CellInfo, LLC v. American Tower Corporation

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

___________________________________

)

CELLINFO, LLC, )

Plaintiff, )

)

v. ) CIVIL ACTION

) NO. 18-11250-WGY

AMERICAN TOWER CORPORATION, )

AMERICAN TOWER LLC, )

AMERICAN TOWER DO BRASIL - )

CESSAO DE INFRAESTRUTURAS LTDA, )

AND ATC IP LLC, )

)

Defendants. )

___________________________________)

YOUNG, D.J. November 30, 2020

MEMORANDUM OF DECISION

This case requires analysis of the substantive provisions

of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 3-4. Such

cases are relatively rare today since the overly expansive

interpretation of that Act by a majority of the Supreme Court

and the acquiescence of the Congress has led to marginalizing

the American jury,1 once the conscience of the community and the

1 Judge Craig Smith & Judge Eric V. Moyé, Outsourcing

American Civil Justice: Mandatory Arbitration Clauses in

Consumer and Employment Contracts, 44 Tex. Tech L. Rev. 281, 282

(2012) (“The Seventh Amendment right to a jury trial is

vanishing before our very eyes. Many sources point to the

increased reliance upon alternative dispute resolution, and

mandatory arbitration specifically, as an explanation for this

trend.”) (footnotes omitted).

“crown jewel” of American jurisprudence,2 the evisceration of our

civil rights and consumer protection laws in the workplace and

the marketplace,3 barring thousands of Americans from their day

in Court,4 and largely banishing the lower courts from the

2 See United States v. West, 552 F. Supp. 2d 74, 75 (D.

Mass. 2008), aff’d, 631 F.3d 563 (1st Cir. 2011).

3 See David Horton, Infinite Arbitration Clauses, 168 U. Pa.

L. Rev. 633, 649 (2020) (“Forced arbitration clauses became a

routine part of consumer and employment contracts, provoking

heated debate about the privatization of the justice system.”);

Alyssa Schaefer, Note, Sexual Harassment in the Shadow of

Mandatory Arbitration, 34 Wis. J. L. Gender, & Soc’y 237, 259

(2019) (“Employers currently wield the ability to require

arbitration of sexual harassment and other statutory rights

claims.”). As the Honorable Judges Smith and Moyé note,

A person cannot open a bank account, obtain a credit

card, buy a car, or use a cell phone without

contracting away the Seventh Amendment right to a jury

trial. In reality, a person must yield his or her

very access to the courts in order to meaningfully

participate in our modern society. Slowly but surely,

the widespread enforcement of mandatory arbitration

clauses has chipped away at the basic tenets of

contract law and of the fundamental freedoms upon

which our nation was founded: the right to a jury

trial in civil cases.

Smith & Moyé, surpa note 1, at 282 (footnotes omitted). See

also id. at 297 (“The resolution of these matters outside of the

court system deprives the citizenry of an open, accessible

development of the common law as it pertains to commercial,

consumer, and employment disputes.”).

4 As professor Margaret Moses writes,

[T]he U.S. system of imposing arbitration on consumers

without their full understanding or consent has

reduced their access to court systems, which means no

right to a jury trial, no right to a class action

(even if a class action is the only effective means of

development of law in these areas.5 As every district judge

knows, about all that’s left is figuring out whether the parties

can somehow be said to have actually agreed to arbitration,6

recourse), and, because an arbitrator’s decision is

not reviewable on the merits, no supervision by the

courts as to whether arbitration is properly

protecting consumer rights.

Margaret L. Moses, How the Supreme Court’s Misconstruction of

the FAA Has Affected Consumers, 30 Loy. Consumer L. Rev. 1, 19

(2017). See also Arthur R. Miller, What Are Courts for? Have We

Forsaken the Procedural Gold Standard?, 78 La. L. Rev. 739, 775-

77 (2018).

5 See In re Nexium (Esomeprazole) Antitrust Litig., 309

F.R.D. 107, 145 (D. Mass. 2015), as amended (Aug. 7, 2015),

aff’d, 842 F.3d 34 (1st Cir. 2016).

In industries where arbitration has become the

dominant forum for dispute resolution and very few

disputes have made their way through the courts in

recent decades, the public law is underdeveloped and

possibly even frozen. Disputants trying to determine

what the current law is in a particular area might try

to comb through the few arbitration awards that are

publicly available, and analyze any hints to what

legal norms arbitrators applied. In other words, the

shadow of substantive outcomes in arbitration is a

dark, murky shadow -- unknown, hard to ascertain, and

unpredictable.

Jill I. Gross, Bargaining in the (Murky) Shadow of Arbitration,

24 Harv. Negot. L. Rev. 185, 201–02 (2019) (footnotes omitted).

6 I do not mean to suggest that this is simple. Well aware

that forced arbitration constitutes a very effective barrier to

inquiry into corporate misconduct, business continually seeks to

extend and heighten this barrier. See, e.g., Ting v. AT&T, 319

F.3d 1126, 1151 (9th Cir. 2003); Murray v. Grocery Delivery E-

Servs. U.S.A., 460 F. Supp. 3d 93 (D. Mass 2020), appeal

pending. See CellInfo, LLC, v. American Tower Corps., 352 F.

