Hudson et al v. Windows USA, LLC et al

Filing 26

ORDER denying 15 Motion for Discovery; granting in part 19 Motion for Extension of Time to File Response/Reply for the reasons stated in the order. Plaintiffs shall file their response(s) to the motion to compel arbitration and the joinder therein within 14 days of the entry of this Order. Signed by District Judge Daniel P. Jordan III on November 3, 2016. (SP)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
ARCHIE & ANGELA HUDSON,
on behalf of themselves and all of those
similarly situated

PLAINTIFFS

v.

CIVIL ACTION NO. 3:16cv596-DPJ-FKB

WINDOWS USA, LLC, d/b/a WINDOWS USA
& ALASKAN WINDOW SYSTEMS;
BIG FOUR COMPANIES, INC.; & WELLS
FARGO, N.A.

DEFENDANTS

ORDER
This case is before the Court on Plaintiffs’ Motion for a Limited Lifting of the Stay of
Discovery [15] and their Motion for Extension of the Deadlines to File Responses in Opposition
to the Defendants’ Motions to Compel Arbitration [19]. Because Plaintiffs have not made a
compelling showing that discovery is necessary, the motion to lift the stay is denied. The motion
for extension is granted to the extent that Plaintiffs will be given 14 days from the entry of this
Order to respond to the arbitration motion.
I.

Facts and Procedural History
This case arises from Plaintiffs’ purchase, following an in-home demonstration, of new

windows for their home from Defendant Windows USA, LLC. The purchase was financed via a
Visa Home Projects Program credit card issued by Defendant Wells Fargo Financial National
Bank.1 Plaintiffs claim that the sales practices employed by Defendants to secure the purchase of
windows and the financing through Wells Fargo are deceptive, fraudulent, and unconscionable.

1

The Complaint named Wells Fargo, N.A., as a defendant, but Wells Fargo asserts that
“[t]here is no such entity.” Def.’s Mot. [12] at 1 n.1.

Plaintiffs filed this lawsuit on July 28, 2016. They assert claims for violations of the
Truth in Lending Act and the Mississippi Consumer Protection Act, fraud, breach of contract,
breach of implied warranties and covenants, and gross negligence, and seek actual and punitive
damages for themselves and on behalf of a class of similarly situated individuals under Federal
Rule of Civil Procedure 23.
On September 16, 2016, Defendant Wells Fargo filed its Motion to Compel Arbitration
[12]. Wells Fargo asserts that, pursuant to the terms of the Home Projects Visa Credit Card
Account Application Plaintiffs signed, Plaintiffs must arbitrate their claims against Wells Fargo.
Defendants Windows and Big Four Companies, Inc. have joined in Wells Fargo’s motion.
Joinder [17]; Mem. [18]. In lieu of responding substantively to the arbitration motion, Plaintiffs
filed their Motion for a Limited Lifting of the Stay of Discovery [15] and Motion for Extension
of the Deadlines to File Responses in Opposition to the Defendants’ Motions to Compel
Arbitration [19]. The matters raised in Plaintiffs’ motions have been fully briefed, and the Court
is prepared to rule.
II.

Analysis
Plaintiffs contend that they need “limited” discovery “in order to raise their legitimate

defenses to whether a contract was ever formed under Mississippi state law related to the
(fraudulent) Wells Fargo Credit Card Agreement.” Pls.’ Mem. [16] ¶ 2. Plaintiffs’ theory is that
they never “assented to the terms of the Wells Fargo Credit Card Application, in general” and
that they never “saw, read, or were informed (until after the paperwork was signed) of the
draconian and disgraceful Arbitration Clause . . . that, perplexingly, is printed on the back of
those forms of adhesion.” Id. ¶ 7.

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Based on these averments, Plaintiffs claim that they need to obtain the following items of
discovery (described as “[a]n illustrative, but not exhaustive, list”) in order to properly respond
to the arbitration motion:
(1) the deposition of Windows USA/Wells Fargo sales-agent, Aaron Williams; (2)
requests for production to all Defendants related to sales training activities and
materials, sale-force manuals, correspondence, or any other documents that relate
to how the Wells Fargo Credit Card Application forms are marketed, sold, and
filled out by the Windows USA/Wells Fargo in-home sale-force; (3) the decision
to print the Arbitration Clause of the Wells Fargo Credit Card Application on the
back of that form of adhesion; (4) interrogatories to the Defendants asking for all
available details about how the Wells Fargo Credit Card Application forms are
marketed, sold, and filled out by the Windows USA/Wells Fargo in-home saleforce during these late-night in-home sales calls; and (5) any communications
between Wells Fargo and Windows USA regarding the creation of the Wells
Fargo Credit Card Application and how Wells Fargo Credit Card Application
forms are marketed, sold, and filled out by the Windows USA/Wells Fargo inhome sale-force during these late-night in-home sales calls.
Id. ¶ 13.
Plaintiffs are correct that the Court’s initial step in assessing the applicability of an
arbitration agreement is to determine “whether the parties entered into any arbitration agreement
at all.” Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016) (emphasis
omitted); see also id. at 202 (explaining that “analysis of contract formation” “turns on state
contract law”). But this analysis should be made in the context of “‘an expeditious and summary
hearing, with only restricted inquiry into factual issues’ bearing on the making of the arbitration
agreement.” Snap-on Tools Corp. v. Mason, 18 F.3d 1261, 1265 n.4 (5th Cir. 1994) (quoting
Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 22 (1983)). “Thus, courts
have generally denied arbitration-related discovery absent a compelling showing that such
discovery is required.” Bell v. Koch Foods of Miss., LLC, No. 3:08cv697-WHB-LRA, 2009 WL
1259054, at *3 (S.D. Miss. May 5, 2009), aff’d, 358 F. App’x 498 (5th Cir. 2009); accord Am.

