Bennett v. TransUnion, LLC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

MARK BENNETT and PAULETTE

BENNETT,

Plaintiffs,

v. Case No.: 2:21-cv-770-SPC-NPM

SYSTEMS & SERVICES

TECHNOLOGIES, INC. and

TRUIST BANK,

Defendants.

/

OPINION AND ORDER1

Before the Court is Defendants Systems & Services Technologies, Inc.

(“SST”) and Truist Bank’s Motion to Compel Arbitration (Doc. 73). Plaintiffs

Mark and Paulette Bennett responded in opposition (Doc. 79). Also here is

Truist’s Unopposed Motion for Judicial Notice (Doc. 9). The Court grants both.

BACKGROUND

This is a consumer-credit case. The Bennetts took out a loan for an RV

(“Debt”). A bank (“Bank”) issued the Debt. A loan agreement (“Note”)

memorializes the parties’ relationship. Eventually, Bank transferred the Debt

1 Disclaimer: Documents hyperlinked to CM/ECF are subject to PACER fees. By using

hyperlinks, the Court does not endorse, recommend, approve, or guarantee any third parties

or the services or products they provide, nor does it have any agreements with them. The

Court is also not responsible for a hyperlink’s availability and functionality, and a failed

hyperlink does not affect this Order.

to SST for servicing. It is unclear whether the Bennetts defaulted. At any

rate, they eventually agreed with SST to settle the Debt for a lesser amount.

Later, Bank sold the Debt to Truist. SST then sent the Bennetts a

collection letter about the Debt. So the Bennetts reviewed their credit

reports—finding errors. Eventually, the Bennetts sued Defendants for

violating the Fair Credit Reporting Act (“FCRA”) and the Florida Consumer

Collection Practices Act (“FCCPA”) (together, “Claims”).

LEGAL STANDARD

It is a “fundamental principle that arbitration is a matter of contract.”

Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010). Since once cannot

force another to arbitrate matters on which they did not agree, courts must

determine validity, enforceability, and scope of an arbitration clause. Anders

v. Hometown Mortg. Servs., Inc., 346 F.3d 1024, 1027 (11th Cir. 2003). These

are “gateway questions” judges must resolve before sending a case to the

arbitrators.2 JPay, Inc. v. Kobel, 904 F.3d 923, 929 (11th Cir. 2017) (cleaned

up). Where state-law governs the Note, Utah law controls. (Doc. 73-1 at 3);

Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (2009); Dasher v. RBC

2 There is an exception. Arbitrators must decide gateway issues if the parties’ intent is “clear

and unmistakable.” Rent-A-Center, 561 U.S. 69 & n.1. Neither party contends the Note

contains a delegation clause. Nor does the Court find the language clear enough to infer one.

Bank (USA) (Dasher 2), 882 F.3d 1017, 1023 (11th Cir. 2018) (“State contract

law determines the existence and contours of parties’ agreements.”).

DISCUSSION

Before tackling the merits, the Court grants Truist’s unopposed request

to take judicial notice of a state-court case. Federal courts can usually take

notice of state-court dockets. Paez v. Sec’y, Fla. Dep’t of Corr., 947 F.3d 649,

651-53 (11th Cir. 2020). And the Court grants this Motion. With that settled,

the Court turns to the dispute—whether to compel arbitration.

A. Enforceability

To start, the Bennetts do not challenge the Note’s validity or existence

(i.e., formation). Instead, they challenge Defendants’ contractual standing.

The Note is between the Bennetts and Bank. Neither Defendant signed the

Note, but they seek to enforce its arbitration clause (“Clause”).

A “litigant who was not a party to the relevant arbitration agreement

may invoke § 3 if the relevant state contract law allows him to enforce the

agreement.” Carlisle, 556 U.S. at 632; Lawson v. Life of the S. Ins., 648 F.3d

1166, 1170 (11th Cir. 2011). Traditionally, states “allow a contract to be

enforced by or against nonparties to the contract through assumption, piercing

the corporate veil, alter ego, incorporation by reference, third-party beneficiary

theories, waiver and estoppel.” Carlisle, 556 U.S. at 631 (cleaned up). Utah is

almost identical. Inception Minding, Inc. v. Danzig, Ltd., 311 F. Supp. 3d 1265,

1274 (D. Utah 2018).

