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American Family Life Assurance Company of Columbus v. Hubbard

United States District Court, M.D. Georgia, Columbus Division

January 3, 2018




         Defendants removed the present action to this Court from the Superior Court of Muscogee County. In the state court action, Plaintiff sought an order compelling Defendants, who are current and former sales associates for Plaintiff, to arbitrate claims their counsel asserted on their behalf in correspondence to Plaintiff. Prior to the removal of this action, Plaintiff obtained from the state court judge a temporary restraining order preventing Defendants from filing any action against Plaintiff until the state court had an opportunity to rule on Plaintiff's motion to compel arbitration. After Defendants removed the action, Plaintiff moved this Court to compel arbitration (ECF No. 4). Plaintiff also sought an expedited hearing and ruling on its motion to compel arbitration before the expiration of the state court temporary restraining order. In the alternative, Plaintiff asked the Court to convert the temporary restraining order into a preliminary injunction, to remain effective until the Court could rule on its motion to compel arbitration (ECF Nos. 7 & 10). This Court held a hearing on December 28, 2017, the day before the state court temporary restraining order expired. At that hearing, the Court, without objection, orally issued a preliminary injunction enjoining Defendants from pursuing litigation of their claims until January 5, 2018. Today, the Court enters this Order deciding Plaintiff's motion to compel arbitration.

         No genuine factual disputes exist to be tried. Therefore, the Court proceeds based on the present record. As explained in the remainder of this Order, that record establishes that the Court has jurisdiction, that the arbitration agreements entered into between the parties cover their disputes, that the agreements are enforceable, and that Plaintiff did not waive its right to insist on arbitration. Accordingly, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., the Court grants Plaintiff's motion to compel arbitration (ECF No. 4).


         I. Defendants' Contractual Agreements with Plaintiff

         Plaintiff is a corporation that sells life, health, and accident insurance. Defendants are all former or current sales associates for Plaintiff. Plaintiff entered into a separate associate agreement with each Defendant. See generally Pl.'s Mot. to Expedite Ruling (“Pl.'s Mot. to Expedite”) Ex. A, J. Arrington Aff. Ex 1, Hubbard Agreement, ECF No. 7-2 at 7-25; id. Ex. 2, Johnson Agreement, ECF No. 7-2 at 26-49; id. Ex. 3, Alcantara Agreement, ECF No. 7-2 at 50-74; id. Ex. 4, Cort Agreement, ECF No. 7-2 at 75-93; id. Ex. 5, McCarthy Agreement, ECF No. 7-2 at 94-106; id. Ex. 6, Leaty Agreement, ECF No. 7-2 at 107-31; id. Ex. 7, Conroy Agreement, ECF No. 7-2 at 132-42 [hereinafter, collectively, “Associate Agreements”]. The Associate Agreements are substantially identical, and they contain the same provision requiring the parties to arbitrate certain defined disputes (the “Arbitration Agreement”). E.g., Hubbard Agreement § 10.1, ECF No. 7-2 at 21. The Associate Agreements also contain a collective action waiver that states, “There shall be no consolidation of claims or class actions without the consent of all parties.” E.g., id. § 10.4, ECF No. 7-2 at 22.

         II. Defendants' Threatened Class Action

         On November 17, 2017, Plaintiff's counsel received from Defendants' counsel an offer to settle claims Defendants believed they could pursue against Plaintiff and AFLAC, Inc. (“AFLAC”), Plaintiff's parent company. Defs.' Resp. to Pl.'s Mot. to Compel Arbitration Ex. A., D. Joffe Aff. ¶¶ 6-7, ECF No. 12-1; Pl.'s Mot. to Expedite Ex. B., L. Cassilly Aff. ¶ 4, ECF No. 7-3. Along with his demand for settlement, Defendants' counsel included a draft class action complaint setting forth federal and state-law claims Defendants had against Plaintiff and AFLAC. D. Joffe Aff. ¶ 7; L. Cassilly Aff. ¶¶ 4-6; see generally L. Cassilly Aff. Ex. 1, Draft Class Action Complaint, ECF No. 7-3 at 6-98.

         In the draft class action complaint, Defendants allege federal claims under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., the Federal Insurance Contributions Act (“FICA”), 26 U.S.C. § 3101 et seq., and the Federal Unemployment Tax Act (“FUTA”), 26 U.S.C. § 3301 et seq. Draft Class Action Complaint ¶¶ 203-14. Defendants also assert state-law claims for fraud under California law and violations of various deceptive trade practice acts and consumer fraud statutes of California, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Idaho, Illinois, Massachusetts, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, and Vermont. Id. ¶¶ 215-385.


         A party “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction . . . in a civil action . . . of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. “Section 4 provides for an order compelling arbitration only when the federal district court would have jurisdiction over a suit on the underlying dispute[.]” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983). “[W]here the parties' controversy has not yet been embodied in preexisting litigation, ‘[a] district court entertaining a § 4 petition' must decide for itself ‘what “a suit” arising out of the allegedly arbitrable controversy would look like.'” Cmty. State Bank v. Strong, 651 F.3d 1241, 1255 (11th Cir. 2011) (second alteration in original) (quoting Vaden v. Discover Bank, 556 U.S. 49, 77 (2009) (Roberts, C.J., concurring in part and dissenting in part)). In this case, the Court does not have to look far to determine what the arbitrable controversy would look like because the underlying dispute is clearly set out in the draft class action complaint that Defendants' counsel sent to Plaintiff's counsel.

         Defendants implicitly threatened to assert in court the federal and state-law claims set forth in the draft class action complaint if Plaintiff did not meet their demand for settlement. The Court would clearly have federal question jurisdiction over the federal claims. Further, both the federal and the state-law claims arise out of Plaintiff's allegedly deceptive recruitment practices and its relationship with Defendants as sale associates. The Court would thus have supplemental jurisdiction over the state-law claims. Because the Court would have jurisdiction over a suit on the underlying dispute, it has subject matter jurisdiction over Plaintiff's petition to compel arbitration of that dispute pursuant to the FAA and the Arbitration Agreement.


         I. The Arbitration Agreement Encompasses the ...

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