MYSTIC RETREAT MED SPA & WEIGHT LOSS CENTER v. ZELTIQ AESTHETICS LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

MYSTIC RETREAT MED SPA & )

WEIGHT LOSS CENTER, PLLC, AND )

MISTY SINCLAIR, M.D., )

)

Plaintiffs, )

)

v. ) 1:21cv00515

)

ASCENTIUM CAPITAL, LLC, ZELTIQ )

AESTHETICS LLC, AND ALLERGAN )

USA, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This case returns to the court on the second motion to compel

arbitration and stay proceedings by Defendants Zeltiq Aesthetics

LLC (“Zeltiq”) and its successor, Allergan USA, Inc. (“Allergan”).

(Doc. 84.) Plaintiffs Mystic Retreat Med Spa & Weight Loss Center,

PLLC (“Mystic”) and Misty Sinclair, M.D. oppose the motion. (Doc.

87.) Plaintiffs also move to strike evidence submitted with

Defendants’ reply brief. (Doc. 90.) The court held a hearing on

the motions on December 15, 2022. For the reasons set forth below,

Plaintiffs’ motion to strike will be denied, and because the court

finds a genuine dispute of material fact whether the arbitration

provision was incorporated into the parties’ contract, Defendants’

motion to compel arbitration will be set for resolution by a jury.

I. BACKGROUND

As Defendants previously moved unsuccessfully to compel

arbitration and stay proceedings (Doc. 73), the court relies on

the factual record developed in that motion as supplemented by the

current record, which demonstrates the following:

Zeltiq sold,1 and Ascentium financed, the purchase of medical

devices designed to assist with weight loss. (Doc. 7 ¶ 8.)

Plaintiff Sinclair is a board-certified neurologist with a sub-

specialty in sleep disorders. (Doc. 34-1 ¶ 4.) She is also a

member-manager of Plaintiff Mystic, a spa and weight loss center,

with her business partner, Marcia Ballard, a nurse practitioner

who is a principal at Mystic. (Id. ¶¶ 2-4; Doc. 34-2 ¶¶ 2-4.)

According to Plaintiffs, in the summer of 2016, Wes Lev,

Zeltiq’s sales manager,2 approached Sinclair about Zeltiq’s

CoolSculpting technology for weight loss, spoke with Sinclair

several times, and met with her in person.3 (Doc. 34-1 ¶¶ 6-9;

Doc. 34-2 ¶¶ 6-8.) On June 19, 2016, Lev sent an email to Sinclair

and Ballard at 8:14 p.m., with a copy to Jason Wise at Ascentium,

regarding the purchase of Zeltiq’s CoolSculpting System and

1 Zeltiq was acquired by Plaintiff Allergan in 2017. (Doc. 16 ¶ 5.)

2 Sinclair states in her affidavit that she has known Lev for “about 6

years” (Doc. 34-1 ¶ 6), but it is not clear whether this predates the

events in this case.

3 Another medical spa operator who had provided Sinclair advice had given

Lev her “name and contact information.” (Doc. 34-1 ¶ 8.)

services. (Doc. 29-2.) The email states:

Dr. Sinclair and Dr. Ballard,

Please see the attached MSA (agreements). I have

one system and 2.

I am copying Jason Wise with Ascentium to give you

finance options and monthly payments.

I look forward to seeing you tomorrow.4

Best,

Wes

(Doc. 29-2 at 1.) The email also includes as attachments two

proposed MSA Sales Orders, each with Attachments A, B, and C.

(Doc. 29-2.) The significant difference between the two MSA Sales

Orders is that one proposes the sale of one CoolSculpting System,

and the other proposes the sale of two such systems. Pertinent

here, Attachment A to both is a three-page document entitled

“Attachment A: Terms & Conditions of Sale” and includes, among

other terms, the following:

APPLICABLE LAW; DISPUTE RESOLUTION

The laws of the State of California govern this agreement

without regard to conflict of laws principles or any

other principles that would result in the application of

a different body of law. The United Nations Convention

on Contracts for the International Sale of Goods is

expressly excluded from this Agreement. Any controversy

or claim arising out of or relating to this Agreement,

4 The next day was June 20, though the parties did not meet until June

22. The discrepancy, though seemingly immaterial, is not explained in

the record.

or its breach, shall be subject to non-binding mediation

prior to binding arbitration in Alameda County,

California under the then-current Commercial Arbitration

Rules of the American Arbitration Association by one

arbitrator appointed in accordance with such Rules. The

arbitrator shall issue a written report to the parties,

detailing the basis of any arbitration award. Judgment

on the award rendered by the arbitrator may be entered

in any court having jurisdiction. Subject to the

parties’ obligation to submit disputes to binding

arbitration in accordance with this paragraph, the

California state courts of Alameda County, California

(or if there is federal jurisdiction, the United States

District Court for the Northern District of California)

have exclusive jurisdiction and venue over any dispute

arising from or related to this Agreement. Customer

hereby, irrevocably, consents to the jurisdiction of

such courts, and waives any objection thereto.

Notwithstanding the foregoing, neither party shall be

precluded, at any time, from seeking injunctive relief

or other provisional relief, or submitting any decision

of an arbitrator reached in accordance with this

paragraph, in any court of law in connection with the

enforcement of this Agreement or such party’s

intellectual property rights.

