Bedgood v. Wyndham Vacation Resorts, Inc.

595 F.Supp.3d 1195

Charles Harold BEDGOOD, Joel Wilson Brandon, Hannah Lyn Heil-Brandon, Eddie Mathews Jr., Reena T. Smith, Justin Floyd Diaz, Candice Clark and Roslind Christine Harper, Plaintiffs,

v.WYNDHAM VACATION RESORTS, INC., Worldmark, the Club and Wyndham Resort Development Corporation, Defendants.

Case No. 6:21-cv-418-PGB-DCI

United States District Court, M.D. Florida, Orlando Division.

Signed March 30, 2022

Adam Szulczewski, Pro Hac Vice, Chicago, IL, Howard B. Prossnitz, The Law Offices of Howard B. Prossnitz, Oak Park, IL, for Plaintiffs.

David S. Sager, Pro Hac Vice, DLA Piper LLP, Short Hills, NJ, J. Trumon Phillips, DLA Piper US, LLP, Tampa, FL, for Defendants.

ORDER

PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

This cause comes before the Court on the following filings:

1. Defendants Wyndham Vacation Resorts, Inc., Worldmark, The Club, and Wyndham Resorts Development Corporation's Motion to Compel Arbitration (Doc. 11 (the "Motion to Compel ")), Plaintiffs Charles Harold Bedgood, Joel Wilson Brandon, Hannah Lyn Heil-Brandon, Eddie Mathews Jr., Reena T. Smith, Justin Floyd Diaz, Candice Clark, and Roslind Christine Harper's response in opposition (Doc. 13), Defendants’ reply (Doc. 19), and Plaintiffs’ surreply thereto (Doc. 23);

2. Magistrate Judge Daniel Irick's Report and Recommendation as to these filings (Doc. 48 (the "Report ")), Plaintiffs’ Objections thereto (Doc. 49), Defendants’ response in opposition (Doc. 50), Plaintiffs’ reply thereto (Doc. 53), and Plaintiffs’ Notice of Supplemental Authority (Doc. 54);

3. Plaintiffs’ Motion for Leave to File Other Document (Doc. 55 (the "Motion for Leave to File ")); and

4. Defendants’ Motion to Strike Plaintiffs’ Motion for Leave to File (Doc. 56 (the "Motion to Strike ")).

Upon consideration, the Court finds that Defendants’ Motion to Compel is due to be denied, Plaintiffs’ Motion for Leave to File is due to be denied, and Defendants’ Motion to Strike is due to be denied.

I. BACKGROUND

This case arises from Plaintiffs’ diligent search for a proper forum to litigate their claims against Defendants. Defendants operate a timeshare ownership program, which sells points to consumers that are, in turn, used to book accommodations at affiliated resorts worldwide. (Doc. 1, ¶¶ 30, 32–33). Using allegedly coercive tactics, Defendants induced Plaintiffs to purchase timeshare points based on representations that "purchasers will have a dizzying array of choices and will be able to stay at their desired property wherever it might be." (Id. ¶¶ 32–43). However, when Plaintiffs went to use their timeshare points to book the accommodations, Plaintiffs discovered that there was little to no availability at their desired affiliated resorts, leaving Plaintiffs with no way to utilize their purchased timeshare points. (Id. ¶¶ 45–49). Plaintiffs then attempted to cancel their agreements with Defendants and seek a refund of the value of the unused timeshare points but were refused. (Id. ).

When timeshare points are purchased, Plaintiffs sign a contract with Defendants containing a mandatory arbitration clause (the "Agreement "), which provides as follows:

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT PROVIDES THAT CERTAIN DISPUTES MUST BE RESOLVED BY BINDING ARBITRATION. IN ARBITRATION YOU GIVE UP THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO PARTICIPATE IN A CLASS ACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE

LIMITED THAN COURT PROCEDURES, AND ARE SUBJECT TO VERY LIMITED REVIEW .

34. Dispute Resolution/Arbitration. Any Disputes between the Parties shall be resolved as follows:

(a) Definition of Disputes. The Parties agree that any dispute, claim, suit, demand or controversy arising out of or relating to this Agreement (any "Dispute ") shall be determined exclusively and finally by individual arbitration, except as specified below. "Dispute" includes, without limitation, any claim regarding any breach, termination, enforcement, interpretation or validity of this Agreement, any claim arising out of or related to the marketing, purchase, and/or use of Owner's Ownership, Owner's use of Seller's properties, and/or Owner's participation in any activities/events sponsored, organized, or made available by Seller or any of its affiliates.

