.3d at 1115.
To be sure, Moses H. Cone (and its progeny) is not without detractors.
Judge Newsome just thoughtfully explained his misgivings over the precedent.
Calderon, 5 F.4th at 1215-21 (Newsome, J., concurring). But as it stands,
that’s the law of land. And any decision to change course is above the Court’s
paygrade. E.g., McGinley v. Houston, 361 F.3d 1328, 1331 (11th Cir. 2004) (Of
course, “a decision by the Supreme Court binds all circuit and district courts.”).7
Since the issue is unbriefed, there is no need to consider Moses H. Cone’s validity.
The Bennetts’ other arguments on scope are less compelling. Courts
agree “claims arising under federal statutes may be the subject of arbitration
agreements and are enforceable under the FAA.”
Caley v. Gulfstream
Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005) (citation omitted). So
the Claims may fall within the Clause’s scope. See, e.g., Vanwechel, 2017 WL
1683665, at *1 (compelling arbitration of TCPA, FCCPA, and FDCPA claims
related to collection of debt under note). Broad argument to the contrary
cannot carry the day. See Bailey, 444 F. Supp. 3d at 1336-37 (explaining flaw
in Bazemore’s reasoning).
In short, the claims against Defendants are within the Clause’s scope.
Moving on, the Bennetts contend Defendants waived any right to compel
arbitration. Unsurprisingly, Defendants disagree.
The “agreement to arbitrate, just like any other contract, may be
waived.” Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1315 (11th Cir.
2002) (cleaned up). “Waiver occurs when both: (1) the party seeking arbitration
substantially participates in litigation to a point inconsistent with an intent to
arbitrate; and (2) this participation results in prejudice to the opposing party.”
In re Checking Acct. Overdraft Litig., 754 F.3d 1290, 1294 (11th Cir. 2014)
(cleaned up). A party acts inconsistent with arbitration if—“under the totality
of the circumstances”—it “substantially invokes the litigation machinery prior
to demanding arbitration.” Garcia v. Wachovia Corp., 699 F.3d 1273, 1277
(11th Cir. 2012) (citation omitted). “Prejudice exists when the party opposing
arbitration undergoes the types of litigation expenses that arbitration was
designed to alleviate.” Overdraft, 754 F.3d at 1294 (cleaned up).
Federal law controls the waiver analysis. S&H Contractors, Inc. v. A.J.
Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir. 1990). Notably, “any party
arguing waiver of arbitration bears a heavy burden of proof.” Gutierrez v. Wells
Fargo Bank, N.A., 889 F.3d 1230, 1236 (11th Cir. 2018). Waiver is inherently
case-specific. Grigsby & Assocs. v. M. Sec. Inv., 635 F. App’x 728, 731 (11th
Cir. 2015). So the relevant procedural history follows.
While in state court, Truist answered without mentioning arbitration.
Two weeks after removal, the Bennetts amended as a matter of course. In the
interim, the Court entered its normal FCRA Fast-Track Scheduling Order.
That Order stayed all discovery except some limited initial disclosures common
in FCRA cases. It also ordered early mediation within four months (in line
with the Court’s usual practice for FCRA cases).
About a month after removal, SST answered the Amended Complaint.
In doing so, it raised arbitration as an affirmative defense.
moved to strike (in part) because the Answer referenced arbitration as a
defense. But the Court denied that motion without prejudice, allowing the
Bennetts two weeks to refile.
Just before the Bennetts moved to strike,
Defendants told them of the intention to compel arbitration. Apparently,
counsel wanted the parties to discuss the motions to strike and compel together
because “the motion to compel arbitration would likely moot the motion to
strike.” (Doc. 79-1 at 2). This conversation occurred a month and a half after
Truist answered, and SST amended its answer. Both parties listed
arbitration as affirmative defenses.
They filed these pleadings about two
months after removal. Then, the Bennetts got three extensions of time to refile
their motion to strike. Despite the extensions, they never refiled the motion.
While the Bennetts settled with two Defendants, the Claims against
Truist and SST were unresolved.
So the parties went to Court-ordered
mediation. They impassed, then filed a Case Management Report (which the
Court ordered). That Report included a jury demand from the parties. Ten
days later, Defendants moved to compel arbitration. In all, about four months
passed between removal and the Motion.
While the Bennetts says all these actions taken together suggest waiver,
the Court is unconvinced.
Based on the totality of these circumstances,
Defendants did not waive arbitration.
Consenting to another parties’ removal (on its own) does not amount to
waiver. See Schriever v. Navient Sols., Inc., No. 2:14-cv-596-FtM-38CM, 2014
WL 7273915, at *4-5 (M.D. Fla. Dec. 19, 2014); Halim v. Great Gatsby’s Auction
Gallery, Inc., 516 F.3d 557, 562 (7th Cir. 2008). Nor does filing an answer.
Leitzke v. JPMorgan Chase Bank, N.A., No. 8:19-cv-2174-T-33AEP, 2020 WL
8669703, at *5 (M.D. Fla. Jan. 27, 2020); Sherrard v. Macy’s Sys. and Tech.
Inc., 724 F. App’x 736, 740 (11th Cir. 2018) (noting “neither filing and answer
nor waiting four months to seek arbitration was sufficient to constitute waiver”
Compliance with initial disclosures and early case
management requirements aren’t necessarily inconsistent with arbitration
Murdock v. Santander Consumer USA Inc., No. 2:15-cv-268-FtM-
38CM, 2016 WL 11467548, at *5 (M.D. Fla. June 23, 2016), report and
recommendation adopted, 2016 WL 3913135 (July 20, 2016); Gimenez v. Am.