(Doc. 29-2 at 7 (emphasis added).)5

Neither Sinclair nor Ballard in either of their affidavits

denies having received and seen Lev’s June 19 email.6 Rather,

they contend that they never saw or “knew of the terms” of the

email’s attachments until November 18, 2020. (Doc. 34-1 ¶ 16;

Doc. 34-2 ¶ 14-15.) Thus, they contend they never intended to

5 Attachment B is a list of supplies and prices; attachment C is entitled,

“Service and Warranty Terms and Conditions.” (Id. at 8-13.)

6 Plaintiffs’ reliance (Doc. 87 at 19) on the court’s earlier statement

noting lack of proof that Plaintiffs “ever saw or were aware of the MSA

attachments” is misplaced, as the court’s statement was based on

Defendants’ failure at that time to authenticate the June 19, 2016 and

other emails, which were merely appended to a brief and not properly

authenticated. (See Doc. 73 at 14.)

agree to these attachments as part of the MSA Sales Order. (Doc.

34-1 ¶ 17; Doc. 34-2 ¶ 15.)

On June 20, Wise replied to all recipients of Lev’s email,

attaching financing options for Plaintiffs’ purchase of the

CoolSculpting equipment. (Doc. 89-2 at 2 ¶ 5, 45-56.)

On June 22, 2016, Sinclair and Ballard met with Lev regarding

the purchase of Zeltiq’s CoolSculpting System and services. Lev

presented a single-page “Master Sales Agreement Sales Order” for

Mystic’s purchase of the equipment and services.7 (Doc. 29-3; Doc.

34-1 ¶ 13; Doc. 34-2 ¶ 12.) Sinclair made two handwritten changes

to the MSA Sales Order; first, to change the address to the new

Mystic facility in Carthage, North Carolina; and second, to note

$1,000 in marketing funds that Zeltiq would provide. (Doc. 34-1

¶ 14, Doc. 29-3.) Lev and Sinclair both initialed and dated the

two changes, and Sinclair signed the document on behalf of Mystic.

(Doc. 29-3.) The bottom of the document, just above Sinclair’s

signature, states:

Included Terms and Attachments. The agreement between

Customer and ZELTIQ Aesthetics regarding the products

described above (the ‘Master Sales Agreement’) includes

this Sales Order and the attachments (A-C) hereto which

are incorporated herein in their entirety by this

reference.

(Doc. 29-3.) However, attachments A, B, and C were not appended

7 This is the same document as one attached to Lev’s June 19, 2016 email

to Sinclair and Ballard for the sale of one CoolSculpting System.

to the MSA Sales Order or otherwise presented at the June 22

meeting. (Doc. 34-1 ¶¶ 13-16; Doc. 34-2 ¶¶ 12-13.)

The next day, June 23, Lev sent Sinclair, Ballard, and Wise

an email and attached a copy of Plaintiffs’ executed, single-page

MSA Sales Order.8 (Doc. 34-1 ¶ 18; Doc. 34-2 ¶ 16.) In an

affidavit, Sinclair states: “[a]fter the pendency of this

litigation, I was shown an email that Mr. Lev apparently sent on

June 23, 2016, the morning after the meeting when I signed the

one-page physical document.” (Doc. 34-1 ¶ 18.) Similarly, Ballard

states that “[a]fter the pendency of this litigation, I found an

email that Mr. Lev apparently sent on June 23, 2016.” (Doc. 34-2

at 16.) Neither affidavit denies having received or known of the

email at the time.

On June 24, Michael Ballard, apparently Plaintiff Ballard’s

husband, responded to Lev’s June 23 email (using the same email

address for Ballard to which Lev had sent his email) stating, “Look

forward to our venture” and “Thanks for your help,” before asking

a question about the system’s voltage. (Doc. 89-2 at 59.)

On July 1, Lev emailed another Zeltiq employee, with copies

to Sinclair and Ballard, seeking to confirm shipment of the

equipment and noting a delivery address of 75 Magnolia Avenue in

Pinehurst, North Carolina. (Doc. 89-2 at 60.) Seventeen minutes

8 Zeltiq formally accepted the MSA Sales Order, by signing it, on June 27,

2016. (Doc. 29-3.)

later, Sinclair emailed a response (from her iPhone), “No, please

deliver to Marcia's practice 1001 Monroe St Ste D Carthage, NC

28327.” (Id. at 61.)

In August 2016, Michael Ballard, responding from the same

email address as before, emailed Lev from his iPhone and copied

Sinclair (again using her same email address), noting that “Our

Coolsculpting machine comes with a warranty” and asking Lev to

“Please send to Ascentium” as the latter needed it for insurance

purposes to avoid a $100-a-month premium. (Id. at 62.) Less than

a minute later, Michael Ballard sent a second email to the same

recipients, attaching a copy of the inquiry from Ascentium that

noted that “property insurance is required under the terms of your

Financing Agreement.” (Id. at 63-64.)

Sometime later, a dispute arose between the parties, and

Plaintiffs sought to return the system and terminate their business

relationship, claiming that the system did not work as represented.