Defendants say they can enforce the Clause under theories of

assumption, agency, or equitable estoppel. The Court takes each in turn.

First, Truist can compel arbitration by assumption. “The theory of

assumption involves subsequent conduct by the non-signatory indicating the

non-signatory is assuming an obligation to arbitrate, despite being a non-

signatory.” Hopkins v. Genesis FS Card Servs., Inc., No. 3:19-cv-00157-AC,

2020 WL 466636, at *10 (D. Or. Jan. 9, 2020) (applying Utah law), report and

recommendation adopted, 2020 WL 437544 (Jan. 28, 2020). Truist bought the

Debt from Bank. In doing so, it assumed the Note’s obligations. Even the

Note’s language contemplates Bank assigning the Debt to someone else. (Doc.

73-1 at 1 (“The words ‘we,’ ‘us,’ ‘our,’ and ‘Lender’ refer to . . . Bank . . . and its

assignees.”), 4 (“ANY HOLDER OF THIS CONSUMER CREDIT NOTE IS

SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR

COULD ASSERT AGAINST THE SELLER.”)).

The Bennetts do not dispute that logic. Instead, they attack whether

Truist ever bought the Debt. They latch onto Truist’s Answer, which asserts

the Debt was “inadvertently included in a bulk purchase” of loans from Bank.

(Doc. 41 at 16-17). So the Bennetts say Truist never assumed the Debt and

any argument to the contrary is disingenuous. This, however, does not defeat

Truist’s assumption theory. Whether the sale was inadvertent is irrelevant

because—as the Complaint and its exhibits show—Truist did buy the Debt.

(Doc. 22-3 at 2 (“This notice is to advise you that . . . [Truist] has purchased the

above referenced account from . . . Bank.”), 22-5 at 5 (reporting the Debt as

owed to “SST/TRUIST”)). According to Truist, it later sold the Debt back to

Bank. (Doc. 73 at 3). But intended or not, it owned the Debt for at least a few

years—during which the conduct giving rise to the Claims occurred.

As much as the Bennetts challenge the lack of an affidavit, it falls short.

They say there must be “direct and specific evidence of an agreement between

the parties.” Mason v. Midland Funding LLC, No. 1:16-CV-2867-WMR, 2021

WL 3017993, at *8 (N.D. Ga. Jan. 18, 2021) (citation omitted), report and

recommendation adopted, 2021 WL 3017990 (Mar. 23, 2021). That statement

(made is a different context) changes nothing. Everyone agrees the Note was

a valid agreement between the parties (i.e., the Bennetts and Bank). At issue

is whether nonsignatories may enforce that agreement. Validity and

enforceability are separate matters. E.g., Mason, 2021 WL 3017990, at *7.

So Truist assumed the Debt and can enforce the Clause.

Second, SST can compel arbitration by agency. Via “agency, an agent

can assume the protection of the contract which the principal has signed.”

Inception, 311 F. Supp. 3d at 1275 (citation omitted). Many “courts have

applied this principal to allow for non-signatory agents to avail themselves of

the protection of their principal’s arbitration agreement.” Id. (cleaned up).

Under this theory, “it matters whether the party resisting arbitration is a

signatory or not.” Id. (citation omitted). Nonsignatories (like SST) “may

compel a signatory to arbitrate.” Id. Even “one-way protection of agents

through arbitration may be enforced.” Seaborn v. Larry H. Miller Mercedes

Benz, No. 2:19-CV-941 TS, 2020 WL 1550789, at *3 (D. Utah Apr. 1, 2020).

According to the Amended Complaint, SST was an agent of both Truist

and Bank to service the Debt. As an agent, therefore, SST can enforce the

Clause. The Bennetts do not challenge this conclusion much. Rather, they say

SST cannot compel arbitration because it was an agent of Truist (who never

owned the Debt). Again, the Court disagrees as to ownership. What’s more,

even if Truist never owned the Debt, SST was Bank’s agent too. (Doc. 22 at 4).

So SST could enforce the Clause even if Truist couldn’t.