Sec. Ins., No. 8:08-cv-2495-T-24-TGW, 2009 WL 257540, at *2 (M.D. Fla. Feb.
3, 2009); Gomez v. Allied Pros. Ins., 457 F. Supp. 3d 1351, 1364-65 (S.D. Fla.
2020). And delay is usually not enough unless “coupled with other substantial
conduct inconsistent with an intent to arbitrate.” Grigsby, 635 F. App’x at 733.
A party waives arbitration when it “substantially participates in
litigation to a point inconsistent with an intent to arbitrate.” Overdraft, 754
F.3d at 1294. Defendants did not substantially participate in litigation. They
merely complied with early requirements set by Federal Rule and the Court’s
efficient FCRA deadlines. Neither Defendant did anything substantial in this
case (e.g., filing dispositive motions or demanding discovery).
Defendants’ lawyer asked, “when Plaintiffs are available for deposition,” that
statement came eleven days before the Motion and apparently no depositions
occurred. (Doc. 79-2 at 2). In fact, it was the Bennetts who advanced litigation
by serving written discovery.
Nor did the litigation reach a point inconsistent with arbitration.
Instead, SST put arbitration on the Bennetts’ radar a month after removal.
Around a month and a half after removal, Defendants told the Bennetts they
planned to compel arbitration. And Defendants filed the Motion less than four
months after removing—when the Bennetts didn’t move to strike and early
mediation did not resolve the case before full-blown discovery. This is not the
type of litigation conduct amounting to implied waiver. See, e.g., Palmer v.
Navient Sols., LLC, No. 3:17-cv-657-J-39JBT, 2018 WL 1863829, at *2-3 (M.D.
Fla. Jan. 31, 2018), report and recommendation adopted, 2018 WL 11344770
(Apr. 18, 2018); Britt v. IEC Corp., No. 20-60814-CIV-ALTMAN/Hunt, 2021
WL 4147714, at *13-14 (S.D. Fla. Sept. 13, 2021).
What’s more, waiver occurs only when there is “prejudice to the opposing
Overdraft, 754 F.3d at 1294.
On this point, the Bennetts say
Defendants cannot force them to start over in arbitration, and Defendants
failed to explain the delay. Again, the Court does not believe the four-month
delay between removal and Motion significant considering these facts. What’s
more, the Bennetts impliedly try to shift the burden. As the ones seeking to
avoid arbitration, they must show waiver. Gutierrez, 889 F.3d at 1236. In
other words, the Bennetts must establish prejudice. They failed to do so. There
is no indication any delay, conduct, or expense here warrants a waiver finding.
See, e.g., Citibank, N.A. v. Stok & Assocs., 387 F. App’x 921, 924-25 (11th Cir.
2010); Britt, 2021 WL 4147714, at *15.
One final point. The Clause’s plain language suggests a party could
invoke the right late in litigation. (Doc. 73-1 at 4 (“Either of us may elect to
arbitrate even if an action has been filed in court, so long as no judgment has
been rendered.”)). This buttresses the conclusion no implied waiver exists.
At bottom, the Court finds Defendants did not waive the right to
arbitrate. See Gutierrez, 889 F.3d at 1236 (“[T]he key ingredient in the waiver
analysis is fair notice to the opposing party and the District Court of a party’s
arbitration rights and its intent to exercise them.”).
Finally, the Bennetts argue Defendants’ Local Rule 3.01(g) conferral was
insufficient. They are right the Court expects substantive discussions, not
sending an ultimatum by email. (Doc. 75 at 3); Schwartz v. ADP, Inc., No. 2:21cv-283-SPC-MRM, 2021 WL 4295274, at *2 (M.D. Fla. Sept. 21, 2021). Even if
Defendants violated 3.01(g) in that regard, the Court finds judicial economy—
the purpose underlying the Rule—best served by ruling on the Motion. Given
the briefing, it would only waste everyone’s time and money to require the
parties to chat and refile these papers. So this issue does not change the
conclusion on arbitration.
Having concluded Defendants are entitled to an order compelling
arbitration, the Court must “either stay or dismiss.” Lambert v. Austin Ind.,
544 F.3d 1192, 1195 (11th Cir. 2008). If the issues are arbitrable, a requested
“stay is mandatory.” Klay v. All Defendants, 389 F.3d 1191, 1204 (11th Cir.
2004). The Court, therefore, grants Defendants’ request to stay the action
pending arbitration. See 9 U.S.C. § 3.
Accordingly, it is now
1. Defendant’s Unopposed Motion for Judicial Notice (Doc. 9) is
2. Defendants’ Motion to Compel Arbitration and Stay the Proceedings
(Doc. 73) is GRANTED.
3. The parties are DIRECTED to arbitrate this case promptly—in
accordance with the contract and its arbitration clause.
4. This case is STAYED until the parties advise the Court that (1)
arbitration has been completed and (2) the stay should be lifted or the
case should be dismissed. The parties are DIRECTED to notify the
Court of such matters within seven (7) days of the arbitration
5. The parties are DIRECTED to file a joint report on the status of
arbitration on or before August 4, 2022, and every ninety (90)
days after until arbitration concludes.
6. The Clerk is DIRECTED to add a stay flag on the docket.
DONE and ORDERED in Fort Myers, Florida on May 10, 2022.
Copies: All Parties of Record
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?