(Doc. 7 ¶¶ 25-26.) Plaintiffs allege Ascentium took possession of

the CoolSculpting system but wrongfully demanded the balance due

under the equipment financing agreements. (Id. ¶¶ 27, 31.) On

May 10, 2021, Plaintiffs sued Defendants in North Carolina state

court. (Doc. 7.) Defendants timely removed the action to this

court. (Doc. 1 ¶ 8.)

In January 2022, Defendants moved to stay proceedings and

compel arbitration (Doc. 29), which the court denied without

prejudice because “Defendants [] failed to produce admissible

evidence that there was an arbitration agreement.” (Doc. 73 at

13.) This was due at least in part to Defendants’ failure to

submit a declaration or other proper basis to authenticate the

proffered documents, relying instead on assertions in their

briefing, which the court determined was not admissible evidence.

(Doc. 73 at 13.) Defendants now move a second time to compel

arbitration, having filed declarations to authenticate the

relevant documents. (Docs. 84, 84-1 and 84-2.) In response,

Plaintiffs move to strike Defendants’ evidence, maintain that

there was no agreement to arbitrate, and, at a minimum, demand a

jury trial on their motion. (Doc. 87 at 1.)

II. ANALYSIS

A. Motion to Strike

As a preliminary matter, Plaintiffs contend that certain

emails attached to the declaration of Roald John L. Bueno in

support of Defendants’ motion to compel arbitration are

inadmissible under Federal Rule of Evidence 901 on the grounds

they are not “true and correct” copies because they contain the

name of “Bridget Rebillard,” an administrative assistant at

Defendants’ law firm, on their header. (Doc. 87 at 8-9.)

Defendants respond that Rebillard’s name appears on the documents

merely because of the process she used to convert them to

electronic format in order to electronically file them on the

court’s docket. (Doc. 89 at 7.) Rebillard has filed a declaration

describing how and why the documents came to be in the form in

which they were filed and attests that the substance of each

document was not altered in any way. (Doc. 89-1.)

In response to Plaintiffs’ objection, Defendants re-uploaded

the relevant emails onto the court’s docket without Rebillard’s

name in the header and submitted them with another declaration

from Bueno, who again reauthenticated them, as an attachment to

their reply brief. (Doc. 89 at 7.) Plaintiffs now move to strike

these latest attachments to Defendants’ reply brief on the ground

they are “entirely new Declarations and Exhibits,” ignore the rules

of procedure, and should not be considered. (Doc. 90 at 5.)

It is not readily apparent that a correction of the type here

falls outside this court’s local rules for reply briefs, which

limits discussion to “matters newly raised in the response.” L.R.

7.3(h). Courts in this district “have consistently held that

‘[r]eply briefs . . . may not inject new grounds . . . [and that

an] argument [that] was not contained in the main brief . . . is

not before the Court.’” Tyndall v. Maynor, 288 F.R.D. 103, 108

(M.D.N.C. 2013) (quoting Triad International Maintenance Corp. v.

Aim Aviation, Inc., 473 F. Supp. 2d 666, 670 n.1 (M.D.N.C. 2006)).

Thus, it is improper, under Local Rule 7.3(h), to wait until a

reply brief to provide support for an unsupported argument made in

a party’s first motion. See Jarvis v. Stewart, No. 1:04CV00642,

2005 WL 3088589, at *1 (M.D.N.C. Nov. 17, 2005). The rule “exists

to give the replying party a chance to rebut newly raised

arguments, not to give the replying party an unfair advantage in

having a chance to make new arguments that should have been raised

initially.” Pouncey v. Guilford County, No. 1:18CV1022, 2020 WL

1274264, at *5 (M.D.N.C. Mar. 17, 2020).

Here, Defendants did not offer new or additional evidence, as

Plaintiffs charge. (Doc. 90 at 3.) Rather, they technically

offered less, as they eliminated the header information to which

Plaintiffs objected. Even if the evidence Defendants submitted

with their motion to compel were inadmissible for the simple reason

that the copies of emails contain information relating to counsel’s

administrative assistant who downloaded them to the court’s

docket, the court clearly has the discretion to permit such a

deficiency to be corrected. Cf. A Helping Hand, LLC v. Baltimore

County, MD, 515 F.3d 356, 369 (4th Cir. 2008) (noting court’s

discretion to consider arguments raised for first time in reply

briefing); DiPaulo v. Potter, 733 F. Supp. 2d 666, 670 (M.D.N.C.

2010) (noting court’s authority to permit a surreply based on new

arguments when fairness dictates, citing cases). Defendants’ re-

filed attachments to their reply brief merely correct this single

alleged deficiency and are otherwise identical to those filed with

the motion to compel arbitration. Moreover, the declarations and

exhibits were re-submitted solely in response to technical

objections attributable to this court’s electronic filing system.

Fairness dictates that the court allow them to be considered, and

they are admissible under Federal Rule of Evidence 901.

Plaintiffs’ motion to strike (Doc. 90) will accordingly be denied.

