Richardson et al v. Coverall North America, Inc.
Filing
25
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART Defendant's 7 Motion to Dismiss, or in the Alternative, Stay Litigation Pending Arbitration. The Clerk is directed to administratively close this case. Signed by Judge Thomas W. Thrash, Jr on 12/7/17. (jkl)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RANDALL RICHARDSON, et al.,
Plaintiffs,
v.
CIVIL ACTION FILE
NO. 1:17-CV-2405-TWT
COVERALL NORTH AMERICA,
INC.,
Defendant.
OPINION AND ORDER
This is an FLSA action. It is before the Court on the Defendant’s Motion to
Dismiss, or in the Alternative, Stay Litigation Pending Arbitration [Doc. 7]. For the
reasons set forth below, the Defendant’s Motion to Dismiss, or in the Alternative, Stay
Litigation Pending Arbitration [Doc. 7] is GRANTED in part and DENIED in part.
I. Background
This case arises out of a franchise agreement between the Plaintiffs Randall
Richardson and Janitorial Tech, LLC, and the Defendant Coverall North America, Inc.
The Defendant operates a commercial cleaning franchising business.1 Mr. Richardson
1
Compl. ¶ 13.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
is the owner of Janitorial Tech, a limited liability company.2 On May 17, 2016, the
parties signed the Joint Franchise Agreement (the “Franchise Agreement”), in which
Janitorial Tech would become a franchisee of the Defendant.3 Mr. Richardson would
perform cleaning services for the Defendant’s customers, and the Defendant would
pay Janitorial Tech.4 Mr. Richardson would then retain the money for the services he
provided.5 The Plaintiffs paid Coverall a $15,570 franchise fee, and the Defendant
promised to provide $3,000 in guaranteed monthly business.6 To pay this fee, the
Plaintiffs paid $3,500 as a down payment, and received a loan from the Defendant for
the remainder.7 Mr. Richardson personally guaranteed the loan.8 The Plaintiffs allege
that the Defendant ultimately failed to provide the guaranteed business.9 Throughout
this process, the Defendant would only formally engage with Janitorial Tech.10
2
Id. ¶ 57.
3
Id. ¶ 55.
4
Id.
5
Id. ¶ 57.
6
Id. ¶ 58.
7
Id. ¶ 59.
8
Id. ¶ 60.
9
Id. ¶ 64.
10
Id. ¶ 56.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-2-
The Plaintiffs allege that the Defendant’s franchise arrangement is a “scheme”
to avoid FLSA liability by requiring its janitors to create limited liability companies
and enter into franchise agreements.11 The Plaintiffs allege that the Defendant
misclassifies its janitors as franchisees and independent contractors, not employees,
in order to avoid these FLSA obligations.12 The Plaintiffs also allege that the
Defendant did not provide the amount of business to the Plaintiffs that it had
promised to provide, and that the Defendant provided illegal loans to the Plaintiffs.13
On June 27, 2017, the Plaintiffs filed this suit, seeking to represent themselves and a
class of all other similarly situated persons and companies.14 The Plaintiffs assert
claims for violation of the FLSA, violation of the Georgia Industrial Loan Act,
violation of Georgia’s Payday Lending Act, violation of the Georgia RICO statute,
and fraud and misrepresentation. The Defendant now moves to dismiss, or in the
alternative, stay this litigation pending arbitration.
II. Legal Standard
A. Motion to Dismiss Standard
11
Id. ¶ 27.
12
Id. ¶ 4.
13
Id. ¶¶ 5, 64.
14
Id. ¶ 2.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-3-
A complaint should be dismissed under Rule 12(b)(6) only where it appears that
the facts alleged fail to state a “plausible” claim for relief.15 A complaint may survive
a motion to dismiss for failure to state a claim, however, even if it is “improbable” that
a plaintiff would be able to prove those facts; even if the possibility of recovery is
extremely “remote and unlikely.”16 In ruling on a motion to dismiss, the court must
accept the facts pleaded in the complaint as true and construe them in the light most
favorable to the plaintiff.17 Generally, notice pleading is all that is required for a valid
complaint.18 Under notice pleading, the plaintiff need only give the defendant fair
notice of the plaintiff’s claim and the grounds upon which it rests.