Supp. 3d 127, 137 (D. Mass. 2018) (“CellInfo I”), appeal

pending; see also Horton, supra note 3, at 647 (“[E]ven the

and, if so, sending the parties off to arbitrate and closing the

case.7

“But let that bide.”8

This case is different. It presents an issue of first

impression in this circuit, viz. can a litigant who is properly

sent to arbitration come back to court if it runs out of money?

After all, arbitration is a private dispute resolution mechanism

and it is expensive9 -- this case illustrates just how expensive.

broadest clause could not cover the elementary question of

whether the parties had consented to arbitrate in the first

place.”).

Since the FAA, by its terms, does not apply “to contracts

of employment of seamen, railroad employees, or any other class

of workers engaged in foreign or interstate commerce,” 9 U.S.C.

§ 1, there is also a robust subset of cases addressing the

claims of workers who seek to avoid the arbitration bar. See,

e.g, Oliveira v. New Prime, Inc., 857 F.3d 7, 11 (1st Cir.

2017), aff’d, 139 S. Ct. 532 (2019); Waithaka v. Amazon.com,

Inc., 966 F.3d 10, 13 (1st Cir. 2020); Biller v. S-H OpCo

Greenwich Bay Manor, LLC, 961 F.3d 502, 507 (1st Cir. 2020).

7 In rare instances, the parties do come back, seeking to

confirm or vacate the arbitration award. See 9 U.S.C. § 10.

Here, in all but the rarest of cases, the job is promptly to

confirm the award, see UBS Fin. Servs. Inc. v. Asociación de

Empleados del Estado Libre Asociado de Puerto Rico, 419 F. Supp.

3d 266, 269, 272 (D. Mass. 2019), appeal pending.

8 Captain Abel Jones, HQ Army of the Potomac, Late Sergeant,

24th Foot (South Wales Borderers) (from Owen Parry, Faded Coat

of Blue 2, 5, 9, 10, 27, 31 (Avon Books, 1999)).

9 See Gross, supra note 5, at 189 (“[S]cholars examining

arbitration procedures contend that today’s arbitration process

has become too litigation-like, eliminating the advantages of

arbitration as a speedy and economical alternative dispute

resolution process.”).

I. The Legal Framework

At first glance this would appear to be quite a dubious

proposition. After all, it apparently makes no difference to

the Supreme Court majority that consumers, employees and small

businesses rarely have the “ability, training, or resources to

navigate the arbitration process effectively,”10 nor that

customers complaining about alleged telephone overcharges

cannot, as a practical matter, afford to pursue their claims

unless they can pursue a class action,11 nor that it is

unconscionable and senseless to compel families to arbitrate

wrongful death claims against a negligent nursing home12 -- when

in arbitration the families typically would be grossly

disadvantaged (lower recovery chills lawyers’ enthusiasm to take

cases),13 nor that a plaintiff’s costs of individually

arbitrating a federal statutory claim exceeds the potential

10 See Miller, supra note 4, at 778.

11 See generally AT&T Mobility LLC v. Concepcion, 563 U.S.

333 (2011). See also Smith & Moyé, supra note 1, at 295

(“Consumer claims are often small in value compared to amounts

at issue in disputes between corporate entities. Alone, these

small-dollar claims appear insignificant and are far less likely

to see their day in court.”) (footnotes omitted).

12 See generally Marmet Health Care Ctr., Inc. v. Brown, 565

U.S. 530 (2012).

13 Andi Alper, Comment, Seeking Justice for Grandma:

Challenging Mandatory Arbitration in Nursing Home Contracts,

2016 J. Disp. Resol. 469, 476 (2016).

recovery,14 nor that sending “wholly groundless” matters to

arbitration would run afoul of the very purpose of arbitration

to be expeditious, affordable, and effective.15

Nevertheless, the Fifth, Eighth, Ninth, and Tenth

Circuits have mapped out a path, albeit narrow, to return to

court from arbitration.

A. The Lifespan of a “Stay”

“Section 3 of the Federal Arbitration Act allows parties to

an arbitration agreement to move the court to ‘stay a judicial

proceeding when the matter before the court involves an issue

governed by an agreement to arbitrate.’” CellInfo I, 352 F.

Supp. 3d at 132 (quoting Campbell v. General Dynamics Gov’t Sys.