B. Motion to Compel Arbitration

1. Legal Standard

The Federal Arbitration Act (“FAA”) establishes “a liberal

federal policy favoring arbitration” agreements. Moses H. Cone

Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24

(1983). “When parties have entered into a valid and enforceable

agreement to arbitrate their disputes and the dispute at issue

falls within the scope of that agreement, the FAA requires federal

courts to stay judicial proceedings, and compel arbitration.”

Murray v. United Food & Commercial Workers International Union,

289 F. 3d 297, 301 (4th Cir. 2002) (citations omitted); 9 U.S.C.

§§ 3-4. However, “a party cannot be required to submit to

arbitration any dispute which he has not agreed so to submit.”

American Bankers Insurance Group v. Long, 453 F.3d 623, 626-27

(4th Cir. 2006) (citation omitted). As such, the court must

determine whether parties have a valid and enforceable agreement

to arbitrate.9 Berkeley County School District v. Hub

9 Defendants contend that an “arbitrator, not the court, must determine

whether Plaintiffs’ claims are subject to arbitration under the MSA

[Sales Order] and enforceability of the MSA [Sales Order].” (Doc. 85

at 7.) While an arbitrator may ultimately determine the scope of an

International Limited, 944 F.3d 225, 234 (4th Cir. 2019).

The party seeking to compel arbitration must establish an

agreement to arbitrate. See In re Mercury Construction Corp.,

656 F.2d 933, 939 (4th Cir. 1981), aff’d sub nom. Moses H.

Cone, 460 U.S. 1 (1983); see Adkins v. Labor Ready, Inc., 303 F.3d

496, 500–01 (4th Cir. 2002) (requiring litigant seeking to compel

arbitration to demonstrate “a written agreement that includes an

arbitration provision which purports to cover the dispute”). A

court may order arbitration of a dispute only where it is satisfied

that the parties entered into an agreement to arbitrate it.

Granite Rock Co. v. International Brotherhood of Teamsters, 561

U.S. 287, 296 (2010) (citing First Options of Chicago, Inc. v.

Kaplan, 514 U.S. 938, 943 (1995)). The party seeking to compel

arbitration must demonstrate: “(1) the existence of a dispute

between the parties, (2) a written agreement that includes an

arbitration provision which purports to cover the dispute, (3) the

relationship of the transaction, which is evidenced by the

agreement, to interstate or foreign commerce, and (4) the failure,

neglect or refusal of [a party] to arbitrate the dispute.”

American General Life & Accident Insurance Co. v. Wood, 429 F.3d

83, 87 (4th Cir. 2005) (quoting Adkins, 303 F.3d at 500-01). Here,

arbitration agreement, the court must first determine whether there was

an agreement to arbitrate. 9 U.S.C. § 4; Dillon v. BMO Harris Bank,

N.A., 787 F.3d 707, 713 (4th Cir. 2015).

the parties dispute whether their agreement included an

arbitration provision.

“Arbitration is ‘a matter of consent, not coercion,’ and

federal arbitration policy does not alter that maxim.” Raymond

James Financial Services, Inc. v. Cary, 709 F.3d 382, 385 (4th

Cir. 2013) (quoting Volt Information Sciences, Inc. v. Board of

Trustees of Leland Stanford Junior University, 489 U.S. 468, 479

(1989)). The Fourth Circuit has recognized that “the ‘touchstones

of arbitrability analysis’ are the ‘twin pillars’ of the parties’

‘consent and intent’ to arbitrate.” Id. at 385-86 (quoting Peabody

Holding Co., LLC v. United Mine Workers of Am., Int’l Union, 665

F.3d 96, 103 4th Cir. 2012)). While the court must resolve any

ambiguity regarding the scope of the arbitral issues in favor of

arbitration, Moses H. Cone, 460 U.S. at 24-25; Wachovia Bank

National Ass’n v. Schmidt, 445 F.3d 762, 767 (4th Cir. 2006), the

question of the parties’ intent to enter into an agreement to

arbitrate does not enjoy any presumption favoring arbitration,

First Options of Chicago, Inc. v. Kaplan, 514 U.S 938, 944 (1995).

To determine whether the parties agreed to arbitrate a

particular dispute, the court must consider relevant state law

principles governing contract formation. Hill v. Peoplesoft USA,

Inc., 412 F.3d 540, 543 (4th Cir. 2005); see Perry v. Thomas,

482 U.S. 483, 492 n.9 (1987). In a case premised upon diversity

jurisdiction, such as the present one, a federal court applies the

law of the forum state. Arthur Anderson LLP v. Carlisle, 556 U.S.

624, 630–31 (2009).10 Thus, this state’s choice of law rules apply.

Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 495–97 (1941).

For a contract claim, North Carolina’s choice of law rule is lex

loci contractus - the law of the place where the contract was

formed. Fortune Ins. Co. v. Owens, 526 S.E.2d 463, 466 (N.C.

2000). A contract is formed at the “place at which the last act

was done by either of the parties essential to a meeting of the

minds.” Key Motorsports, Inc. v. Speedvision Network, LLC, 40 F.