B. Motion to Compel Arbitration Standard
15
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009); FED. R. CIV. P. 12(b)(6).
16
Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007).
17
See Quality Foods de Centro America, S.A. v. Latin American
Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also
Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir.
1994) (noting that at the pleading stage, the plaintiff “receives the benefit of
imagination”).
18
See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.
1985), cert. denied, 474 U.S. 1082 (1986).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-4-
“The liberal federal policy favoring arbitration agreements . . . is at bottom a
policy guaranteeing the enforcement of private contractual arrangements.”19 When
considering a motion to compel arbitration, the Court must first “determine whether
the parties agreed to arbitrate that dispute.”20 If they have, the Court must then
determine whether the arbitration clause is valid. It may be unenforceable on grounds
that would permit the revocation of any contract, such as fraud or unconscionability.21
There may also be legal constraints precluding arbitration, such as a clear
congressional intention that a certain claim be heard in a judicial forum.22 “[A]s a
matter of federal law, any 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
19
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,
625 (1985).
20
Id. at 626.
21
See id. at 627 (“[C]ourts should remain attuned to well-supported claims
that the agreement to arbitrate resulted from the sort of fraud or overwhelming
economic power that would provide grounds ‘for the revocation of any contract.’”)
(citing 9 U.S.C. § 2)).
22
See id. at 628 (“Having made the bargain to arbitrate, the party should
be held to it unless Congress itself has evinced an intention to preclude a waiver of
judicial remedies for the statutory rights at issue.”).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-5-
arbitrability.”23 If the moving party establishes the necessary elements, “the FAA
requires a court to either stay or dismiss a lawsuit and to compel arbitration.”
III. Discussion
A. Mediation
First, the Defendant argues that the Plaintiffs’ claims should be dismissed
because mediation was a condition precedent to the filing of a lawsuit.24 The
Defendant contends that the parties agreed to make a good faith attempt to mediate
before filing a lawsuit, and that the Plaintiffs did not satisfy this condition precedent
because they never requested mediation. The Franchise Agreement, under a heading
titled “INFORMAL DISPUTE RESOLUTION/MEDIATION, provides:
If a dispute arises between Coverall and Franchisee and if the dispute is
not resolved or settled, Coverall and Franchisee agree that prior to filing
any proceeding, whether in arbitration or (if permissible) in court, they
will attempt, in good faith, to settle the dispute by non-binding mediation
administered pursuant to the Commercial Mediation Rules of the
American Arbitration Association, or as otherwise agreed upon in
writing by the parties. The mediation shall take place in the Area in
which Franchisee conducts its business, and shall be administered by a
neutral mediator agreed upon by the parties. In the event Coverall and
Franchisee are unable to agree upon a mediator within 15 days of the
date on which either party requests mediation of a matter, the mediator
shall be designated by the American Arbitration Association. The costs
23
Moses H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25
(1983).
24
Def.’s Mot. to Dismiss, at 6.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-6-
of the mediation shall be shared equally by the parties unless otherwise
agreed in writing.25
Thus, under the Franchise Agreement, mediation is a condition precedent to either
party’s ability to file a lawsuit or commence arbitration.26
The parties do not dispute that this provision is valid and enforceable under
Georgia law. Instead, they dispute whether the Plaintiffs requested mediation.27 Based
upon the evidence offered by the parties, the Court finds that the Plaintiffs did not
make a good faith request for mediation, and consequently have not satisfied the
condition precedent to filing a lawsuit. The Plaintiffs provide evidence of e-mails Mr.
Richardson sent to the Defendant asking for mediation.28 However, evidence provided
by the Defendant fills in gaps in the e-mail chains that the Plaintiffs provided. When
these e-mails are put into context by the Defendant’s evidence, it becomes obvious
that Mr. Richardson was not requesting mediation for the issues in dispute in this
lawsuit.
25
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
26
Houseboat Store, LLC v. Chris-Craft Corp., 302 Ga. App. 795, 799
(2010) (“[T]he mediation provision is a condition precedent to either party’s right to
file a lawsuit arising out of disputes between them.”).
27
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 8-9; Reply Br. in Supp.
of Def.’s Mot. to Dismiss, at 3-4.