And third, Defendants contend each could invoke the Clause under

equitable estoppel. There is no need to address this alternative rationale given

the conclusions above.

In short, Defendants have contractual standing to enforce the Clause.

B. Arbitrability

Next, the parties dispute whether the claims are subject to arbitration

(i.e., whether they fall within the scope of the Clause). The Clause allows

either side to invoke binding arbitration on “any dispute arising under this

Note.” (Doc. 73-1 at 4). According to the Bennetts, the Claims might relate to

the Note, but they don’t arise under it. Defendants disagree.

1. Choice of Law

Before getting to that, the Court notes an unbriefed, sticky choice-of-law

issue. The Bennetts say substantive federal law governs this scope dispute,

citing cases that say as much. Defendants offer no position one way or the

other. But appellate courts are wishy-washy on this question. Compare

Entrekin v. Internal Med. Assocs. of Dothan, P.A., 689 F.3d 1248, 1251 (11th

Cir. 2012) (“Because arbitration is a matter of contract, determining whether

a claim falls within the scope of an arbitration agreement is generally a matter

of state law.” (cleaned up)), with Lawson, 648 F.3d at 1170 (“To determine

which disputes between the parties to an enforceable arbitration agreement

are covered by the language of the arbitration clause, we apply the federal

substantive law of arbitrability.” (cleaned up)). At times, the Supreme Court

suggested state law controls. Carlisle, 556 U.S. 624, 630-31 (The Federal

Arbitration Act (“FAA”) doesn’t “alter background principles of state contract

law regarding the scope of agreements (including the question of who is bound

by them).”).

What seems probable is state law governs scope as a simple matter of

contract interpretation; but lurking in the background is the federal preference

for arbitration, which courts must consider. See Volt Info. Sci., Inc. v. Bd. of

Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475-76 (1989) (When

“applying general state-law principles of contract interpretation to the

interpretation of an arbitration agreement within the scope of the Act, due

regard must be given to the federal policy favoring arbitration, and ambiguities

as to the scope of the arbitration clause itself resolved in favor of arbitration.”

(internal citation omitted)). No matter the answer, resolving that issue is far

outside the briefing. And where relevant, Utah perhaps favors arbitration

even more than federal courts. Cent. Fla. Invs., Inc. v. Parkwest Assocs., 40

P.3d 599, 606, 608 (Utah 2002) (“It is the policy of the law in Utah to interpret

contracts in favor of arbitration . . . Furthermore, given the strong policy of the

law in Utah in favor of arbitration, there is also a strong presumption against

waiver of the right to arbitrate.” (cleaned up)); HITORQ, LLC v. TCC

Veterinary Servs., Inc., 502 P.3d 281, 286 (Utah 2021) (“When the language is

ambiguous, there is a presumption in favor of arbitration.” (cleaned up)). As

the parties rely on general federal law regarding scope—and the difference

appears irrelevant—the Court does too.3

2. Analysis

At bottom, the parties disagree whether the Claims are within the

Clause’s scope. For support, Defendants list cases with broader arbitration

3 The Court will not, however, rely on Florida law, which the Bennetts impliedly argue for.

Even if state law governs scope, it is undisputed the state would be Utah—not Florida.

provisions. They concerned arbitration for claims “related to” or “connected

with” a contract (or some similar language).4 Hearn v. Comcast Cable

Commc’ns, LLC, 992 F.3d 1209 (11th Cir. 2021). If the relevant language here

had those types of broad phrases, the Court would probably agree with

Defendants on scope without much fuss. See id. at 1215-16 (compelling

arbitration of FCRA claim that “relates to” contract).5

The Clause, however, is narrower—it only encompasses “any dispute

arising under” the Note. (Doc. 73-1 at 4); Telecom, 248 F.3d at 1115

(differentiating “arising under” from “related to”).6 To be sure, “any means all.”

Don’t Look Media LLC v. Fly Victor Ltd., 999 F.3d 1284, 1299 (11th Cir. 2021)

(cleaned up). Put different, that word widens the scope. Nailcare Acad. LLC

v. Medinails, Inc., No. 2:21-cv-405-SPC-NPM, 2022 WL 61196, at *5 (M.D. Fla.

