United States District Court, N.D. Texas, Dallas Division
VICKIE FORBY, individually and on behalf of all others similarly situated, Plaintiff,
ONE TECHNOLOGIES, LP; ONE TECHNOLOGIES MANAGEMENT LLC; and ONE TECHNOLOGIES CAPITAL LLP, Defendants.
MEMORANDUM OPINION AND ORDER
Lindsay, United States District Judge
the court is Defendants' Motion to Compel Arbitration and
Dismiss the Case (Doc. 52), filed April 17, 2017. After
careful review of the motion, record, and applicable law, the
court grants Defendants' Motion to Compel Arbitration and
Dismiss the Case, and dismisses with prejudice this action.
Factual and Procedural Background
April 24, 2015, Plaintiff Vickie Forby
(“Plaintiff” or “Forby”) filed a
class action complaint in Illinois state court against One
Technologies, LP; One Technologies Management LLC; and One
Technologies Capital LLP (collectively,
“Defendants”), alleging claims for violations of
the Illinois Consumer Fraud Act (“ICFA”) and
unjust enrichment. Specifically, Plaintiff contends that
Defendants' website leads consumers to believe they are
signing up for a free credit report; however, once consumers
sign up, they are enrolled in a credit monitoring service
that costs $29.95 per month.
14, 2015, this action was removed to the Southern District of
Illinois pursuant to 28 U.S.C. § 1332(d) and 28 U.S.C.
§ 1441(a). On July 21, 2015, Defendants moved to dismiss
or transfer the case. In its motion, Defendants contended
that the parties entered into a valid contract that requires
their dispute to be resolved by arbitration in Dallas, Texas.
Defendants contended that pursuant to Seventh Circuit
precedent the court could not compel arbitration outside of
its district. Defendants, therefore, requested that the court
dismiss the action pursuant to the doctrine of forum non
conveniens, or transfer the action to the Northern
District of Texas pursuant to 28 U.S.C. § 1404(a). In
the alternative, Defendants requested that the court dismiss
with prejudice the action pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted. On March 25, 2016, Judge David R.
Herndon issued a memorandum and order that transferred this
action to the Northern District of Texas pursuant to 28
U.S.C. § 1404(a).
9, 2016, Defendants moved to dismiss all of Plaintiff's
claims under Federal Rule of Civil Procedure 12(b)(6) for
failure to state a claim upon which relief can be granted. On
March 31, 2017, the court denied the motion with respect to
Plaintiff's ICFA claim; granted the motion with respect
to Plaintiff's unjust enrichment claim; and dismissed
with prejudice Plaintiff's unjust enrichment claim. On
April 17, 2017, almost thirteen months after the case was
transferred to the Northern District of Texas, Defendants
moved to compel arbitration and dismiss with prejudice this
case. Defendants also simultaneously moved to stay the
proceeding and for a protective order regarding discovery
pending resolutions of the motion to compel. On April 24,
2017, the court held a telephonic hearing and granted
Defendants' expedited motion to stay the proceedings and
issued a protective order. On May 8, 2017, Plaintiff filed
her response to Defendants' Motion to Compel Arbitration
and Dismiss the Case. On May 22, 2017, Defendants filed their
reply to Plaintiff's response.
Federal Arbitration Act (“FAA”) “embodies
the national policy favoring arbitration.” Buckeye
Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443
(2006); Neal v. Hardee's Food Sys., Inc., 918
F.2d 34, 37 (5th Cir. 1990). In deciding whether to grant a
motion to compel arbitration, the court first considers
whether the parties agreed to arbitrate the dispute at issue.
See Webb v. Instacorp., Inc., 89 F.3d 252, 258 (5th
Cir. 1996) (per curiam). The court next determines whether
there are any legal restraints external to the agreement that
would foreclose arbitration of the dispute. See OPE
Int'l LP v. Chet Morrison Contractors, Inc., 258
F.3d 443, 445-46 (5th Cir. 2001) (per curiam). There is a
strong presumption against a finding that a party waived
arbitration, and the party contending that the right to
arbitration has been waived bears a heavy burden. Al
Rushaid v. Nat'l Oilwell Varco, Inc., 757 F.3d 416,
422 (5th Cir. 2014) (quoting Republic Ins. Co. v. PAICO
Receivables, LLC, 383 F.3d 341, 344 (5th Cir. 2004)).
this circuit's precedent, a party waives its right to
arbitrate if it (1) ‘substantially invokes the judicial
process' and (2) thereby causes ‘detriment or
prejudice' to the other party.” Id.
(quoting Miller Brewing Co. v. Fort Worth Distrib.
Co., 781 F.2d 494, 497 (5th Cir.1986)). To invoke the
judicial process, “the party seeking arbitration must
have taken acts in the lawsuit sufficient to
‘demonstrate[ ] a desire to resolve the arbitrable
dispute through litigation rather than
arbitration.'” Pacheco v. PCM Const. Servs.,
L.L.C., 602 F. App'x 945, 948 (5th Cir. 2015)
(alteration in original) (quoting Republic Ins. Co.,
383 F.3d at 345).
of the judicial process alone does not constitute waiver.
Republic Ins. Co., 383 F.3d at 346. There must also
be prejudice to the party opposing arbitration. Id.
Prejudice in this context refers to “inherent
unfairness in terms of delay, expense, or damage to a
party's legal position that occurs when the party's
opponent forces it to litigate an issue and later seeks to
arbitrate that same issue.” Id. (citation
omitted). Delay alone is insufficient to establish waiver of
the right to arbitration. Walker v. J.C Bradford &
Co., 938 F.2d 575, 578 (5th Cir. 1991) (“The mere
failure to assert [timely] the right of arbitration does not
alone translate into a waiver of that right.”). Delay
does, however, “bear on the question of prejudice, and
may, along with other considerations, require a court to
conclude that waiver has occurred.” Id.
“Once a defendant has put the plaintiff on notice
of its intent to demand arbitration, the plaintiff's
burden of showing waiver by subsequent acts of the defendant
is heavier.” Pacheco v. PCM Const. Servs.,
L.L.C., 602 F. App'x 945, 948 (5th Cir. 2015)
(citing Keytrade USA, Inc. v. Ain Temouchent M/V,
404 F.3d 891, 897 (5th Cir.2005)). “Waiver of an
arbitration right will not be lightly inferred without some
showing of prejudice” and “plaintiffs'
failure to bring forth more than generalized protestations
about the costs of delay are insufficient to overcome the
strong federal presumption in favor of arbitration.”
Walker, 938 F.2d at 578.
move to compel arbitration of the parties' dispute and
dismiss this action. Defendants contend that the arbitrator
should determine the enforceability of the arbitration
clause, not the courts. Further, Defendants contend that even
if the court decides the enforceability of the arbitration
provision, the court ought to compel arbitration, as a valid
arbitration provision exists and the dispute falls within the
scope of that provision. Plaintiff counters that Defendants
have waived their right to arbitration by invoking the
jurisdiction of the courts, which has caused Plaintiff to
suffer prejudice. The court will first address
Defendants' argument regarding the enforceability of the
arbitration clause, and then it will discuss whether the
Defendants have waived their right to arbitration.
Enforceability of the Arbitration Provision
fails to respond to Defendants arguments regarding the
enforceability of the arbitration provision. Plaintiff,
therefore, does not dispute that she assented to the Terms
and Conditions on the Defendants' website, which
contained the arbitration provision at issue. Accordingly,
there does not appear to be any dispute over the existence of
a valid arbitration clause or whether the parties'
dispute falls within that clause. As this ...