28
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, Ex. A.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-7-
This evidence shows that Mr. Richardson communicated with the Defendant
concerning the Defendant’s failure to provide the guaranteed business it had promised
to provide, and about refinancing the debt on the loans that the Plaintiffs owed the
Defendant.29 The parties attempted to informally resolve these two specific issues: Mr.
Richardson’s concerns about the guaranteed business, and money owed on the notes.
This is further supported by the settlement agreement the Defendant proposed to Mr.
Richardson, which addressed refinancing the promissory notes and providing money
for business owed.30 Mr. Richardson’s requests for mediation did not address the
issues in dispute in this lawsuit. These e-mail communications did not touch upon any
FLSA allegations, fraud allegations, or allegations that the loans violated state law.
And, although the lack of promised business is mentioned in the Complaint, it is only
a peripheral issue in the instant lawsuit. Therefore, the Court finds that the Plaintiffs
did not make a good faith attempt to mediate the disputes at issue in this lawsuit.
However, the Court concludes that a stay is more appropriate than dismissal.31
“When confronted with an objection that a plaintiff has initiated litigation without
29
Reply Br. in Supp. of Def.’s Mot. to Dismiss, Ex. A.
30
Pls.’ Sur-Reply Br. in Opp’n to Def.’s Mot. to Dismiss, Ex. A-1 at 1-2.
31
See Mobility Transit Servs., LLC v. Augusta, 2013 WL 3225475, at *3
(S.D. Ga. June 25, 2013) (concluding that a stay was more appropriate than dismissal
in a case involving failure to mediate).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-8-
satisfying arbitration or mediation requirements, courts routinely stay rather than
dismiss the proceedings to allow for implementation of the agreed-upon dispute
resolution mechanism.”32 “[D]istrict courts have inherent, discretionary authority to
issue stays in many circumstances, and granting a stay to permit mediation (or to
require it) will often be appropriate.”33 “It is true, of course, that examples in the case
law do exist wherein actions have been dismissed for non-compliance with dispute
resolution provisions. But that course of action is not mandatory; rather, district courts
are vested with discretion to determine whether stay or dismissal is appropriate.”34
Therefore, the Court stays this litigation until the Plaintiffs make a proper request for
mediation.
The Plaintiffs also argue that the Defendant waived its right to rely upon the
alternative dispute resolution mechanisms in the Franchise Agreement by refusing to
mediate.35 However, as discussed above, the e-mail communications between the
32
Id. (quoting Swartz v. Westminister Servs., Inc., 2010 WL 3522141, at
*1 (M.D. Fla. Sept. 8, 2010)).
33
Advanced Bodycare Sols., LLC v. Thione Int’l, Inc., 524 F.3d 1235, 1241
(11th Cir. 2008); see also Clinton v. Jones, 520 U.S. 681, 683 (1997) (noting that a
“District Court has broad discretion to stay proceedings as an incident to its power to
control its own docket”).
34
Mobility Transit Servs., 2013 WL 3225475 at *3 (quoting N-Tron Corp.
v. Rockwell Automation, Inc., 2010 WL 653760, at *7 (S.D. Ala. Feb. 18, 2010)).
35
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 9-11.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-9-
parties demonstrate that the Plaintiffs never raised complaints concerning the issues
in dispute in this lawsuit. Therefore, the Defendant never refused to mediate these
issues at all. Furthermore, the issue of waiver should be decided by the arbitrator, and
not this Court.36
B. Arbitration
The Court also concludes that it is appropriate to grant the Defendant’s motion
to compel arbitration. Any disputes that remain unresolved after the completion of
mediation should be submitted to arbitration pursuant to the procedures outlined in the
Franchise Agreement. Paragraph 25 of the Franchise Agreement, titled “DISPUTE
RESOLUTION/ARBITRATION,” provides, in part, that “all controversies, disputes
or claims between Coverall . . . and Franchisee . . . arising out of or related to this
Agreement or the validity of this Agreement or any provision thereof . . . shall be
submitted promptly for binding arbitration.”37
Importantly, the Franchise Agreement also contains a provision delegating
questions of validity or enforceability of the arbitration agreement to the arbitrator.
This provision states that all disputes “arising out of or related to this Agreement or
36
BG Group, PLC v. Republic of Argentina, 134 S. Ct. 1198, 1207 (2014)
(noting that “courts presume that the parties intend arbitrators, not courts, to decide
disputes about the meaning and application of particular procedural preconditions for
the use of arbitration” including “waiver, delay, or a like defense to arbitrability”).