4 Most judges see little difference between variations of the same phrase. For example,

“arising out of” and “arising under” generally mean the same thing. See Telecom Italia, SpA

v. Wholesale Telecom Corp., 248 F.3d 1109, 1115 (11th Cir. 2001); Gregory v. Electro-Mech.

Corp., 83 F.3d 382, 386 (11th Cir. 1996); John Wyeth & Bro. Ltd. v. CIGNA Int’l Corp., 119

F.3d 1070, 1074-75 (3d Cir. 1997) (Alito, J.).

5 See also Brown v. Midland Credit Mgmt., Inc., No. 20-CV-4239 (JMF), 2020 WL 5117975,

at *2 (S.D.N.Y. Aug. 31, 2020); Bailey v. Diversified Consultants, Inc., 444 F. Supp. 3d 1330,

1335-36 (N.D. Ala. 2020); Fialek v. I.C. Sys., Inc., No. 3:18-cv-136-J-39MCR, 2019 WL 660824,

at *3-6 (M.D. Fla. Jan. 24, 2019); Vanwechel v. Regions Bank, No. 8:17-CV-738-T-23AAS,

2017 WL 1683665, at *1 (M.D. Fla. May 3, 2017).

6 See also Coregis Ins. v. Am. Health Found., Inc., 241 F.3d 123, 128-29 (2d Cir. 2001)

(Sotomayor, J.); Azima v. RAK Inv. Auth., 926 F.3d 870, 877-78 (D.D.C. 2019); Phillips v.

Audio Active Ltd., 494 F.3d 378, 389 (2d Cir. 2007); Stephen E. Friedman, The Lost

Controversy Limitation of the Federal Arbitration Act, 46 Univ. of Rich. L. Rev. 1005, 1037-

39 (2012) (“‘Arising out of” and ‘relating to’ are two very different concepts.”).

Jan. 6, 2022). At the same time, the Clause limits arbitration to disputes

“arising under” the Note. (Doc. 73-1 at 4).

“The term ‘arising out of’ is broad, but it is not all encompassing.” Doe v.

Princess Cruise Lines, Ltd., 657 F.3d 1204, 1218 (11th Cir. 2011). To decide if

disputes arise from a contract, courts focus on “whether the tort or breach in

question was an immediate, foreseeable result of the performance of

contractual duties.” Telecom, 248 F.3d at 1116; Hearn, 992 F.3d at 1213.

“Disputes that are not related—with at least some directness—to performance

of duties specified by the contract do not count as disputes ‘arising out of’ the

contract.” Telecom, 248 F.3d at 1116. Said another way, “‘Arising out of’

requires the existence of some direct relationship between the dispute and the

performance of duties specified by the contract.” Princess, 657 F.3d at 1218.

“A dispute does not arise out of . . . contract for the purposes of

arbitration just because the dispute would not have arisen if the contract had

never existed.” Calderon v. Sixt Rent a Car, LLC, 5 F.4th 1204, 1212-13 (11th

Cir. 2021). So but-for causation is not necessarily determinative. E.g.,

Reading Health Sys. v. Bear Stearns & Co., 900 F.3d 87, 99 (3d Cir. 2018)

(Many “courts have resisted the siren call of equating the term arising out of

with the concept of but-for causation.” (cleaned up)).

Defendants contend their collection and credit-reporting efforts (which

underlie the Claims) were foreseeable results of performing contractual duties.

They point out places where the Note contemplates what happens in the event

of default, Truist’s rights and remedies upon default, and a warning that Truist

might send a negative credit report. As the argument goes, Defendants merely

responded to a perceived default in a way the Note anticipated. So the

resulting Claims, they say, arise under the Note.

For their part, the Bennetts counter. According to them, Defendants

violated FCRA and FCCPA, which are not contractual obligations. What’s

more, the Claims neither rely on the Note nor demand reference to it. So they

don’t think the Claims arise under.

The Bennetts’ point is well-taken. From the plain language, whether the

Claims all arise under the Note is a somewhat close call (especially as to SST).

While the Claims almost certainly relate to the Note, whether they arise under

it is less clear. Still, it is not difficult to tie the Claims flowing from Truist’s

conduct directly to specified duties. For SST, the connection is attenuated.