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Gen. Life Ins. Co. v. Harper, No. 3:15cv605-DPJ-FKB, 2016 WL 430609, at *2 (S.D. Miss. Feb.
3, 2016).
Here, Plaintiffs support their prayer for discovery by asserting that the salesperson from
whom they purchased windows “intentionally misrepresented the instruments themselves—
including, and especially, the Wells Fargo Visa Credit Card Application—that the Hudsons were
tricked, misle[]d, and otherwise defrauded into signing.” Pls.’ Mem. [16] ¶ 8. Plaintiffs
emphasize that they are pursuing a fraud-in-the-factum argument, which they believe is
“determinative over the question sub judice.” Pls.’ Reply [25] at 2.2
“[F]raud in factum is a ‘misrepresentation as to the nature of a writing that a person signs
with neither knowledge nor reasonable opportunity to obtain knowledge of its character or
essential terms.’” GuideOne Mut. Ins. Co. v. Rock, No. 1:06cv218-SA-JAD, 2009 WL 2195047,
at *3 (N.D. Miss. July 22, 2009) (quoting Ross v. Citifinancial, Inc., 344 F.3d 458, 465 (5th Cir.
2003)). The facts pertinent to this defense—assuming it is available to Plaintiffs—are within
their personal knowledge. And Plaintiffs have not demonstrated how asserting a fraud-in-thefactum defense is “determinative” of the present motion or how they hope to enhance that
defense through the far-reaching discovery they now seek.
Under these circumstances, courts—including this one—have denied arbitration-related
discovery. See Harper, 2016 WL 430609, at *2 (“Presumably, [the plaintiff] possesses personal
knowledge regarding what he was told, or should at least be able to explain a theory.” (citing

2

Whether this defense matters with respect to the motion to compel is debatable but not
yet relevant. Only fraud “relate[d] to the arbitration clause itself”—whether pleaded as “fraud in
the factum [or] fraud in the inducement”—can impact the question of whether a party to a
contract “can be compelled to arbitrate.” R.M. Perez & Assocs., Inc. v. Welch, 960 F.2d 534, 538
(5th Cir. 1992). If the alleged fraud—in the factum or in the inducement—instead “relates to the
entire agreement, then the Federal Arbitration Act requires that the fraud claim be decided by an
arbitrator.” Id.
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Bell, 358 F. App’x at 501)); Bell, 2009 WL 1259054, at *3 (“Plaintiffs already have personal
knowledge regarding the manner in which the subject Agreements, and arbitration[] clauses
contained therein, were presented to them.”); Bank One, N.A. v. Coates, 125 F. Supp. 2d 819,
828 (S.D. Miss. 2001), aff’d sub nom. Bank One NA v. Coates, 34 F. App’x 964 (5th Cir. 2002)
(“The terms of the original agreement and amendment notification can be gleaned from the
documents themselves; and there is no apparent need for discovery as to [the consumer’s] own
knowledge of the contents and/or existence of these documents or as to his alleged understanding
of (or failure to understand) the terms of these documents, for these are matters only the
[consumer] himself could know.”).
Finally, Plaintiffs’ conclusory allegation to the contrary—that the information sought “is
necessary[,] and outside of the personal knowledge of the Hudsons[,] for the Hudsons to
adequately and reasonably respond to the Defendants’ Motions to Compel Arbitration in this
matter”—does not establish the need for discovery. Pls.’ Reply [25] at 12. See Ameriprise Fin.
Servs., Inc. v. Etheredge, 277 F. App’x 447, 449 (5th Cir. 2008) (affirming denial of discovery
where plaintiff asserted various defenses to motion to compel arbitration, including fraud-in-thefactum, but “never suggested what evidence relevant to these defenses he suspected to find
through discovery”).
In sum, Plaintiffs have not explained how any of the discovery they seek would aid the
Court in assessing whether they agreed to arbitrate disputes with Defendants. Therefore, their
motion to lift the stay of discovery is denied. But, to the extent that they will be given 14 days
from the entry of this Order to respond to the motion to compel arbitration and the joinder
therein, their motion for extension is granted in part.

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III.

Conclusion
The Court has considered all arguments. Those not specifically addressed would not

have changed the outcome. For the foregoing reasons, Plaintiffs’ Motion for a Limited Lifting of
the Stay of Discovery [15] is denied, and their Motion for Extension of the Deadlines to File
Responses in Opposition to the Defendants’ Motions to Compel Arbitration [19] is granted in
part. Plaintiffs shall file their response(s) to the motion to compel arbitration and the joinder
therein within 14 days of the entry of this Order.
SO ORDERED AND ADJUDGED this the 3rd day of November, 2016.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE

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