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Forby v. One Technologies LP

United States District Court, N.D. Texas, Dallas Division

January 13, 2020

VICKIE FORBY, individually and on behalf of all others similarly situated, Plaintiff,
v.
ONE TECHNOLOGIES, LP; ONE TECHNOLOGIES MANAGEMENT, LLC; and ONE TECHNOLOGIES CAPITAL, LLP, Defendants.

          MEMORANDUM OPINION AND ORDER

          SAM A. LINDSAY UNITED STATES DISTRICT JUDGE.

         On November 8, 2019, the United States Magistrate Judge entered the Findings, Conclusions and Recommendation of the United States Magistrate Judge (Doc. 118) (“Report”), recommending that the court: (1) deny Defendants' Motion to Compel Arbitration and Stay Proceedings (Doc. 97); (2) grant Defendants' Motion, In the Alternative, to Strike Plaintiff's Class Allegations (Doc. 99) and require Plaintiff to filed an amended complaint that excludes all class allegations; and deny as moot Defendants' Motion for a Temporary Stay of All Proceedings Pending Resolution of Defendants' Motion to Compel Arbitration (Doc. 102).

         Plaintiff filed objections (Doc. 119) to the Report, contending that the magistrate judge erred in recommending that her class allegations be stricken. Defendants filed objections (Doc. 120) to the Report, contending that the magistrate judge erred in recommending that their Motion to Compel Arbitration be denied by failing to consider their contention that Plaintiff should be compelled to arbitrate her new Credit Repair Organizations Act claim because Defendants could not have waived their right to arbitrate this new claim. Defendants also filed a response to Plaintiff's objections.[*] For the reasons that follow, the court accepts in part and rejects in part the findings and conclusions of the magistrate judge.

         I. Defendants' Motion to Compel Arbitration and to Stay Proceedings (Doc. 97)

         The Report adequately addresses the issues raised by the parties with respect to Defendants' Motion to Compel Arbitration, and the court determines that the magistrate judge's findings, conclusions, and recommendations regarding this motion is correct. Accordingly, having reviewed Defendants' Motion to Compel Arbitration, pleadings, file, record in this case, and Report, and having conducted a de novo review of the portions of the Report to which objection was made with respect to this motion, the court determines that the findings and conclusions of the magistrate judge are correct, and accepts them as those of the court. Accordingly, the court overrules the Defendants' objections and denies Defendants' Motion to Compel Arbitration and Stay Proceedings (Doc. 97).

         II. Defendants' Motion, In the Alternative, to Strike Plaintiff's Class Allegations (Doc. 99)

         As noted, the magistrate judge recommended that the court grant Defendants' Motion, In the Alternative, to Strike Plaintiff's Class Allegations (“Motion to Strike”) (Doc. 99) and require Plaintiff to filed an amended complaint that excludes all class allegations. Specifically, the magistrate judge recommended that “the allegations of any putative class members subject to the Arbitration Agreement in Plaintiff's Second Amended Complaint should be stricken, ” as Defendants did not, and could not “have waived their arbitration rights as to putative class members because the class has yet to be certified. Report 5-6. For the reasons that follow, the court rejects the findings and conclusions of the magistrate judge with respect to Defendants' Motion to Strike (Doc. 99), as the court determines that Defendants have no class arbitration rights to waive.

         A. The Parties' Contentions

         In support of their Motion to Strike, Defendants argue that the court should strike Forby's class allegations because they have a “broad and enforceable” arbitration agreement with all absent class members that has not been waived by them, and “it is undisputed that all putative class members' claims are subject to [binding] individual arbitration.” Defs.' Mot. to Strike 12, 14. Defendants further assert that, because, “every absent putative class member is subject to binding, individual arbitration, ” Forby's class allegations necessarily fail, as she will never be able to meet Federal Rule of Civil Procedure 23(a)'s numerosity, typicality, and adequacy requirements for class certification, and no amount of discovery will cure this deficiency. Thus, Defendants' Motion to Strike centers on its contention that, because all claims and disputes by individual persons who purchase and use Defendants' credit monitoring services are subject to binding arbitration under the arbitration agreement at issue, the arbitration agreement necessarily extends to and requires arbitration of class or collective actions.

         Defendants contend that it is undisputed that they have a valid arbitration agreement with all absent class members based on this court's opinion in Forby v. One Techs., LP, 3:16-CV-856-L, 2017 WL 2930514 (N.D. Tex. July 10, 2017), which was reversed by the Fifth Circuit on November 28, 2018. See Forby v. One Techs., L.P., 909 F.3d 780 (5th Cir. 2018). Defendants also rely on the declaration of One Technologies Senior Escalations Administrator Kevin Hain (“Hain”), in which he states:

5. One Technologies began selling its credit-monitoring services on October 1, 2008. Ever since October 1, 2008, every person who has purchased and used One Technologies' services first had to click a button, as part of the enrollment path, confirming that he or she had agreed to the “Terms and Conditions” that were (and still are) accessible during the enrollment process. This is true for all consumers who clicked through the enrollment path on all ScoreSense websites. Ever since October 1, 2008, it has been impossible for a person to enroll in One Technologies' credit-monitoring services without first agreeing to the Terms and Conditions.
6. From October 1, 2008 through May 16, 2019, the One Technologies Terms and Conditions have always included an arbitration agreement that has had the same material terms (any changes have been clerical, e.g. punctuation or identifying parties by name rather than category). A true and correct copy of the arbitration agreement that One Technologies has used since October 1, 2008 can be found at Paragraph 23 of Exhibit B to my original Declaration, which was dated July 21, 2015.

Defs.' Mot. to Strike App. 3.

         Defendants contend that, while the Fifth Circuit concluded that they waived their right to arbitrate Forby's claim for alleged violations of the Illinois Consumer Fraud Act (“ICFA”), it did not and could not have held that they waived their right to arbitrate any putative class members' claims because a nonnamed class member is not a party to a class-action litigation before the class is certified and, thus, cannot be compelled to arbitrate. Defendants argue that they could not have waived their right to compel arbitration of absent class members because the putative class members in this case have not ...


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