Neither side addresses this distinction though. And SST acted as Truist’s

agent to service the Debt. So taking the language in the Note together with

the facts, the Court concludes the Claims arise under it.

Even if there is ambiguity in the Clause, the Court must resolve all

doubts in favor of arbitration. In general, arbitration “should not be denied

unless it may be said with positive assurance that the arbitration clause is not

susceptible of an interpretation that covers the asserted dispute.” AT&T

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986) (citation

omitted). “Stated differently, the FAA ‘establishes that, as a matter of federal

law, any doubts concerning the scope of arbitrable issues should be resolved in

favor of arbitration.’” Dasher v. RBC Bank (USA) (Dasher 1), 745 F.3d 1111,

1115 (11th Cir. 2014) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24-25 (1983)). If an “arbitration agreement is ambiguous

about whether it covers the dispute at hand,” a “presumption of arbitrability”

arises. Granite Rock Co. v. Int’l Brotherhood of Teamsters, 561 U.S. 287, 301

(2010); Dasher 2, 882 F.3d at 1022 (explaining when presumption “comes into

play”). Of course, courts cannot imagine ambiguity to apply the interpretive

dynamite of Moses H. Cone. Kobel, 904 F.3d at 929. But when—as here—true

ambiguity on scope exists, the rule applies. Dasher 1, 745 F.3d at 1115.

To be sure, Moses H. Cone (and its progeny) is not without detractors.

Judge Newsome just thoughtfully explained his misgivings over the precedent.

Calderon, 5 F.4th at 1215-21 (Newsome, J., concurring). But as it stands,

that’s the law of land. And any decision to change course is above the Court’s

paygrade. E.g., McGinley v. Houston, 361 F.3d 1328, 1331 (11th Cir. 2004) (Of

course, “a decision by the Supreme Court binds all circuit and district courts.”).7

7 Since the issue is unbriefed, there is no need to consider Moses H. Cone’s validity.

The Bennetts’ other arguments on scope are less compelling. Courts

agree “claims arising under federal statutes may be the subject of arbitration

agreements and are enforceable under the FAA.” Caley v. Gulfstream

Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005) (citation omitted). So

the Claims may fall within the Clause’s scope. See, e.g., Vanwechel, 2017 WL

1683665, at *1 (compelling arbitration of TCPA, FCCPA, and FDCPA claims

related to collection of debt under note). Broad argument to the contrary

cannot carry the day. See Bailey, 444 F. Supp. 3d at 1336-37 (explaining flaw

in Bazemore’s reasoning).

In short, the claims against Defendants are within the Clause’s scope.

C. Waiver

Moving on, the Bennetts contend Defendants waived any right to compel

arbitration. Unsurprisingly, Defendants disagree.

The “agreement to arbitrate, just like any other contract, may be

waived.” Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1315 (11th Cir.

2002) (cleaned up). “Waiver occurs when both: (1) the party seeking arbitration

substantially participates in litigation to a point inconsistent with an intent to

arbitrate; and (2) this participation results in prejudice to the opposing party.”

In re Checking Acct. Overdraft Litig., 754 F.3d 1290, 1294 (11th Cir. 2014)

(cleaned up). A party acts inconsistent with arbitration if—“under the totality

of the circumstances”—it “substantially invokes the litigation machinery prior

to demanding arbitration.” Garcia v. Wachovia Corp., 699 F.3d 1273, 1277

(11th Cir. 2012) (citation omitted). “Prejudice exists when the party opposing

arbitration undergoes the types of litigation expenses that arbitration was

designed to alleviate.” Overdraft, 754 F.3d at 1294 (cleaned up).

Federal law controls the waiver analysis. S&H Contractors, Inc. v. A.J.

Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir. 1990). Notably, “any party

arguing waiver of arbitration bears a heavy burden of proof.” Gutierrez v. Wells

Fargo Bank, N.A., 889 F.3d 1230, 1236 (11th Cir. 2018). Waiver is inherently

case-specific. Grigsby & Assocs. v. M. Sec. Inv., 635 F. App’x 728, 731 (11th

Cir. 2015). So the relevant procedural history follows.

While in state court, Truist answered without mentioning arbitration.