37
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-10-
the validity of this Agreement or any provision thereof (including this arbitration
agreement, the validity and scope of which Coverall and Franchisee acknowledge and
agree is to be determined by an arbitrator, not a court)” should be submitted to
arbitration.38 A “delegation provision” such as this is an “an agreement to arbitrate
threshold issues concerning the arbitration agreement.”39 With such a provision, the
parties have agreed that threshold determinations, such as whether an arbitration
agreement is enforceable, should be determined by the arbitrator.40 Both the Supreme
Court and the Eleventh Circuit have upheld these kinds of provisions.41 “Courts
should enforce valid delegation provisions as long as there is ‘clear and unmistakable’
evidence that the parties manifested their intent to arbitrate a gateway question.”42
The Court’s authority to review an arbitration agreement containing a
delegation provision is narrow. “When an arbitration agreement contains a delegation
38
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
39
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010).
40
Parnell v. CashCall, Inc., 804 F.3d 1142, 1146 (11th Cir. 2015).
41
See Rent-A-Center, 561 U.S. at 68-69 (“We have recognized that parties
can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties
have agreed to arbitrate or whether their agreement covers a particular controversy.”);
Parnell, 804 F.3d at 1146 (discussing the enforceability of delegation provisions).
42
In re Checking Account Overdraft Litig. MDL No. 2036, 674 F.3d 1252,
1255 (11th Cir. 2012).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-11-
provision and the plaintiff raises a challenge to the contract as a whole, the federal
courts may not review his claim because it has been committed to the power of the
arbitrator. Instead, the plaintiff must ‘challenge[ ] the delegation provision
specifically.’”43 “[A]bsent a challenge to the delegation provision itself, the federal
courts must treat the delegation provision ‘as valid under § 2, and must enforce it
under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole
for the arbitrator.’”44 None of the Plaintiffs’ arguments specifically challenge the
delegation provision. Therefore, these disputes should be decided by an arbitrator.
43
Parnell, 804 F.3d at 1146 (quoting Rent-A-Center, 561 U.S. at 72).
44
Id. at 1146-47 (quoting Rent-A-Center, 561 U.S. at 72).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-12-
i. Class Action Waiver
First, the Plaintiffs challenge the class action waiver in the arbitration clause.
This waiver provides:
B. Franchisee and Coverall agree that arbitration shall be conducted on
an individual, not a class wide basis, that only Coverall (and its officers,
directors, agents and/or employees) and Franchisee (and Franchisee’s
owners, officers, directors and/or guarantors) may be parties to any
arbitration proceeding described in this Paragraph 25B, and that no such
arbitration between Coverall and Franchisee shall be consolidated with
any other proceeding between Coverall and any other Franchisee or third
party.45
The Plaintiffs argue that this creates a carve-out from the delegation provision for
challenges to the class action waiver.46 However, the Plaintiffs’ argument
misconstrues this contractual language. The class action waiver provides that “if any
court or arbitrator determines that all or any part” of the class action waiver is
unenforceable, then those disputes shall be resolved in a judicial proceeding.47 From
this, the Plaintiffs argue that the Franchise Agreement states that a court can determine
if the class action waiver is enforceable.
However, this language merely states that if a court, under some circumstance,
were to conclude that the waiver is unenforceable, then those disputes would be heard
45
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
46
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 17.
47
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-13-
by a court of competent jurisdiction. It addresses a hypothetical situation in which a
court has the authority to make such a determination. It does not itself give authority
to review the waiver. One example of such a situation, as the Defendant noted at oral
argument, would be if a court were to find the delegation provision invalid. This
provision does not itself, however, provide this Court with authority to determine
whether the class action waiver is enforceable. Therefore, there is no carve-out
provision for review of the class action waiver.