Corp., 407 F.3d 546, 552 (1st Cir. 2005)). “Section 4 of the

Federal Arbitration Act permits parties ‘aggrieved by another

party’s refusal to arbitrate to petition a district court to

compel arbitration in accordance with the parties’ preexisting

agreement.” Id. (quoting Campbell, 407 F.3d at 552). Sections

3 and 4 should be interpreted together. Marie v. Allied Home

Mtge. Corp., 402 F.3d 1, 13 (1st Cir. 2005) (“[T]he Supreme

14 See American Exp. Co. v. Italian Colors Rest., 570 U.S.

228, 228 (2013); Miller, supra note 4, at 775.

15 See Henry Schein, Inc. v. Archer & White Sales, Inc., 139

S. Ct. 524, 527 (2019).

Court has cautioned us to interpret sections 3 and 4 of the FAA

together.”).

A stay remains “until such arbitration has been had in

accordance with the terms of the agreement, providing the

applicant for the stay is not in default in proceeding with such

arbitration.” 9 U.S.C. § 3.

B. When Would a Termination of Arbitration as a Result of

Non-Payment Be “in Accordance with the Terms of the Agreement”

and Permit Lifting a Stay?

Consulting the decisions below, whether the arbitration “has

been had in accordance with the terms of the agreement,” depends

on whether the non-payment was a failure, neglect, or outright

refusal to arbitrate, as opposed to an innocent inability to pay

and proceed with the arbitration. See 9 U.S.C. § 4; Tillman v.

Tillman, 825 F.3d 1069, 1075 (9th Cir. 2016).

Like CellInfo, the district court compelled Tillman to

arbitrate. See Tillman, 825 F.3d at 1072-73. In that case,

too, the paying party who compelled the arbitration elected not

to cover the arbitration fees for Tillman. Id. at 1072, 1074.

There, too, the arbitration was terminated due to non-payment

pursuant to Rule-57 of the Commercial Arbitration Rules and

Mediation Procedures, American Arbitration Association (2013)

(“AAA Rule-57”). Id. at 1072. There, too, Tillman, the

compelled party, asked to lift the stay and proceed in court.

Id. at 1074-75. Under these circumstances, the Ninth Circuit

held that the arbitration complied with the terms of the

arbitration agreement and the district court properly lifted the

stay. Id.

The Ninth Circuit was conscious of the fact that the

compelled party was the very one who caused the arbitration to

terminate. Lifting the stay was nonetheless appropriate only

because the non-paying party acted in good faith during the

arbitration and became genuinely unable to afford it.

Our decision that Tillman’s case may proceed does not

mean that parties may refuse to arbitrate by choosing

not to pay for arbitration. If Tillman had refused to

pay for arbitration despite having the capacity to do

so, the district court probably could still have

sought to compel arbitration under the FAA’s provision

allowing such an order in the event of a party’s

“failure, neglect, or refusal” to arbitrate. 9 U.S.C.

§ 4.1. Or, in that context, the court could, and most

probably should, dismiss Tillman’s complaint under

Fed. R. Civ. P. 41(b), for failure to comply with the

order to arbitrate despite its ability to do so.

Here, however, the district court found that Tillman

had exhausted her funds and was “unable to pay for her

share of arbitration.” As a result, the district

court excused Tillman’s lack of compliance with its

order compelling arbitration under 9 U.S.C. § 4.

See id. at 1075–76 (emphasis in original). In a footnote, the

Tillman Court added:

A question may arise in such circumstances as to

whether an arbitration “has been had in accordance

with the terms of the agreement,” 9 U.S.C. § 3, when

it has been terminated due to the nonpayment of a

party who has the ability to pay but simply chooses

not to. Even if such an arbitration has been

terminated in accordance with the rules governing the

arbitration, as Tillman’s arbitration was here, it may

be contrary to “the structure and purpose of the FAA”

to allow a party to an arbitration agreement to

benefit from their intentional noncompliance with an

arbitrator’s rules. Sink v. Aden Enters., 352 F.3d

1197, 1200 (9th Cir. 2003). But because Tillman was

unable to pay, gave notice of her inability to pay

during arbitration, and “made genuine efforts to make

alternate payment arrangements,” id. at 1199, we need

not decide how to construe 9 U.S.C. §§ 3 and 4 in the

event of a party’s willful nonpayment of an

arbitrator’s fees.

Id. at 1076.

Other courts support this observation.

[W]hen a party who has engaged in arbitration in good

faith is unable to afford to continue in such a forum,

that party may seek relief from the superior court.

If sufficient evidence is presented on these issues,

and the court concludes the party’s financial status

is not a result of the party’s intentional attempt to

avoid arbitration, the court may issue an order

specifying: (1) the arbitration shall continue so long

as the other party to the arbitration agrees to pay,

or the arbitrator orders it to pay, all fees and costs

of the arbitration; and (2) if neither of those occur,

the arbitration shall be deemed “had” and the case may

proceed in the superior court.

Weiler v. Marcus & Millichap Real Estate Inv. Servs., Inc., 22

Cal. App. 5th 970, 981 (2018), review denied (Aug. 15, 2018),

cert. denied, 139 S. Ct. 2665, 204 (2019). See also Dobbins v.