Supp. 2d 344, 347 (M.D.N.C. 1999) (quoting Fast v. Gulley, 155

S.E.2d 507, 510 (N.C. 1967)). While presumably that might be

either California or Delaware, as the MSA Sales Order reflects it

was accepted by Zeltiq (which Plaintiffs represent is a Delaware

LLC with a California address (see Doc. 1-1 at 3, 6)) on June 27,

2016 (Doc. 29-3), Defendants do not argue this ground, and none of

Defendants’ declarations avers where the MSA Sales Order was

finally accepted by Zeltiq. (Doc. 84-1; Doc. 84-2; Doc. 89-1;

Doc. 89-2.) Rather, the parties argue that the law of North

Carolina, where the MSA Sales Order was negotiated, applies, and

the court need not question that conclusion on this record.11

10 While the proposed arbitration provision states that California law

applies, the court’s preliminary question of course is whether the

provision is even part of the parties’ contract.

11 In any event, there is no showing by the parties that North Carolina

law regarding contract formation differs substantively from California

Wiener v. AXA Equitable Life Ins. Co., No. 21-2165, 2023 WL 329317,

at *3 (4th Cir. Jan. 20, 2023) (holding that choice of law issues

may be waived).

In determining if an agreement to arbitrate exists, North

Carolina law instructs “the court to examine the language of the

contract itself for indications of the parties’ intent.” State v.

Philip Morris, USA, Inc., 618 S.E.2d 219, 225 (N.C. 2005). The

parties’ intent is determined in light of the “contract as a

whole.” Id. “Whenever a court is called upon to interpret a

contract its primary purpose is to ascertain the intention of the

parties at the moment of its execution.” Lane v. Scarborough,

200 S.E.2d 622, 624 (N.C. 1973). When construing contractual

terms, a contract’s plain language controls. See DeLoach v.

Lorillard Tobacco Co., 391 F.3d 551, 558 (4th Cir. 2004) (noting

that “as under general principles of contract law, our task is to

‘give ordinary words their ordinary meanings.’” (quoting Internet

East, Inc. v. Duro Communications, Inc., 553 S.E.2d 84, 87 (N.C.

Ct. App. 2001))); Walton v. City of Raleigh, 467 S.E.2d 410, 411

(N.C. 1996) (“If the plain language of a contract is clear, the

or Delaware law. While Defendants contend that Attachment A is part of

their agreement (which states “[t]he laws of the State of California

govern this agreement without regard to conflict of law principles”),

they do not suggest that California law should apply in deciding whether

Attachment A was a part of the contract. (See Doc. 85 at 2, 6-7, 11

(noting that “North Carolina law governing contract formation dictates

whether a valid arbitration agreement exists”).)

intention of the parties is inferred from the words of the

contract.”).

The standard for deciding a motion to compel arbitration is

similar to that applied to a motion for summary judgment.

Berkeley, 944 F.3d at 234; Adams v. Citicorp Credit Services, Inc.,

93 F. Supp. 3d 441, 445 (M.D.N.C. 2015). A party seeking to compel

arbitration bears the initial burden of demonstrating the absence

of any genuine dispute of material fact as to the parties’

agreement to arbitrate. See Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986); see also Dillon v. BMO Harris Bank, N.A., 787

F.3d 707, 713 (4th Cir. 2015). Once the moving party has met its

burden, the nonmoving party must affirmatively demonstrate with

specific evidence that there is a genuine dispute of material fact

requiring trial. Matsushita Electric Industry Co. v. Zenith Radio

Corp., 475 U.S. 574, 585–87 (1986); see Drews Distributing, Inc.

v. Silicon Gaming, Inc., 245 F.3d 347, 352 n.3 (4th Cir. 2001).

In determining whether arbitration should be compelled, the court

is entitled to consider materials beyond the complaint and its

supporting documents. Berkeley, 944 F.3d at 234. If there are

unresolved questions of material fact that prevent the court from

deciding the arbitrability issue, the court shall hold “an

expeditious and summary hearing.” Dillon, 787 F.3d at 713 (citing

Moses H. Cone, 460 U.S. at 22; 9 U.S.C. § 4.) “If the making of

the arbitration agreement . . . be in issue, the court shall

proceed summarily to the trial thereof.” (Id. (citing 9 U.S.C.

§ 4).)

2. Merits

Defendants contend that that the parties’ written agreement

includes an arbitration provision because the signed MSA Sales

Order expressly incorporated Attachment A, which contains an

arbitration provision, by reference. (Doc. 85 at 12-13.) As

evidence, Defendants proffer two declarations authenticating the

MSA Sales Order and the purported attachments and stating that Lev

emailed Sinclair and Ballard the MSA and attachments, including

the arbitration provisions, on June 19, 2016, three days before

the parties met in person to sign the MSA Sales Order. (Doc. 85

at 13; Docs. 84-1 & 84-2.) Defendants also offer a recent decision

from a California court that granted Zeltiq’s motion to compel

arbitration in another case, Ascentium Capital LLC v. Mitchell

Street Dental Group PC, No. 30-2018-01001353-CU-BC-NJC (Cal. Sup.

Ct. Nov. 10, 2022)). (Doc. 93-1.) Finally, Defendants contend

that Plaintiffs “should be estopped from denying their agreement

to the full terms of the MSA because they have been performing and

receiving benefits under the MSA for years.” (Doc. 85 at 19.)