The Plaintiffs also argue that the class action waiver is unenforceable because
it violates the National Labor Relations Act, the Georgia Industrial Loan Act, and
Georgia’s Payday Lending Act.48 However, these arguments challenge the
enforceability of a portion of the arbitration agreement, which the parties have
committed to be determined in arbitration. This is the exact kind of dispute that the
delegation provision addresses. Since these arguments do not challenge the validity
of the delegation provision itself, the arbitrator, and not this Court, should review
them.
ii. Injunctive Relief
Next, the Plaintiffs argue that their claims for injunctive relief are not subject
to arbitration. The Franchise Agreement provides that “[n]otwithstanding anything in
48
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 17-23.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-14-
Paragraphs 24 and 25 to the contrary, Coverall and Franchisee shall be entitled to
apply at any time directly to a court of competent jurisdiction for the entry of
preliminary and permanent injunctions and orders of specific performance.”49 The
Plaintiffs argue that the arbitration agreement provides a carve-out from the delegation
provision for claims for injunctive relief and specific performance.50
However, the Court concludes that this is a threshold determination that the
parties have delegated to the arbitrator to determine. The delegation provision states
that any disputes arising out of the arbitration agreement, including its “scope” should
be “determined by an arbitrator, not a court.”51 This dispute goes to the scope of the
arbitration agreement – whether it encompasses injunctive relief or not. It would
contravene the parties’ intent for the Court to decide this issue. Therefore, the
arbitrator should determine whether the arbitration agreement encompasses the
Plaintiffs’ claims for injunctive relief. This conclusion is further bolstered by the fact
that holding otherwise would result in inefficient piecemeal litigation in which certain
claims would be decided in arbitration while others would remain before this Court.
49
Def.’s Mot. to Dismiss, Ex. 1-A at 16.
50
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 13-16.
51
Def.’s Mot. to Dismiss, Ex. 1-A at 15.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-15-
iii. Notice of Right to Pursue Administrative Claims
Next, the Plaintiffs argue that the delegation and arbitration provisions are
unenforceable because they do not provide reasonable notice to the Plaintiffs that they
can file administrative claims before the NLRB.52 Courts have found that language in
arbitration provisions, which employees can reasonably interpret as a waiver of their
right to file administrative labor charges, violate the NLRA.53
However, this is once again a challenge to the validity or enforceability of the
arbitration agreement, which is an issue that the parties have delegated to the
arbitrator. The Plaintiffs essentially are arguing that the arbitration agreement is
unenforceable because it violates the NLRA. The parties have specifically delegated
questions of enforceability of the arbitration provision such as this to the arbitrator.
The Plaintiffs attempt to characterize this as a challenge to the delegation provision,
which this Court can consider. However, the Plaintiffs have failed to explain how
delegating the threshold questions of arbitrability to an arbitrator would lead
employees to believe that they could not file administrative actions with the NLRB.
All of the cases cited by the Plaintiffs deal sweeping language in arbitration
agreements that seem to preclude any type of civil proceeding outside of arbitration,
52
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 23.
53
See, e.g., Murphy Oil USA v. NLRB, 808 F.3d 1013, 1019 (5th Cir. 2015);
D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 363-64 (5th Cir. 2013).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-16-
and not language in delegation provisions.54 Therefore, since this argument does not
present a challenge to the validity of the delegation provision, it should be left to the
arbitrator.
iv. Mr. Richardson’s Claims
Finally, the Plaintiffs argue that Mr. Richardson’s claims are not subject to
arbitration. Specifically, they contend that Mr. Richardson was not a party to the
arbitration agreement between the Defendant and Janitorial Tech because he only
signed the contract in a representative capacity on behalf of Janitorial Tech.55 Thus,
according to them, Mr. Richardson did not individually agree to arbitrate his claims.
The Defendant responds that Mr. Richardson signed the Franchise Agreement as sole
owner of Janitorial Tech, and agreed that the arbitration agreement applied to
Janitorial Tech and its “owners, officers, directors, agents and/or employees and/or
any guarantors of this Agreement.”56
54
See, e.g., D.R. Horton, 737 F.3d at 363 (discussing an arbitration clause
stating that employees waived the right to file a “lawsuit or other civil proceeding”).
55
Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss, at 24-25.
56
Reply Br. in Supp. of Def.’s Mot. to Dismiss, at 8.