Hawk’s Enters., 198 F.3d 715, 716 (8th Cir. 1999) (“[T]he

district court held an evidentiary hearing to provide the

Dobbinses the opportunity to present evidence on their financial

condition and inability to pay the arbitration fees. Following

the evidentiary hearing, the district court lifted the stay,

reopened the case, and found that the arbitration fees precluded

the Dobbinses from availing themselves of the arbitral forum.”);

Miller v. Aaacon Auto Transp., Inc., 545 F.2d 1019, 1020 (5th

Cir. 1977) (“Had the failure of arbitration been caused by

plaintiff’s dilatory tactics, vacating the stay may have been

improper, since plaintiff would be profiting from her own

wrongdoing.”).

The focus in the cases above on good faith compliance with

the arbitration resonates with this Court.

The integrity and efficacy of the arbitration institution

as well as court orders and contract laws are at stake here.

Parties should be deterred from manipulating the justice system

by forum shopping and noncompliance. Therefore, only upon a

satisfactory showing that the non-paying party acted in good

faith and under a genuine indigency -- inadvertently causing the

premature termination of the arbitration proceedings –- would

lifting a stay and adjudicating in court be appropriate.

Needless to say, a party should do more than simply show

empty pockets. Rather, it must show that it diligently

arbitrated, that it sought alternative funds but failed, that it

attempted to adjust payment, get a discount or delay from the

AAA, that it did not drag foot without action, that it made

reasonable efforts to arbitrate in good faith.

As the Tenth Circuit reasoned in a similar case:

In the arbitration proceeding, Mr. Cahill did not show

he was unable to afford payment, ask the arbitrators

to modify his payment schedule, or move for an order

requiring Pre–Paid to pay his share for him so that

arbitration could continue. Instead, by refusing

multiple requests to pay, he allowed arbitration to

terminate.

Pre-Paid Legal Servs., Inc. v. Cahill, 786 F.3d 1287, 1294 (10th

Cir. 2015).

II. The Present Case

Assuming without deciding that the Ninth Circuit’s analysis

in Tillman properly applies the mandate of the FAA, this Court

held a two-day evidentiary hearing to determine what

transpired.16

The Plaintiff, CellInfo, LLC (“CellInfo”), is a

Massachusetts-based business that provides services to wireless

companies to improve cellular coverage. Compl. ¶¶ 2, 19, ECF

No. 1. The Defendant, American Tower Corporation, owns,

operates, and develops communications real estate, and is the

parent company of American Towers LLC, ATC IP, and American

Tower do Brasil (collectively, “American Tower”). Id. ¶¶ 12-14;

Defs.’ Mem. Supp. Dismiss or Stay & Compel Arbitration 1

(“Defs.’ Mem. Dismiss/Stay”), ECF No. 18.

CellInfo and American Tower contracted for the purchase of

16 All hearings on the motion to reopen have been conducted

via video conference due to the Covid-19 pandemic. Clerk’s

Notes, ECF Nos. 91, 93, 102, 109, 112.

lease options, site acquisition services, and consulting

services. Compl. ¶¶ 21, 30, 43. CellInfo and ATC IP entered

into a Master Consulting Services Agreement (the “Agreement”) on

January 23, 2017. CellInfo’s Mot. Prelim. Inj., Ex. 5, Master

Consulting Services Agreement (“MCSA”), ECF No. 29-5.

By June 2018, the business relationship between the parties

had derailed and terminated. CellInfo brought an action against

American Tower, alleging misappropriation of confidential

information and trade secrets and unfair competition, as well as

other claims. Compl. ¶¶ 1, 8. In response, American Tower

filed a motion to dismiss or, in the alternative, stay and

compel arbitration, which CellInfo opposed. Defs.’ Mot. Dismiss

or Stay & Compel Arbitration (“Defs.’ Mot. Dimiss/Stay”), ECF

No. 17; Pl.’s CellInfo, LLC’s Resp. Defs.’ Mot. Dimiss or State

& Compel Arbitration (“Pl.’s Opp’n”), ECF No. 27.

The Agreement contained a “Dispute Resolution” provision,

Article Seven, which compels arbitration in a broad scope of

issues. Defs.’ Mem. Dismiss/Stay 2-3, 6-15; see MCSA § 7.1.

This Court ruled that all the American Tower entities were

entitled to rely on the agreement’s arbitration provision.

Accordingly, based on the extensive arbitration clause, the

Court stayed the action and administratively closed the case in

order to allow the parties to commence arbitration and further

explore the arbitrability of the issues under dispute. See

CellInfo I, 352 F. Supp. 3d at 130, 133-35.