Plaintiffs’ affidavits state that they were never presented

with the attachments containing any arbitration provision at the

June 22, 2016 meeting and never saw attachments A through C before

signing the one-page MSA Sales Order. (Docs. 34-1 ¶¶ 16-17; 34-2

¶¶ 14-15.) Plaintiffs contend they had no intention of signing a

contract with an arbitration provision. (Id.) Plaintiffs also

contend that the MSA.pdf file attached to the June 19, 2016 email,

which contained (among other provisions) the arbitration

agreement, cannot serve as a “valid written agreement” for several

reasons, including Defendants’ failure to comply with North

Carolina’s Uniform Electronics Transactions Act (“NCUETA”), N.C.

Gen. Stat. § 66-315(e), and the writing requirements of both North

Carolina’s statute of frauds, N.C. Gen. Stat. § 25-2-201(1), and

§ 2 of the FAA. (Doc. 87 at 12-13.)

The court begins with Plaintiffs’ argument that consideration

of Attachment C is barred by the NCUETA, as this argument is

potentially dispositive of Defendants’ motion to compel

arbitration. The NCUETA allows for certain transactions to be

conducted by electronic means. It also permits parties to sign

documents electronically, and there are certain presumptions about

when electronic records are received if sending protocols are

observed. N.C. Gen. Stat. §§ 66-316(b), 66-325. Plaintiffs note

that the act, by its terms, “applies only to transactions between

parties each of which has agreed to conduct transactions by

electronic means,” which is “determined from the context and

surrounding circumstances, including the parties conduct.” Id.

§ 66-315(b). Plaintiffs argue that the MSA.pdf file attached to

the June 19, 2016 email constitutes an “electronic record” within

the meaning of the NCUETA (id. at § 66-312(7), and they point out

that they never agreed, either implicitly or explicitly, to conduct

their transaction by electronic means. (Doc. 87 at 13.) Thus,

Plaintiffs contend, their failure to ever agree to conduct the MSA

Sales Order transaction electronically prevents Defendants from

relying on the MSA.pdf file, an electronic record, as a basis for

the contract. (Id. at 15.)

Merely because the MSA.pdf file attached to the June 19, 2016

email is an electronic record within the potential protection of

the NCUETA, however, does not mandate that it not be considered

here. The actual transaction – the signing of the MSA Sales Order

– was conducted in person and not by electronic means, which is

the central purpose of the act. The NCUETA does not clearly

contemplate that the sending of documents by email prior to an in-

person meeting precludes their consideration. Plaintiffs have

cited no authority to that effect. The only case law applying the

NCUETA is Powell v. City of Newton, 703 S.E.2d 723, 727-28 (N.C.

2010), which expressly rejected the application of the act to a

transaction involving the exchange of documents by email where the

parties contemplated a physical signature for a land conveyance.

This court is bound to follow state law and should not seek to

expand it. See Burris Chem., Inc. v. USX Corp., 10 F.3d 243, 247

(4th Cir. 1993) (federal courts adjudicating issues of state law

“rule upon state law as it exists and do not surmise or suggest

its expansion”). To adopt Plaintiffs’ position would exceed the

application contemplated by the statute as interpreted by the North

Carolina courts.

Plaintiffs’ reliance on several cases from other

jurisdictions under their various statutes for electronic records

transactions to support their contention is unpersuasive. For

example, Plaintiffs cite SN4, LLC v. Anchor Bank, 848 N.W.2d 559,

567 (Minn. App. 2014), and Buckles Management LLC v. InvestorDigs,

LLC, 728 F. Supp. 2d 1145 (D. Colo. 2010). However, these cases

concerned whether an electronic signature validated contracts, not

whether attachments could be sent via email before signing

documents in person. In Anchor Bank, the trial court found, and

the appellate court affirmed, that there was no express or implied

agreement to “electronically subscribe to the purported agreement”

but rather evidence that one party wanted the contracts executed

by hand. 848 N.W.2d at 567. Though plaintiffs sent the bank hand-

signed versions of the contract, the bank never hand-signed them.

Id. The court rejected plaintiffs’ argument that “the bank

electronically subscribed to the agreement.” Id. at 566. The

court was unpersuaded because it concluded that “the [state

electronic transactions act] is inapplicable because no reasonable

fact-finder could determine that the buyers and the bank agreed to

use electronic signatures to subscribe to an e-mail attachment.”

Id. at 569. Similarly, in Buckles Management, the court determined

that as a matter of law, an email signature was not “executed or

adopted by a person with the intent to sign the record.” 728 F.

Supp. 2d at 1151 (citations omitted). Here, in contrast, the

parties executed the MSA Sales Order in person, and the issue is

whether they intended for the attachments to be incorporated into

it, not whether the parties signed the MSA Sales Order.

The court therefore finds that the NCUETA is inapplicable and

does not bar consideration of the purported attachments merely

because they were sent via email.

In similar fashion, Plaintiffs’ argument that the arbitration

provision of Attachment A cannot be considered because it is barred

by the writing requirements of both the statute of frauds and § 2

of the FAA fails. The arbitration provision is indisputably in

writing, and the MSA Sales Order is signed. The question is

whether Attachment A is signed by the party to be charged – i.e.,

by Plaintiffs, and that turns on whether it was properly

incorporated by reference into the MSA Sales Order, an issue to

which the court now turns.

