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Noye v. Johnson & Johnson

United States District Court, M.D. Pennsylvania

May 11, 2018

T JASON NOYE, individually and on behalf of all others similarly situated, Plaintiffs
JOHNSON & JOHNSON, et al., Defendants


          Yvette Kane, District Judge

         Before the Court is Defendant Johnson & Johnson Services, Inc. (“J&J”)'s renewed motion to compel arbitration and dismiss or, in the alternative, stay all proceedings. (Doc. No. 74.) For the reasons that follow, the Court will deny the motion.


         Plaintiff T Jason Noye (“Plaintiff”), initiated the above-captioned action against Defendants J&J and Kelly Services, Inc. (“Kelly”), on December 11, 2015, alleging various violations of the Federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681a-1681x.[1](Doc. No. 1.) On February 22, 2016, Kelly filed a motion to compel arbitration (Doc. No. 39), and J&J filed a motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and to compel arbitration or, in the alternative, stay all proceedings (Doc. No. 40). On March 3, 2016, the Court stayed the action pending disposition of both motions. (Doc. No. 48.)

         On September 7, 2016, the Court denied both Defendants' motions without prejudice as to their right to refile the motions after conducting arbitration-related discovery. (Doc. Nos. 61, 62, 63.) The Court then ordered arbitration-related discovery beginning on September 7, 2016 and lasting for sixty (60) days. (Doc. No. 62.) After the arbitration-related discovery period concluded and the parties notified the Court of their disagreement as to the results of the discovery (Doc. No. 70), J&J filed the instant renewed motion to compel arbitration and to dismiss or, alternatively, to stay proceedings on January 30, 2017 (Doc. No. 74). Kelly also filed a renewed motion to compel arbitration on that date. (Doc. No. 72.)

         On November 6, 2017, the Court issued a Memorandum and Order granting Kelly's motion to compel arbitration. (Doc. Nos. 83, 84.) As to J&J's motion, the Court ordered the parties “to file additional briefing, specifically addressing the issue of the applicability of the theory of equitable estoppel to the motion in light of the Third Circuit's recently-issued precedential opinion in White v. Sunoco, 870 F.3d 257 (3d Cir. 2017).” In accordance with this Order, J&J filed a supplemental brief in support of its renewed motion on November 20, 2017 (Doc. No. 85), and Plaintiff filed a brief in opposition on December 4, 2017 (Doc. No. 86). On December 22, 2017, J&J filed a reply brief. (Doc. No. 87.) Accordingly, J&J's renewed motion is fully briefed and thus ripe for disposition, and the parties have submitted briefs addressing the applicability of equitable estoppel to J&J's motion following White.


         The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, provides the “body of federal substantive law establishing and governing the duty to honor agreements to arbitrate disputes” and expresses a “strong federal policy in favor of resolving disputes through arbitration.” Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 522 (3d Cir. 2009). Even in light of the FAA, arbitration is “strictly a matter of contract.” Bel-Ray Co. v. Chemrite (Pty) Ltd., 181 F.3d 435, 444 (3d Cir. 1999). “If a party has not agreed to arbitrate, the courts have no authority to mandate that he do so.” Id. “Thus, in deciding whether a party may be compelled to arbitrate under the FAA, we first consider ‘(1) whether there is a valid agreement to arbitrate between the parties and, if so, (2) whether the merits-based dispute in question falls within the scope of that valid agreement.'” Flintkote Co. v. Aviva PLC, 769 F.3d 215, 220 (3d Cir. 2014) (quoting Century Indem., 584 F.3d at 527).

         As to the first question, the United States Court of Appeals for the Third Circuit has clarified “the standard for district courts to apply when determining whether, in a specific case, an agreement to arbitrate was actually reached.” Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771 (3d Cir. 2013). In effect, to determine whether there is a valid agreement to arbitrate, a district court “must initially decide whether the determination is made under Fed.R.Civ.P. 12(b)(6) or 56.” Sanford v. Bracewell & Guiliani, LLP, No. 14-1763, 2015 WL 4035614, at *2 (3d Cir. July 2, 2015). Having already permitted limited discovery on the question of arbitrability, the Court applies the summary judgment standard to J&J's renewed motion to compel arbitration.

         Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment is warranted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A factual dispute is material if it might affect the outcome of the suit under the applicable law, and is genuine only if there is a sufficient evidentiary basis that would allow a reasonable factfinder to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

         At the summary judgment stage, the relevant inquiry is whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law. Id. at 251-52. In making this determination, the Court must “consider all evidence in the light most favorable to the party opposing the motion.” A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007). In deciding a motion for summary judgment, the Court need not accept allegations that are merely conclusory in nature, whether they are made in the complaint or a sworn statement. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990). Moreover, the Court's function is not to make credibility determinations, weigh evidence, or draw inferences from the facts. Anderson, 477 U.S. at 249. Rather, the Court must simply “determine whether there is a genuine issue for trial.” Id.

