Valiente v. StockX, Inc.

645 F.Supp.3d 1331

Heriberto VALIENTE, Plaintiff, v. STOCKX, INC., Defendant.

Case No. 22-cv-22432-BLOOM/Otazo-Reyes

United States District Court, S.D. Florida

Signed December 9, 2022

Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, William Charles Wright, The Wright Law Office, P.A., West Palm Beach, FL, for Plaintiff.

Mark David Schellhase, GrayRobinson, P.A., Boca Raton, FL, Charles Glover, Pro Hac Vice, Kari M. Rollins, Pro Hac Vice, Sheppard, Mullin, Richter & Hampton LLP, New York, NY, for Defendant.

ORDER ON MOTION TO COMPEL INDIVIDUAL ARBITRATION AND STAY LITIGATION

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon Defendant StockX Inc.'s Motion to Compel Individual Arbitration and Dismiss Litigation, ECF No. [24] ("Motion"). Plaintiff Heriberto Valiente filed a Response in Opposition, ECF No. [27] ("Response"), to which Defendant filed a Reply, ECF No. [28] ("Reply"). The Court has carefully reviewed the Motion, all related submissions, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted.

I. BACKGROUND

Plaintiff initiated this class action against Defendant on August 2, 2022, by filing his Complaint. See ECF No. [1]. Plaintiff alleges Defendant: (1) violated Florida's Deceptive and Unfair Trade Practices Act ("FDUTPA"); (2) violated State Consumer Fraud Acts; (3) breached an express warranty, an implied warranty of merchantability/fitness for a particular purpose, and Magnuson Moss Warranty Act; (4) made negligent misrepresentations; (5) committed fraud; and (6) was unjustly enriched. See generally id.

In the instant Motion, Defendant requests that the Court compel the parties to arbitration and dismiss the case. ECF No. [24]. Defendant argues that Plaintiff agreed to the StockX Terms of Service ("Terms") when he created a Stock X account, which includes an arbitration provision directing the parties to resolve any and all disputes exclusively through arbitration ("Arbitration Provision"). Defendant further contends that Plaintiff acknowledged his agreement to the Terms each time he logged into his account. The Arbitration Provision states in relevant part:

14. Disputes with StockX

. . . You and StockX each agree that any and all disputes or claims that have arisen or may arise between you and StockX relating in any way to or arising out of the Terms or your use of or access to the Services, shall be resolved exclusively through final and binding arbitration, rather than in court. Alternatively, you may assert your claims in small claims court, if your claims qualify and so long as the matters remains in such court and advances only on an individual (non-class, non-representative) basis. The FAA governs the interpretation and enforcement of this Agreement to Arbitrate.

ECF No. [24-2] at 6.

Plaintiff responds that (1) Florida law must be applied; (2) the Arbitration Provision is not valid because the agreement constituted an improper browsewrap agreement which did not put Plaintiff on notice of the Terms; (3) unconscionability bars compelling arbitration; and (4) the issue of arbitrability should be decided by the Court. See ECF No. [27].

II. LEGAL STANDARD

The presence of a valid arbitration provision raises a strong presumption in favor of enforcement. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 630-31, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (stressing that the enforcement of a mutually agreed upon arbitration or forum-selection clause serves as an "indispensable precondition to the achievement of the orderliness and predictability essential to any international business transaction"). Indeed, the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., "embodies a 'liberal federal policy favoring arbitration agreements.' " Hemispherx Biopharma, Inc. v. Johannesburg Consol. Invs., 553 F.3d 1351, 1366 (11th Cir. 2008) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Accordingly, the FAA requires courts to "rigorously enforce agreements to arbitrate." Brandon, Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. MedPartners, Inc., 312 F.3d 1349, 1357-58 (11th Cir. 2002) (quoting Mitsubishi Motors Corp., 473 U.S. at 625-26, 105 S.Ct. 3346), abrogated on other grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Eng'rs & Participating Emp'rs, 571 U.S. 177, 134 S. Ct. 773, 187 L.Ed.2d 669 (2014); see also Hemispherx Biopharma, Inc., 553 F.3d at 1366 (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985)). Under the FAA, a written agreement to arbitrate is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

Despite courts' proclivity for enforcement, a party will not be required to arbitrate where it has not agreed to do so. See Nat'l Auto Lenders, Inc. v. SysLOCATE, Inc., 686 F. Supp. 2d 1318, 1322 (S.D. Fla. 2010), aff'd, 433 F. App'x 842 (11th Cir. 2011) (citing United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)). It is axiomatic that the determination of whether parties have agreed to submit a dispute to arbitration is an issue of law subject to judicial resolution. See Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 296, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010). Generally, this determination requires the district court to apply standard principles of state contract law. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 939, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995); see also P & S Bus. Machs., Inc. v. Canon USA, Inc., 331 F.3d 804, 807 (11th Cir. 2003).