Defendants’ principal argument is that Attachment A is

incorporated into the MSA Sales Order by virtue of the express

incorporation at the bottom of the MSA Sales Order as well as the

fact that a copy of the attachment containing the arbitration

provision was sent to Plaintiffs in Lev’s June 19, 2016 email.

Defendants contend Plaintiff Sinclair is bound by the reference

because she signed the MSA Sales Order and had a duty to read it.

(Doc. 85 at 14-15.) Plaintiffs respond that North Carolina’s duty

to read obligation cannot be stretched to benefit Defendants in

this case and that no attachment was presented at the June 22,

2016 signing of the MSA Sales Order. (See Doc. 87 at 15-16.)

In North Carolina, a party signing a contract has a duty to

read its provisions and will be bound by the terms of what she

signs. Mills v. Lynch, 130 S.E.2d 541, 543-544 (N.C. 1963) (“The

duty to read an instrument or to have it read before signing it is

a positive one, and the failure to do so, in the absence of any

mistake, fraud, or oppression, is a circumstance against which no

relief may be head, either at law or in equity.”) (quoting Furst

& Thomas v. Merritt, 130 S.E. 40, 43 (N.C. 1925)). A contract can

incorporate other documents by reference such that the

incorporated documents become part of the contract, binding the

parties. Booker v. Everhart, 240 S.E.2d 360, 363 (N.C. 1978) (“To

incorporate a separate document by reference is to declare that

the former document shall be taken as part of the document in which

the declaration is made, as much as if it were set out at length

therein.”); Montessori Children’s House of Durham v. Blizzard, 781

S.E.2d 511, 514 (N.C. App. 2016) (noting that “[w]hen a contract

expressly incorporates a document by reference . . . that document

becomes a part of the parties’ agreement”). However, in order for

a document to be incorporated by reference as a matter of law it,

as with any material term of an agreement, must be unambiguous.

Lane, 200 S.E.2d at 624.

Here, while Sinclair surely had a duty to read the MSA Sales

Order she signed, and while that document stated that the parties’

“‘Master Sales Agreement’ includes this Sales Order and the

attachments (A-C) hereto which are incorporated herein in their

entirety by this reference,” the reference to the attachments is

ambiguous. The MSA Sales Order does not specifically identify the

location of the attachment containing the arbitration provision.

Cf. Krusch v. TAMKO Bldg. Prods., Inc., 34 F. Supp. 3d 584, 589

(M.D.N.C. 2014) (upholding arbitration provision contained in

warranty materials whose availability was specifically molded onto

each shingle plaintiff purchased). Moreover, Plaintiffs contend,

and Defendants do not deny, that Lev did not present the

attachments at the June 22 meeting, which would have been easy to

do. Given the manner in which Lev proceeded, identification of

the attachments referenced depends on parol evidence offered by

Defendants - that the attachments are the those attached to Lev’s

June 19, 2016 email. Martin v. Vance, 514 S.E.2d 306, 311 (N.C.

App. 1999) (approving of consideration of extrinsic evidence to

interpret ambiguity of contract containing arbitration provision).

Yet, Sinclair and Ballard deny ever having read those attachments

and claim they were unaware of them at the time Sinclair executed

the MSA Sales Order. (Doc. 34-1 ¶¶ 15-16; 34-2 ¶¶ 13-14.) The

duty to read does not extend to Lev’s June 19, 2016 email, as it

was not a document that Plaintiffs executed. Thus, Plaintiffs

cannot be held to knowledge of the email’s attachments as a matter

of law.

The question ultimately is the intent of the parties when

they signed the MSA Sales Order. Martin, 514 S.E.2d at 311.

Defendants have offered evidence that Plaintiffs must have known

of the contents of Attachment A, which included the arbitration

provision, and intended that it be incorporated because, among

other things: Sinclair and Ballard do not deny having read the

June 19, 2016 email; they would not likely have entered into a

contract of this magnitude (over $136,000) without having read the

terms of the agreement in the attachments; the MSA Sales Order

Sinclair signed expressly makes reference to and includes

“attachments (A-C) hereto”; Plaintiffs responded to other emails

at about the same time as the June 19, 2016 email; and Michael

Ballard shortly thereafter inquired about the CoolSculpting

System’s warranty that was contained in Attachment C in order to

save money on financing. Sinclair and Ballard maintain, however,

that they never read or were aware of the attachments to the

June 19, 2016 email. This is an unequivocal denial, which is

supported by their affidavits. Drews, 245 F.3d at 352 n.3 (noting

duty of party opposing arbitration to unequivocally deny there was

an arbitration agreement and produce evidence to support that

denial). As a consequence, the court is not satisfied there is an

agreement to arbitrate because this factual dispute must first be

resolved by a fact finder. 9 U.S.C. § 4; Berkeley, 944 F.3d at

234 (noting that “the court is obliged to conduct a trial under

the Trial Provision [of the FAA] when a party unequivocally denies

‘that an arbitration agreement exists,’ and ‘shows sufficient

facts in support’ thereof”).