         The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, “the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006); accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial, ” summary judgment is warranted. Celotex, 477 U.S. at 322. With respect to the sufficiency of the evidence that the non-moving party must provide, a court should grant a motion for summary judgment when the non-movant's evidence is merely colorable, conclusory, or speculative. Anderson, 477 U.S. at 249-50. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id. at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).


         A. Equitable Estoppel and Whether a Non-Signatory May Compel Arbitration

         A non-signatory to an arbitration agreement may bind a signatory to that agreement in certain circumstances under the theory of equitable estoppel. See, e.g., Dwayne E. Williams, Binding Nonsignatories to Arbitration Agreements, 25-SPG Franchise L.J. 175, 178 (2006) (“Equitable estoppel is typically applied against signatory plaintiffs . . . to compel them to arbitrate claims asserted against defendant nonsignatories to the arbitration agreement.”); see also Abrams v. Chesapeake Energy Corp., Nos. 4:16-cv-1343, 4:16-cv-1345, 4:16-cv-1346, 4:16-cv-1347, 2017 WL 6541511, at *8 (M.D. Pa. Dec. 21, 2017) (citing Griswold v. Coventry First LLC, 762 F.3d 264, 271 (3d Cir. 2014)). “[W]hen a signatory resists arbitration, courts may use equitable estoppel to join a ‘willing' nonsignatory to a proceeding where arbitration between the underlying signatory participants is appropriate.” Alexandra Anne Hui, Equitable Estoppel and the Compulsion of Arbitration, 60 Vand. L. Rev. 711, 728-29 (2007) (quoting David F. Sawrie, Equitable Estoppel and the Outer Boundaries of Federal Arbitration Law: The Alabama Supreme Court's Retrenchment of an Expansive Federal Policy Favoring Arbitration, 51 Vand. L. Rev. 721, 736 (1998)). However, within the Third Circuit, the use of equitable estoppel by a non-signatory to compel arbitration is limited to circumstances in which there is a close relationship among the entities involved, as well as a connection between the wrongs allegedly committed by the non-signatory and the non-signatory's obligations and duties under the relevant contract. See id. (citing E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.A., 269 F.3d 187 (3d Cir. 2001)).

         1.Applicable Law on Equitable Estoppel

         i. Pennsylvania and Michigan Law

         The Court's choice of law analysis is governed by Pennsylvania choice of law rules, as Pennsylvania is the forum state. See, e.g., LaSala v. Bordier et Cie, 519 F.3d 121, 140 (3d Cir. 2008) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). As noted by the parties in their respective briefs, both Pennsylvania and Michigan- the only states whose laws would be applicable to the Court's analysis of equitable estoppel in this case - permit a non-signatory to compel a signatory to arbitrate claims against it under certain circumstances.[2] (Doc. Nos. 75 at 14, 77 at 8, 85 at 6, 86 at 4, 87 at 2.) Under Pennsylvania law, “non-signatories to an arbitration agreement can enforce such an agreement when there is an obvious and close nexus between the non-signatories and the contract or the contracting parties, ” and the claims involved are “inextricably entwined with the [c]ontract.” See Elwyn v. DeLuca, 48 A.3d 457, 463 (Pa. 2012) (quoting Dodds v. Pulte Home Corp., 909 A.2d 348, 463 (Pa. Super. Ct. 2006)).

         Similarly, Michigan Law recognizes that “a party to an arbitration agreement may be equitably estopped from litigating its claims against non-parties in court and may be ordered to arbitration” under circumstances in which: (1) “the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against a non-signatory;” or (2) “when the signatory raises allegations of substantially interdependent and concerted misconduct by both the non-signatory and one or more signatories to the contract.” See Tobel v. AXA Equitable Live Ins. Co., No. 298129, 2012 WL 555801, at *11 (Mich. Ct. App. Feb. 21, 2012) (citing Grigson v. Creative Artists Agency, LLC, 210 F.3d 524, 528 (5th Cir. 2000)). Because both Pennsylvania and Michigan law on equitable estoppel ultimately hinge on the relationship or connection between the relevant parties, the Court concludes that no conflict exists and either state's law can be applied to the Court's equitable estoppel analysis.

         ii. Third Circuit's Acknowledgment of Equitable ...

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