Consequently, CellInfo initiated arbitration proceedings

before a panel of three arbitrators (the “Panel”), just as the

Agreement stipulated. See MCSA § 7.1. From the outset,

CellInfo faced daunting financial problems in prosecuting this

arbitration. American Tower was CellInfo’s largest customer and

when their business relationship fell apart, CellInfo’s income

stream essentially dried up. See Sept. 24, 2020 Hr’g Tr. 52,

ECF No. 110; Sept. 17, 2020 Hr’g Tr. 6-7, ECF No. 106; Decl.

Victor Nathan Drouin, Ex. 2, Dep. Paul Karger 48-49, ECF No. 94-

2. At once CellInfo began to seek litigation financing to

support what it insists is a very strong case. See Sept. 17,

2020 Hr’g Tr. 10, 32-51. At once it ran into a severe problem.

Since the heart of this case involves alleged trade secrets, the

parties jointly negotiated, and this Court entered, a protective

order governing the disclosure of discovery materials. Order

Allowing Modified Protective Order, ECF No. 54; Order Granting

Stipulated Protective Order, ECF No. 55. To hear CellInfo tell

it now, this protective order was a fatal misstep by its

attorneys because the protective order prevented it from showing

potential litigation investors the actual strengths of its case.

See Sept. 17, 2020 Hr’g Tr. 36, 42, 46, 48-51.

Nevertheless, buoyed by a small core of loyal investors who

kept extending loans to CellInfo, it plunged hammer and tongs

into discovery and preparation for the arbitral hearing, running

up legal fees in the amount of over $1,300,000 in the process.

See Pl. CellInfo, LLC’s Reply Memo, Ex. A, Decl. Victor Nathan

Drouin, Ex. 20, Summ. Outstanding Invoices 10/25/19 p. 99

(“Outstanding Invoices”), ECF No. 95-1; Sept. 17, 2020 Hr’g Tr.

56-57.

As this Court indicated in CellInfo I, arbitration is

expensive, 352 F. Supp. 3d at 136, and three-person arbitration

is especially expensive. Here, the arbitrator chosen by

CellInfo charges $650 per hour, Sept. 17, 2020 Hr’g Tr. 81-82;

AAA’s Notice Compensation Thomas Brewer, Joint Hr’g Ex. 12, the

one chosen by American Tower charges $900, Sept. 17, 2020 Hr’g

Tr. 79-81; AAA’s Notice Compensation James Warren, Joint Hr’g

Ex. 13, and the retired judge chairing the panel charges $1,200

per hour, Sept. 17, 2020 Hr’g Tr. 79; AAA’s Notice Compensation

Richard Holwell, Joint Hr’g Ex. 14.

In sum, CellInfo submitted several motions to the Panel

that were ultimately denied, engaged in expensive discovery, and

timely paid all the arbitration fees from December 2018 until

April 2019 in the total amount of $61,250. See Panel’s Op. &

Order, March 4, 2020, 2-3 (“Panel’s March 4 Op. & Order”), Joint

Hr’g Ex. 35; Pl. CellInfo Memo. Supp. Mot. Reopen Case & Set

Trial, Ex. A, AAA Detail Invoice, ECF. 70-1 (“AAA Invoice”);

Sept. 17, 2020 Hr’g Tr. 85-87.

On September 5, 2019, CellInfo received an invoice from the

American Arbitration Association in the amount of $207,900 to

cover arbitration expenses through the scheduled hearing and

decision. One half of this sum was due by October 3, 2019 and

the remainder by October 31. See AAA Invoice; Sept. 17, 2020

Hr’g Tr. 88. By now, CellInfo’s legal fees exceeded $1,250,000.

See Sept. 17, 2020 Hr’g Tr. 28; Outstanding Invoices 99.

CellInfo went to its loyal investors who agreed to pony up

enough additional funds to pay at least the first half of the

AAA invoice. See Sept. 17, 2020 Hr’g Tr. 25-27; Sept. 24, 2020

Hr’g Tr. 17-18.

At this juncture,17 Victor N. Drouin, CellInfo’s CEO

(“Drouin”), testified that CellInfo’s lawyer, confident of the

strength of CellInfo’s case, said that his law firm would pay

17 What follows is a tale of raw chicanery, deception, and

betrayal charged to CellInfo’s lawyer and law firm. It is

supported only by the sworn testimony of CellInfo’s CEO, Victor

N. Drouin, and corroborated by one of its loyal investors, Paul

Karger, as well as the final proposed $300,000 contingency fee

agreement. Pl. CellInfo, LLC’s Reply Memo, Ex. A, Decl. Victor

Nathan Drouin, Ex. 16, Amended Agreement for Legal Services 84,

ECF No. 95-1. CellInfo never called its lawyer to testify and

American Tower naturally was not privy to what passed between

CellInfo and its lawyer. The Court views this testimony with

some skepticism and thus will use the terms “lawyer” and “law

firm” throughout. Nevertheless, so serious are the breaches of

professional responsibility alleged that this Court will refer

the matter to the Massachusetts Board of Bar Overseers for a

full report and recommendation. There the lawyer and law firm

will be afforded a fair chance to defend their conduct in a

confidential proceeding.

the arbitration fees and press the case through to a decision –-

all on a contingency basis –- if only CellInfo would pay

$250,000 up front. See Sept. 17, 2020 Hr’g Tr. 24, 28, 105,

120. Faced with ever mounting attorneys’ fees, this seemed like

a good deal and Drouin jumped at it, telling his investors this

would be the final loan he would solicit. See id. 55, 101-02;

Sept. 24, 2020 Hr’g Tr. 44. Drouin thus turned over to the

lawyer $180,000 raised for the arbitration fee, believing that

this sum would be paid to the American Arbitration Association.