Plaintiffs cite several cases to support their argument that

Defendants’ motion should be denied because Sinclair and Ballard

never saw the attachments and thus could not have agreed to

arbitrate. However, their cases are distinguishable. Plaintiffs

rely most heavily on Sciolino v. TD Waterhouse Investor Services,

Incorporated, 562 S.E.2d 64, 66 (N.C. Ct. App. 2002). There, the

defendant argued that an arbitration provision was incorporated

into the parties’ contract because plaintiff’s application

contained an agreement to “be bound by the terms of the attached

Customer Agreement” which contained the arbitration clause. Id.

The appeals court affirmed a denial of a motion to arbitrate after

the trial court “conducted a plenary hearing” and found that “the

existence of an agreement to arbitrate has not been demonstrated.”

Importantly, the court determined that there was not an agreement

to arbitrate as a matter of fact, not as a matter of law. See id.

Among the problems was a lack of evidence “to suggest that [the

arbitration provision] was ever provided to plaintiffs, when it

was provided . . . or whether plaintiffs ever saw it at all.” Id.

As the court noted, “Defendants produced no evidence that

plaintiffs actually received either customer agreement when they

signed the application.” Id. at 67. Here, in contrast, Defendants

have provided evidence that Plaintiffs received Attachment A

before executing the MSA Sales Order.

Similarly, in Dillon, the court denied arbitration after it

found the evidence submitted regarding the arbitration agreements

was neither reliable nor credible. 173 F. Supp. 3d at 273. The

court admonished that “online sellers cannot insert terms and

conditions the consumer did not have an opportunity to review.”

Id. at 269. Here, by contrast, Defendants’ evidence is sufficient

for a fact finder to believe Plaintiffs must have read the

attachments, including the arbitration provision, before executing

the MSA Sales Order.

Defendants’ reliance on the decision of the California court

granting a motion to compel arbitration is also misplaced. While

the parties there agreed that they signed the MSA Sales Order and

the plaintiff claimed he never received or saw the attachments

containing the arbitration provision, that version of the MSA Sales

Order included the additional statement that the parties

“explicitly acknowledge[] receipt of the Attachments,” which the

court found persuasive. (Doc. 93-1 at 2-3.) In contrast, the MSA

Sales Order in this case does not contain that explicit

acknowledgement of receipt of the attachments.

Finally, Defendants’ argument that Plaintiffs are

collaterally estopped from denying the arbitration provision is

part of their contract is meritless. Defendants’ argument relies

heavily on Plaintiffs’ request to have Zeltiq forward Ascentium a

copy of the warranty for the CoolSculpting System to permit

Plaintiffs to avoid an insurance premium as well as Plaintiffs’

use of the equipment after the June 2016 sale. (Doc. 85 at 19-

20.) More specifically, Defendants contend that because

Plaintiffs “invoked the additional terms of MSA Attachments A-C,”

Plaintiffs should be estopped from denying the arbitration

provision. (Doc. 89 at 6-7.) Defendants rely on this court’s

decision in Krusch, supra. But the facts here fall short of those

in that case. In Krush, this court enforced an arbitration

provision contained in a limited warranty because before purchase

the plaintiff’s agent had received a sample roofing shingle that

contained an embossed notice advising of the limited warranty and

listing a toll-free telephone number and website address for a

copy of the materials. 34 F. Supp. 3d at 589-90. Thus, the

evidence demonstrated that the plaintiff’s agent had actual notice

of the materials. Whether Plaintiffs here had notice, by contrast,

remains a fact issue. While there is an inference (perhaps even

a strong one) that Plaintiffs may have only learned of the warranty

in the email attachments, it is not apparent that is the only

source of their knowledge. Indeed, had Plaintiffs known of the

warranty in Attachment C, they ostensibly would not have had to

ask Zeltiq for a copy. Moreover, while the Krusch plaintiff was

aware of the warranty before purchase and chose not to read it,

there is a fact question here whether Plaintiffs were even aware

of Attachment A containing the arbitration provision (or

Attachment C’s warranty for that matter) before purchase. And

unlike the situation in Krusch, where the plaintiff was seeking to

enforce the very warranty that contained the arbitration provision

he claimed was not agreed to, here the Plaintiffs do not seek to

enforce the warranty provision contained in Attachment C, which is

also a different document from Attachment A that contained the

arbitration provision. (Doc. 84-1 at 7-9.)

Because a review of the complete record demonstrates that

Defendants have not established an agreement to arbitrate as a

matter of law in that there is an issue of fact as to whether the

Plaintiffs intended for Attachment A, which includes the

arbitration provision, to be part of their contract, and because

Plaintiffs have made a jury demand, Defendants’ motion to compel

arbitration must be resolved by that factfinder. Berkeley, 944

F.3d at 241-42.

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that Plaintiffs’ motion to strike

evidence in Defendants’ reply brief (Doc. 90) is DENIED;

IT IS FURTHER ORDERED that Defendants’ second motion to compel

arbitration and stay proceedings (Doc. 84) shall be set for

determination by jury on March 6, 2023, at 9:00 a.m.

/s/ Thomas D. Schroeder

United States District Judge

January 23, 2023