Under Florida law, when presented with a motion to compel arbitration, a court must consider three factors: (1) whether a valid agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitrate was waived. Nat'l Auto Lenders, Inc. v. SysLOCATE, Inc., 686 F. Supp. 2d 1318, 1322 (S.D. Fla. 2010) aff'd, 433 F. App'x 842 (11th Cir. 2011); see also Sims v. Clarendon Nat'l Ins. Co., 336 F. Supp. 2d 1311, 1326 (S.D. Fla. 2004) (citing Marine Envt'l. Partners, Inc. v. Johnson, 863 So. 2d 423, 426 (Fla. 4th DCA 2003); and Seifert v. U.S. Home Corp., 750 So. 2d 633 (Fla. 1999)) ("Under both federal and Florida law, there are three factors for the court to consider in determining a party's right to arbitrate: (1) a written agreement exists between the parties containing an arbitration clause; (2) an arbitrable issue exists; and (3) the right to arbitration has not been waived.").

In addition, the Court of Appeals for the Eleventh Circuit has explained that courts should "treat motions to compel arbitration similarly to motions for summary judgment." Hearn v. Comcast Cable Commc'ns, LLC, 992 F.3d 1209, 1215 n.3 (11th Cir. 2021) (citing Bazemore v. Jefferson Cap. Sys., LLC, 827 F.3d 1325, 1333 (11th Cir. 2016) (concluding "that a summary judgment-like standard is appropriate and hold[ing] that a district court may conclude as a matter of law that parties did or did not enter into an arbitration agreement only if 'there is no genuine dispute as to any material fact' concerning the formation of such an agreement")). Once the movant satisfies its initial burden of showing there is no genuine issue of material fact, then "the burden shifts to the nonmovant to show evidence raising a genuine issue of material fact." Deal v. Tugalo Gas Co., Inc., 991 F.3d 1313, 1325 (11th Cir. 2021). "A plaintiff challenging the enforcement of an arbitration agreement bears the burden to establish, by substantial evidence, any defense to the enforcement of the agreement." Inetianbor v. CashCall, Inc., 923 F. Supp. 2d 1358, 1362 (S.D. Fla. 2013) (citing Bess v. Check Express, 294 F.3d 1298, 1306-07 (11th Cir. 2002)). In determining whether to compel arbitration, district courts must view the facts in the light most favorable to the nonmovant. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

"By its terms, the [FAA] leaves no room for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc., 470 U.S. at 213, 105 S.Ct. 1238. Thus, if the criteria above are satisfied, a court is required to issue an order compelling arbitration. See John B. Goodman Ltd. P'ship v. THF Constr., Inc., 321 F.3d 1094, 1095 (11th Cir. 2003) ("Under the FAA, . . . a district court must grant a motion to compel arbitration if it is satisfied that the parties actually agreed to arbitrate the dispute.").

III. DISCUSSION

As noted above, Defendant requests that the Court compel Plaintiff to submit his claims to arbitration and dismiss the case. See ECF No. [24]. Plaintiff responds that (1) Florida law must be applied; (2) the Arbitration Provision is not valid because the agreement constituted an improper "browsewrap agreement" and Plaintiff was not put on notice of the Terms; (3) unconscionability bars compelling arbitration; and (4) the issue of arbitrability should be decided by the Court. See ECF No. [27].

A. Law to Be Applied

The Terms provide that "except to the extent inconsistent with the Federal Arbitration Act ("FAA") or preempted by federal law, the laws of the State of Michigan, without regard to principles of conflict of laws will govern these Terms and any claim or dispute that has arisen or may arise between you and StockX." ECF No. [24-2] at 7. Plaintiff argues that because he is challenging the very existence of an agreement, Florida law must be applied. ECF No. [27] at 9. Defendant replies that there is a valid Michigan choice-of-law clause and under either Florida or Michigan law, the Court should find that Plaintiff and Defen...