Two weeks after removal, the Bennetts amended as a matter of course. In the

interim, the Court entered its normal FCRA Fast-Track Scheduling Order.

That Order stayed all discovery except some limited initial disclosures common

in FCRA cases. It also ordered early mediation within four months (in line

with the Court’s usual practice for FCRA cases).

About a month after removal, SST answered the Amended Complaint.

In doing so, it raised arbitration as an affirmative defense. The Bennetts

moved to strike (in part) because the Answer referenced arbitration as a

defense. But the Court denied that motion without prejudice, allowing the

Bennetts two weeks to refile. Just before the Bennetts moved to strike,

Defendants told them of the intention to compel arbitration. Apparently,

counsel wanted the parties to discuss the motions to strike and compel together

because “the motion to compel arbitration would likely moot the motion to

strike.” (Doc. 79-1 at 2). This conversation occurred a month and a half after

removal.

Truist answered, and SST amended its answer. Both parties listed

arbitration as affirmative defenses. They filed these pleadings about two

months after removal. Then, the Bennetts got three extensions of time to refile

their motion to strike. Despite the extensions, they never refiled the motion.

While the Bennetts settled with two Defendants, the Claims against

Truist and SST were unresolved. So the parties went to Court-ordered

mediation. They impassed, then filed a Case Management Report (which the

Court ordered). That Report included a jury demand from the parties. Ten

days later, Defendants moved to compel arbitration. In all, about four months

passed between removal and the Motion.

While the Bennetts says all these actions taken together suggest waiver,

the Court is unconvinced. Based on the totality of these circumstances,

Defendants did not waive arbitration.

Consenting to another parties’ removal (on its own) does not amount to

waiver. See Schriever v. Navient Sols., Inc., No. 2:14-cv-596-FtM-38CM, 2014

WL 7273915, at *4-5 (M.D. Fla. Dec. 19, 2014); Halim v. Great Gatsby’s Auction

Gallery, Inc., 516 F.3d 557, 562 (7th Cir. 2008). Nor does filing an answer.

Leitzke v. JPMorgan Chase Bank, N.A., No. 8:19-cv-2174-T-33AEP, 2020 WL

8669703, at *5 (M.D. Fla. Jan. 27, 2020); Sherrard v. Macy’s Sys. and Tech.

Inc., 724 F. App’x 736, 740 (11th Cir. 2018) (noting “neither filing and answer

nor waiting four months to seek arbitration was sufficient to constitute waiver”

(citation omitted)). Compliance with initial disclosures and early case

management requirements aren’t necessarily inconsistent with arbitration

either. Murdock v. Santander Consumer USA Inc., No. 2:15-cv-268-FtM-

38CM, 2016 WL 11467548, at *5 (M.D. Fla. June 23, 2016), report and

recommendation adopted, 2016 WL 3913135 (July 20, 2016); Gimenez v. Am.

Sec. Ins., No. 8:08-cv-2495-T-24-TGW, 2009 WL 257540, at *2 (M.D. Fla. Feb.

3, 2009); Gomez v. Allied Pros. Ins., 457 F. Supp. 3d 1351, 1364-65 (S.D. Fla.

2020). And delay is usually not enough unless “coupled with other substantial

conduct inconsistent with an intent to arbitrate.” Grigsby, 635 F. App’x at 733.

A party waives arbitration when it “substantially participates in

litigation to a point inconsistent with an intent to arbitrate.” Overdraft, 754

F.3d at 1294. Defendants did not substantially participate in litigation. They

merely complied with early requirements set by Federal Rule and the Court’s

efficient FCRA deadlines. Neither Defendant did anything substantial in this

case (e.g., filing dispositive motions or demanding discovery). While

Defendants’ lawyer asked, “when Plaintiffs are available for deposition,” that

statement came eleven days before the Motion and apparently no depositions

occurred. (Doc. 79-2 at 2). In fact, it was the Bennetts who advanced litigation

by serving written discovery.

Nor did the litigation reach a point inconsistent with arbitration.

Instead, SST put arbitration on the Bennetts’ radar a month after removal.