See Sept. 17, 2020 Hr’g Tr. 25, 28. Instead, the law firm

applied these funds to other litigation expenses (deposition and

expert report preparation) and the arbitration fee went unpaid.

See id. 52-53; Email from Lawyer to Drouin, Oct. 1, 2019, Joint

Hr’g Ex. 75. Moreover, the lawyer went back to Drouin and told

him that, since the arbitration fees were greater than he had

thought, the up-front payment necessary to effectuate the

proposed contingent fee agreement had now risen to $300,000.

See Sept. 17, 2020 Hr’g Tr. 29; Email from Lawyer to Drouin,

Oct. 1, 2019, Joint Hr’g Ex. 75. Drouin felt he had been

double-crossed and unable to return to his investors, having

told them he had asked for the “final” loan. See Sept. 17, 2020

Hr’g Tr. 55. Even so, he tried and, in fact, raised some

additional funds for CellInfo. See Sept. 17, 2020 Hr’g Tr. 63,

94-97; Sept. 24, 2020 Hr’g Tr. 70. The $300,000 up-front

payment was never made. See Sept. 17, 2020 Hr’g Tr. 53-56.

On October 23, 2019, several weeks before the scheduled

hearing on the merits, CellInfo’s lawyer notified the Panel of

his withdrawal from representation without further explanation.

Withdrawal Letter, Joint Hr’g Ex. 70.

CellInfo then requested to stay the arbitration proceedings

to seek substitute legal counsel and created a debt in the

arbitration account. Panel’s March 4 Op. & Order 3. The Panel

set a deadline for satisfying the outstanding fees, and, upon

the passage of the deadline with no payment, suspended the

proceedings pursuant to AAA Rule-57 on November 18, 2019. AAA

Order of Suspension, Nov. 18, 2019, Joint Hr’g Ex. 72.

American Tower thus moved for default judgment against

CellInfo while CellInfo cross-moved that the Panel certify to

this Court that CellInfo’s alleged inability to pay prevented

effective vindication of its claims. Panel’s March 4 Op. &

Order 1. The Panel denied both motions and renewed the

suspension, declining to decide whether CellInfo’s non-payment

was a result of inability or willfulness and suggesting that

American Tower pay CellInfo’s outstanding AAA invoices to keep

the arbitration going. Id. 1, 3.

Since neither party paid the overdue fees, the Panel

eventually terminated the proceedings on April 21, 2020. AAA

Final Order, Joint Hr’g Ex. 74.

On July 2, 2020, CellInfo filed a motion to reopen the case

in this Court and to proceed to trial. CellInfo, LLC.’s Mot.

Reopen Case & Set Trial Date (“CellInfo’s Mot.”), ECF No. 68;

Pl. CellInfo, LLC’s Mem. Supp. Mot. Reopen & Set Trial Date

(“CellInfo’s Mem.”), ECF No. 70.

American Tower opposed and moved to dismiss the case with

prejudice for noncompliance with this Court’s order compelling

arbitration. American Tower’s Opp’n. Mot. Reopen (“American

Tower’s Opp’n”), ECF No. 82; American Tower’s Mot. Rule 11

Sanctions (“American Tower’s Mot.”), ECF No. 84.

On September 3, 2020, this Court heard the parties’ oral

arguments on the motions. Elec. Clerk’s Notes, ECF No. 93. The

parties agreed that before this Court could reopen the case, it

must be satisfied that CellInfo was unable, as opposed to

unwilling, to pay its arbitration fees, and that CellInfo made a

good faith attempt to overcome the payment hurdle and proceed

with the arbitration. See Sept. 3, 2020 Hr’g Tr. 7, 13, ECF No.

100. The parties also agreed that the Court may rely solely on

the exhibits attached to the briefs in rendering a decision.

See id.

CellInfo claimed that it genuinely lacked the funds to

continue arbitration within the time frame that had been set by

the Panel. Id. 13-14. American Tower conceded that CellInfo’s

financial papers supported indigency but argued that CellInfo

enjoyed the financial support of a group of loyal investors and

thus was able (but reluctant) to pay for arbitration. Id. 5.

After hearing the parties, this Court took the matter under

advisement and scheduled a tentative evidentiary hearing on the

issue of non-payment, allowing the parties to supplement their

arguments in writing and provide additional evidence. Id. 16,

21. In the interim, the parties submitted new arguments and a

large volume of new exhibits to support their positions.