(b) Neutral Arbitrator/No Jury. Any Dispute will be submitted to a neutral arbitrator, for a final and binding determination, known as an award. The arbitrator is an independent decision maker, appointed by the American Arbitration Association ("AAA "), who reviews and weighs evidence provided by both Parties, and issues an award enforceable in court. Decisions by an arbitrator are subject to very limited review by a court. Except as expressly provided below in this Dispute Resolution/Arbitration clause, the Parties waive and relinquish any and all rights to have a court or a jury resolve any Dispute. The Parties expressly waive any right to a jury trial.

* * * *

(e) Applicable Rules/Location. This arbitration agreement is governed by the Federal Arbitration Act ( 9 U.S.C. § 1 et seq. ). The arbitration shall be administered by the AAA under its Consumer Arbitration Rules.... The arbitration shall be held in the County of Orange, State of Florida unless the Parties agree to another location in writing, or the arbitrator decides to hold a telephonic hearing to reach a decision based solely on the Parties’ submission of documents, or to designate another location reasonably convenient for the Parties. In the event of any conflict between the AAA Rules and this Agreement, the provisions of this Agreement shall be controlling.

* * * *

(h) Payment of Fees. The payment of all fees for registration, filing and administration of the arbitration, and the payment of arbitrator fees, shall be governed by the AAA Rules and applicable law, unless otherwise stated in the Agreement. The Parties shall bear their own legal fees and legal expenses for any arbitration proceeding.

(i) Notice and Good Faith Negotiation. Any party intending to file an arbitration demand against the other Party must notify the other Party at least thirty (30) days before filing. The Parties agree to attempt to negotiate a mutually agreeable resolution to resolve any such dispute or claim during this period. If a Party filing an arbitration demand fails to provide that notice, the other Party is entitled to seek a stay of the arbitration proceeding from the AAA for thirty (30) days and to participate in settlement negotiations during that period in good faith.

(Doc. 1-2, pp. 30–31).

Plaintiffs Charles Bedgood ("CB "), Joel Brandon ("JB "), and Hannah Heil-Brandon ("HB ") initially filed complaints with the American Arbitration Association ("AAA ") pursuant to the Agreement. (Doc. 1, ¶¶ 15–17). However, upon filing the complaints with the AAA, the AAA informed Plaintiffs that the organization declined to hear arbitrations involving Defendants, stating,

Prior to the filing of this arbitration, [Defendants] failed to comply with AAA's policies regarding consumer claims. Accordingly, we must decline to administer this claim and any other claims between [Defendants] and its consumers at this time.... According to R-1(d) of the Consumer Rules, should the AAA decline to administer an arbitration, either party may choose to submit its dispute to the appropriate court for resolution.

(Doc. 1-2, p. 2).

Plaintiffs CB, JB, and HB, along with other Plaintiffs Eddie Mathews Jr., Reena T. Smith, Justin Floyd Diaz, Candice Clark, and Roslind Christine Harper, then filed this action.¹ Even though Plaintiffs CB, JB, and HB initially tried to arbitrate these claims and were rebuffed, Defendants moved the Court to compel all Plaintiffs to arbitrate those same exact claims. (Doc. 11). In the Motion to Compel, Defendants argued that: (1) the AAA was unavailable because it would not arbitrate the Agreement; (2) however, the AAA was not integral to the Agreement; (3) thus, the Court must compel arbitration before a substitute arbitrator. (Id. at pp. 7–16). In response, Plaintiffs argued that the AAA is available, but Defendants are precluded from compelling arbitration based on the FAA, waiver, and breach of contract. (Doc. 13, pp. 3, 9–18). Defendants then replied that Plaintiffs had not carried their burden in showing waiver or breach of contract and the AAA is available to arbitrate following a court order. (Doc. 19).² Plaintiffs then filed a surreply, but merely reiterated their original arguments. (Doc. 23).

After reviewing the initial briefing, the Report concluded that most of Defendants’ argument regarding the substitute arbitrator was inapposite because both parties conceded the AAA was an available forum, but Plaintiffs had failed to carry their burden to show that Defendants had either waived their right to arbitration or breached their contract in a way that would foreclose the arbitration of the claims. (Doc. 48). Accordingly, the Report recommended that the Court should grant the Motion to Compel, compel arbitration before the AAA, and stay this case. (Id. ).

While Plaintiffs’ original response to Defendants’ Motion to Compel was not the picture of clarity, Plaintiffs’ timely Objection clearly articulates that Defendants cannot compel arbitration based on § 3 of the FAA,³ and argues that they had shown Defendants had waived or breached the Agreement.⁴ (Doc. 49). Defendants, in response, argue that arbitration can be compelled before the AAA, § 4 of the FAA compels arbitration in this case, and Plaintiffs failed to show Defendants waived or materially breached the Agreement. (Doc. 50). Plaintiff also filed a reply describing the realities of compelling arbitration in this case without further discovery. (Doc. 53, pp. 6–7).

Subsequently, Plaintiffs filed a notice of supplemental authority in support of their Objection. (Doc. 54). And now, most recently, Plaintiffs have...