Around a month and a half after removal, Defendants told the Bennetts they

planned to compel arbitration. And Defendants filed the Motion less than four

months after removing—when the Bennetts didn’t move to strike and early

mediation did not resolve the case before full-blown discovery. This is not the

type of litigation conduct amounting to implied waiver. See, e.g., Palmer v.

Navient Sols., LLC, No. 3:17-cv-657-J-39JBT, 2018 WL 1863829, at *2-3 (M.D.

Fla. Jan. 31, 2018), report and recommendation adopted, 2018 WL 11344770

(Apr. 18, 2018); Britt v. IEC Corp., No. 20-60814-CIV-ALTMAN/Hunt, 2021

WL 4147714, at *13-14 (S.D. Fla. Sept. 13, 2021).

What’s more, waiver occurs only when there is “prejudice to the opposing

party.” Overdraft, 754 F.3d at 1294. On this point, the Bennetts say

Defendants cannot force them to start over in arbitration, and Defendants

failed to explain the delay. Again, the Court does not believe the four-month

delay between removal and Motion significant considering these facts. What’s

more, the Bennetts impliedly try to shift the burden. As the ones seeking to

avoid arbitration, they must show waiver. Gutierrez, 889 F.3d at 1236. In

other words, the Bennetts must establish prejudice. They failed to do so. There

is no indication any delay, conduct, or expense here warrants a waiver finding.

See, e.g., Citibank, N.A. v. Stok & Assocs., 387 F. App’x 921, 924-25 (11th Cir.

2010); Britt, 2021 WL 4147714, at *15.

One final point. The Clause’s plain language suggests a party could

invoke the right late in litigation. (Doc. 73-1 at 4 (“Either of us may elect to

arbitrate even if an action has been filed in court, so long as no judgment has

been rendered.”)). This buttresses the conclusion no implied waiver exists.

At bottom, the Court finds Defendants did not waive the right to

arbitrate. See Gutierrez, 889 F.3d at 1236 (“[T]he key ingredient in the waiver

analysis is fair notice to the opposing party and the District Court of a party’s

arbitration rights and its intent to exercise them.”).

D. Conferral

Finally, the Bennetts argue Defendants’ Local Rule 3.01(g) conferral was

insufficient. They are right the Court expects substantive discussions, not

sending an ultimatum by email. (Doc. 75 at 3); Schwartz v. ADP, Inc., No. 2:21-

cv-283-SPC-MRM, 2021 WL 4295274, at *2 (M.D. Fla. Sept. 21, 2021). Even if

Defendants violated 3.01(g) in that regard, the Court finds judicial economy—

the purpose underlying the Rule—best served by ruling on the Motion. Given

the briefing, it would only waste everyone’s time and money to require the

parties to chat and refile these papers. So this issue does not change the

conclusion on arbitration.

E. Stay

Having concluded Defendants are entitled to an order compelling

arbitration, the Court must “either stay or dismiss.” Lambert v. Austin Ind.,

544 F.3d 1192, 1195 (11th Cir. 2008). If the issues are arbitrable, a requested

“stay is mandatory.” Klay v. All Defendants, 389 F.3d 1191, 1204 (11th Cir.

2004). The Court, therefore, grants Defendants’ request to stay the action

pending arbitration. See 9 U.S.C. § 3.

Accordingly, it is now

ORDERED:

1. Defendant’s Unopposed Motion for Judicial Notice (Doc. 9) is

GRANTED.

2. Defendants’ Motion to Compel Arbitration and Stay the Proceedings

(Doc. 73) is GRANTED.

3. The parties are DIRECTED to arbitrate this case promptly—in

accordance with the contract and its arbitration clause.

4. This case is STAYED until the parties advise the Court that (1)

arbitration has been completed and (2) the stay should be lifted or the

case should be dismissed. The parties are DIRECTED to notify the

Court of such matters within seven (7) days of the arbitration

concluding.

5. The parties are DIRECTED to file a joint report on the status of

arbitration on or before August 4, 2022, and every ninety (90)

days after until arbitration concludes.

6. The Clerk is DIRECTED to add a stay flag on the docket.

DONE and ORDERED in Fort Myers, Florida on May 10, 2022.

, □□□ plata,

UNITED STATES DISTRICT JUDGE

Copies: All Parties of Record

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