CellInfo’s Opp’n Mot. Sanctions & Exs., ECF No. 92; Decl. Drouin

& Dep. Paul Karger, ECF No. 94; CellInfo’s Reply Resp. Mot.

Reopen & Exs., ECF No. 95.

Due to the complexity of the matter, which involved third-

party’s statements and factual disputes, the Court decided that

conducting an evidentiary hearing was advisable. See Sept. 3,

2020 Hr’g Tr. 20-21.

At the evidentiary hearing on September 17, 2020, the Court

heard live testimony from Drouin and CellInfo’s investors: John

Pantekidis and Wesley Parker, both partners in TwinFocus Capital

Partners LLC. Elec. Clerk’s Notes, ECF No. 102; Sept. 17, 2020

Hr’g Tr. 3, 111, 117-18. On September 24, 2020, the hearing

resumed with the testimony of another TwinFocus partner and

CellInfo investor, Paul Karger. Elec. Clerk’s Notes, ECF No.

109; Sept. 24, 2020 Hr’g Tr. 7. On September 29, 2020, the

Court heard the parties’ closing arguments and entered an order

denying CellInfo’s motion to reopen, reserving the right to

enter a written decision later. Elec. Clerk’s Notes, ECF No.

112; Sept. 29, 2020 Hr’g Tr. 33. In doing so, the Court held

that CellInfo failed to prove by a preponderance of the evidence

an inability to pay or to proceed with the arbitration and that

the evidence was inconclusive as to CellInfo’s good faith.

Sept. 29, 2020 Hr’g Tr. 31-32.

III. Applying the Legal Framework

In determining whether the termination of the arbitration

proceedings due to CellInfo’s non-payment warrants lifting the

stay, it is easier to dispose of the second part of the

condition for lifting a stay, which requires that the applicant

for the stay be in good standing in the arbitration. 9 U.S.C.

§ 3. Here, the American Tower entities -- the applicants of the

stay and the opponents of reopening -– complied with the

arbitration proceedings, paid their invoices, and have not

defaulted. Panel’s March 4 Op. & Order 3. Therefore, the

second condition for lifting the stay could be quickly set

aside.18

As for the first part of the condition, if CellInfo’s non-

payment was a “failure, neglect, or refusal” to arbitrate, 9

U.S.C. § 4.1, then it could not be said that the arbitration was

“had in accordance with the terms of the agreement,” id. § 3,

and reopening the case in the District Court would be

unjustified.

18 It appears that the FAA’s drafters were more concerned

with abusive parties that would not only torpedo arbitration but

also prevent their adversaries’ recourse in court than of the

situation where a party would purposely drain its own funds just

to evade arbitration and litigate in court instead. See Weiler,

22 Cal. App. 5th at 981 n. 3. As the California Court of

Appeals noted in Weiler,

At oral argument, defendants claimed that allowing

parties to seek relief from arbitration in the courts

based on their current financial condition creates an

open invitation for abuse by those seeking to escape

their arbitration obligations. We seriously doubt

parties will purposefully make themselves impecunious

to have their cases returned to the courts.

Regardless, we are more concerned with deep-pocketed

parties leveraging their wealth to deprive their

opponents of the right to resolve their disputes than

we are with parties choosing to bankrupt themselves as

a way out of arbitration and into court. And, under

our holding today, a court may not grant relief if the

evidence demonstrates a party’s financial status is a

result of the party’s intentional attempt to avoid

arbitration.

Id.

True, it is undisputed that CellInfo itself lacked

sufficient funds to afford arbitration. Sept. 17, 2020 Hr’g Tr.

21-22, 57, 67-68; Decl. Victor Nathan Drouin Supp. Pl. CellInfo,

LLC’s Mot. Reopen Case & Set Trial Date ¶ 8, Joint Hr’g Ex. 34.

CellInfo’s litigation, however, has been financed mostly by

a small group of outside investors from the inception of this

civil action. Sept. 17, 2020 Hr’g Tr. 58-59, 68-73. The record

does not reflect that these investors are obliged to loan

CellInfo any money, but the fact of the matter is that they have

significantly and continuously extended loans. Sept. 17, 2020

Hr’g Tr. 100, 113-14; Sept. 24, 2020 Hr’g Tr. 23-25.