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-17-
“Arbitration is . . . a matter of contract, and ‘the FAA's strong proarbitration
policy only applies to disputes that the parties have agreed to arbitrate.’”57 Ordinarily,
“a party cannot be required to submit to arbitration any dispute which he has not
agreed so to submit.”58 “Under certain circumstances, however, nonsignatories to an
arbitration agreement governed by the Federal Arbitration Act can be compelled to
arbitrate their claims.”59 “In deciding whether a nonsignatory should be bound to an
arbitration agreement . . . ‘[the Georgia Court of Appeals] has considered a number
of other factors in this context, including the status of the parties as joint tortfeasors,
the relationship of the claims to the arbitration contract, and the existence of an agency
relationship.’”60 For example, the Georgia Court of Appeals has held that a nonsignatory guarantor who asserted a claim for affirmative relief was estopped from
avoiding arbitration.61 The Georgia Court of Appeals has also compelled a non-
57
Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845
F.3d 1351, 1354 (11th Cir. 2017) (quoting Klay v. All Defendants, 389 F.3d 1191,
1200 (11th Cir. 2004)).
58
AT&T Tech., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648
(1986).
59
LaSonde v. CitiFinancial Mortg. Co., 273 Ga. App. 113, 114 (2005).
60
Lankford v. Orkin Exterminating Co., 266 Ga. App. 228, 231 (2004).
61
Dunaway v. UAP/GA AG. Chem., Inc., 301 Ga. App. 282, 286 (2009)
(“[B]y asserting a claim for affirmative relief, the Dunaway entities were estopped
from avoiding arbitration of the set-off claim.”).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-18-
signatory plaintiff to arbitrate when that plaintiff’s claims arose from the contract
containing the arbitration agreement and were intertwined with the claims of the
signatory plaintiff.62
Here, Mr. Richardson and Janitorial Tech’s claims are inextricably intertwined.
In fact, they maintain the same exact claims against the Defendant, which weighs in
favor of compelling Mr. Richardson to arbitration.63 Like the non-signatory party in
Dunaway, Mr. Richardson chose to assert an affirmative claim for relief that arose out
of the business relationship resulting that the Franchise Agreement created.
Furthermore, Paragraph 37 of the Franchise Agreement, titled “GUARANTY,” states
that “[t]he shareholders or members of any corporate entity constituting Franchisee
. . . that may own the shares of the partnership or corporate entity constituting
Franchisee . . . do by signing this Agreement . . . agree to be bound by Paragraphs 18,
62
LaSonde, 273 Ga. App. at 114; see also Lankford, 266 Ga. App. at 231
(concluding that intertwined claims were appropriately sent to arbitration despite the
fact that one defendant was a non-signatory to the arbitration agreement); Autonation
Fin. Servs. Corp. v. Arain, 264 Ga. App. 755, 761 (2003) (noting that the plaintiff’s
claims against signatory and non-signatory defendants were “based on the same facts
and are inherently inseparable”).
63
See LaSonde, 273 Ga. App. at 115 (“Moreover, because Jack and Mary
have alleged the exact claims against CitiFinancial, resolution of their claims in
different forums ‘may result in varying decisions, discreditable to the administration
of justice.’”).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-19-
20, 23, 24, and 25.”64 Paragraph 25 contains the arbitration provisions. Thus, Mr.
Richardson agreed that he, as the sole member of Janitorial Tech, would be bound by
the arbitration provision. Finally, Mr. Richardson also personally guaranteed Janitorial
Tech’s performance of its obligations under the Franchise Agreement.65 Mr.
Richardson’s status as a guarantor further weighs in favor of compelling him to
comply with the arbitration provision.66 Because of these facts, the Court finds that it
is appropriate to compel Mr. Richardson to arbitrate his claims.
IV. Conclusion
For the reasons stated above, the Defendant’s Motion to Dismiss, or in the
Alternative, Stay Litigation Pending Arbitration [Doc. 7] is GRANTED in part and
DENIED in part. The Clerk is directed to administratively close this case.
SO ORDERED, this 7 day of December, 2017.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
64
Def.’s Mot. to Dismiss, Ex. 1-A at 17.
65
Reply Br. in Supp. of Def.’s Mot. to Dismiss, Ex. A-3.
66
See Dunaway, 301 Ga. App. at 285-86 (noting that the non-signatory
party “personally guaranteed” the signatory party’s debt and concluding that the nonsignatory party was bound by the arbitration provision because its claim arose out of
this business relationship).
T:\ORDERS\17\Richardson\17cv2405\mtdtwt.wpd
-20-
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?