Scott et al v. Family Dollar Stores, Inc.

Filing 291

ORDER denying 275 Motion to Compel. Signed by Magistrate Judge David S. Cayer on 1/3/17. (tob)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
Civil Action No.: 3:08-CV-540-MOC-DSC
LUANNA SCOTT, et al.,
Plaintiffs,

ORDER

v.
FAMILY DOLLAR STORES, INC.,
Defendant.
THIS MATTER is before the Court on Defendant’s “Motion … to Compel Arbitration”
(document #275) and the parties’ briefs and exhibits.
The Court has carefully considered the parties’ arguments and the applicable authorities.
On June 17, 2013, approximately one month after oral argument on class certification
before the Fourth Circuit, Defendant began to solicit putative class members to sign agreements
opting for arbitration rather than participation as members of the class in this case. Defendant did
not disclose its solicitations or the existence of those arbitration agreements to Plaintiffs’ counsel
or the Court for more than three years. Rather, Defendant elected to litigate the class certification
issue in this Court and on appeal to the Fourth Circuit. Defendant moved to compel arbitration
only after the Fourth Circuit affirmed this Court’s class certification order.
It is well recognized that arbitration can be waived when not sought until after class
certification has been fully litigated. See In re: Cox Enterprises, Inc., Set-Top Cable Television
Box Antitrust Litigation, 790 F.3d 1112 (10th Cir. 2015); In re Citigroup, Inc., 376 F.3d 23 (1st
Cir. 2004); In re: Checking Account Overdraft Litigation, 2016 U.S. Dist. LEXIS 145813 at **2930; Elliott v. KB Home N.C., Inc., 231 N.C. App. 332, 752 S.E.2d 694 (N.C. Ct. App. 2013), cert.

denied, 135 S. Ct. 494 (2014); Milbourne v. JRK Residential Am., LLC, 2016 U.S. Dist. LEXIS
33603, 2016 WL 1071564 (E.D. Va. Mar. 15, 2016); Kingsbury v. U.S. Greenfiber, LLC, 2012
U.S. Dist. LEXIS 94854, 2012 WL 2775022 (C.D. Cal. June 29, 2012); Edwards v. First Am.
Corp., 289 F.R.D. 296 (C.D. Cal. 2012); Newberg on Class Actions, Vol. 1, § 1:5, 12-16 (5th ed.
2011).
The courts’ collective guidance is simple: when a defendant has a right to
arbitrate it “‘must do all it could reasonably have been expected to do to make the
earliest feasible determination of whether to proceed judicially or by
arbitration.’” Because Wachovia choose to try to win the case on the merits by
filing dispositive motions and obtaining discovery, all of which were geared
primarily to defeating the claims of the class, it cannot now invoke arbitration
against the unnamed class members.
In Re: Checking Account, 2016 U.S. Dist. LEXIS 145813 at **27-28 (citing In re Cox, 790 F.3d
at 1119-20; emphasis added, quoting Stud & Components, Inc. v. American Eagle Design Build
Studios, LLC, 588 F.3d 963, 969 (8th Cir. 2009)). “[A] party must do all it could reasonably have
been expected to do to make the earliest feasible determination of whether to proceed judicially or
by arbitration.” Id.; In re: Cox, 790 F.3d at 1119-1121 (same).
Defendant’s decision to fully litigate the class certification issue prior to pursuing
arbitration is contrary to “the purpose of arbitration [which is] to reach a full settlement of disputed
matters without litigation….” Elliott, 231 N.C. App. at 336 (citing Gemini Drilling & Found., LLC
v. National Fire Ins. Co. of Hartford, 192 N.C. App. 376, 383, 665 S.E.2d 505, 509 (2008)
(emphasis added; citation omitted).
For those and the other reasons stated in Plaintiff’s brief (document #285), Defendant’s
Motion to Compel Arbitration is denied.
The Clerk is directed to send copies of this Order to the parties’ counsel and to the
Honorable Max O. Cogburn, Jr.

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SO ORDERED.

Signed: January 3, 2017

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