Even were the Court to credit CellInfo’s evidence that it

struggled to raise enough for the $207,900 AAA invoice and also

secure the contingency agreement with its lawyer, see Sept. 17,

2020 Hr’g Tr. 22-29, CellInfo failed to do the one simple thing

common sense calls for in such a situation, that is, to reach

out to the AAA to address its financial hardship. See Tillman,

825 F.3d at 1074 (“Current Rule R-53 allows the AAA to prescribe

fees and gives it the sole discretion to reduce fees in the

event of hardship.”); see also Lifescan, Inc. v. Premier

Diabetic Servs., Inc., 363 F.3d 1010, 1013 (9th Cir. 2004)

(“Unlike the more inflexible Federal Rules of Civil Procedure,

the AAA rules allow the arbitrators to adjust the payment of

costs in light of circumstances.”); Wells Fargo Bank Nat’l Ass’n

v. Chance, No. 2:19-CV-02120-RDP, 2020 WL 1891224, at *5 n.1

(N.D. Ala. Apr. 16, 2020) (“Indeed, the Panel may suspend the

hearing, but it does not have to. If so desired, the Panel

could continue the proceedings without prepayment of the

fees.”).

It is puzzling that CellInfo reached out to the AAA to

request an extension of time to retain a new lawyer, at a time

when it knew it could no longer afford the arbitration, electing

to withhold such crucial information from the AAA. See

CellInfo’s Mot. Extend Time Retain Successor Counsel, Joint Hr’g

Ex. 77; Email from Richard J. Holwell to Parties, Oct. 30, 2019,

Joint Hr’g Ex. 71.

CellInfo’s inaction differentiates it from Tillman, who

“gave notice of her inability to pay during arbitration” and

“made genuine efforts to make alternate payment arrangements.”

Tillman, 825 F.3d at 1075 n.1.

Ironically, it was American Tower that finally brought the

issue to the attention of the Panel by moving for default

judgment against CellInfo as a remedy for non-payment of its

arbitration fees portion. See Sept. 17, 2020 Hr’g Tr. 97

(Drouin’s testimony); Panel’s March 4 Op. & Order. Even then,

CellInfo did not offer a satisfactory explanation to the Panel

for the alleged financial hardship. Panel’s March 4 Op. & Order

6 (“The record is silent as to why Twin Focus Capital Partners

has withdrawn its support.”).

Relying only on its drained bank account, CellInfo held

back from the Panel helpful information and missed the

opportunity to put forward what allegedly transpired with the

lawyer and impacted the investors’ willingness to maintain its

litigation financing.

It was all fresh back then: the hearing on the merits

before the Panel was around the corner, the lawyer was no longer

in the picture (CellInfo had hired new counsel), CellInfo was

supposed to try to save the arbitration, and as a bonus,

CellInfo might even have compelled American Tower to pay the

bills. What kept CellInfo from disclosing everything -- as it

did to this Court -- to the Panel back then?

CellInfo’s conduct appears to this Court as failure or

neglect to comply with the arbitration. What’s more, CellInfo’s

forbearance during the arbitration weakens the credibility of

its later evidence of financial inability and good faith. See

Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed. Cir. 2010), aff’d and

remanded, 566 U.S. 431 (2012).

Notably, only one investor jumped ship; the rest resumed

financing CellInfo’s litigation as soon as it retained its

current lawyer in December 2019, while the arbitration was still

pending. Sept. 17, 2020 Hr’g Tr. 73; Sept. 24, 2020 Hr’g Tr.

70-72. In the aggregate, CellInfo raised a total sum of

$110,000 from December 2019 through May 2020. Sept. 17, 2020

Hr’g Tr. 96. This, at least, shows a modest yet stable

fundraising ability, and since CellInfo never asked the AAA for

payment modifications after disclosing the root of the financial

hardship, who knows what the AAA would have replied?

Considering the fundraising ability and the advanced stage

of the arbitration proceedings, the AAA might have been willing

to entertain reduced fees or late payment. After all, the AAA

enjoys sole discretion in this business. See Tillman, 825 F.3d

at 1074.

CellInfo had met true financial challenges; however, the

good faith standard required it to do more. In sum, CellInfo

has simply not demonstrated a sufficiently sincere good faith

effort to comply with the flexible AAA requirements. Therefore,

lifting the stay would be unwarranted. Yet, for a good while,

CellInfo had complied with the Court’s order to arbitrate by

initiating the arbitration, cooperating with the arbitration

proceedings for months and paying the previous AAA invoices.

Therefore, the Court will not take a step further and dismiss

the civil action. This would be an unnecessarily harsh sanction

under the circumstances.

Although the Court is not persuaded that the evidence

justifies altering the previous order compelling arbitration,

the Court’s ruling does not affect the viability of these civil

(and potentially criminal, see Sept. 29, 2020 Hr’g Tr. 30-33)

causes of action. These causes of action may still be pursued

in accordance with the parties’ preexisting agreements (if the

AAA would be willing to reconsider termination or if the parties

agree to turn to a different arbitrable forum).

IV. CONCLUSION

In conclusion, CellInfo’s motion to reopen the case in this

Court was DENIED, ECF No. 68, and the case remains

administratively closed. At any time, any party may move to

reopen the case for entry of final awards as a result of

arbitration or settlement or for other appropriate reason.

/s/ William G. Young

WILLIAM G. YOUNG

DISTRICT JUDGE