526 F.Supp.3d 95
D. Md.2021Background
- Patricia Brito sued Major Energy alleging "slamming" (unauthorized switches) and "cramming" (false promises of savings) and asserted MCPA, unjust enrichment, common-law fraud, and negligent misrepresentation on behalf of a nationwide class and a Maryland subclass.
- Major moved to dismiss and to stay/dismiss under the Federal Arbitration Act (FAA §3), arguing Brito is bound by an arbitration agreement (with a class-action waiver) in Major’s mailed Terms & Conditions; Major also argued lack of subject-matter jurisdiction for failure to exhaust Maryland PSC remedies and improper venue.
- Major submitted a corporate declaration and copies of an Enrollment Letter, Terms & Conditions (containing an arbitration clause and three-day rescission right), and a Renewal Letter; the declaration stated neither letter was returned as undeliverable and Brito’s account remained active until Jan. 15, 2019.
- Brito contended she never consented to switch providers and therefore no contract (and no arbitration clause) was formed; she sought leave to file surreplies with a self-declaration denying receipt of the mailed documents.
- The court denied leave to file surreplies, held Maryland contract law governs formation and that receipt of mailed terms plus acceptance of benefits/silence can establish assent, found Brito accepted Major’s contract by silence/conduct, and concluded the arbitration clause was enforceable.
- Because all claims were within the arbitration clause (or subject to PSC jurisdiction), the court dismissed the action under the FAA (instead of merely staying it); it therefore did not reach Major’s exhaustion or merits arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a contract was formed such that the arbitration clause binds Brito | Brito never consented to the switch; no contract exists | Enrollment and Renewal Letters (with Terms) were mailed and not returned; Brito accepted by receiving/using/paying for service and by failing to rescind | Court: Contract formed; presumption of receipt plus acceptance by silence/conduct binds Brito to arbitration |
| Whether the FAA requires a stay or dismissal and whether claims are arbitrable | Brito sought to litigate in court (class action) | All claims fall within the Agreement’s dispute-resolution clause (PSC or arbitration) and include a class-action waiver; defendant sought dismissal | Court: All claims arbitrable/subject to PSC; dismissal under FAA §3 appropriate (dismissed rather than stayed) |
| Whether failure to exhaust Maryland PSC remedies deprives court of jurisdiction | Brito did not exhaust PSC remedies but argued arbitration/contract issues control | Major argued lack of subject-matter jurisdiction for failure to exhaust PSC remedies | Court: Did not decide exhaustion; arbitration ruling made exhaustion/subject-matter arguments unnecessary |
| Whether plaintiff could file surreplies and submit a declaration denying receipt | Brito sought leave to file surreplies asserting new reply arguments and attached a declaration denying receipt | Major opposed; argued replies merely noted plaintiff’s lack of evidence | Court: Denied leave to file surreplies; declined to consider late declaration evidence |
Key Cases Cited
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (FAA requires enforcement of arbitration agreements)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (federal policy favors arbitration agreements)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (courts decide whether an arbitration agreement was ever formed)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (parties can delegate gateway arbitrability questions to arbitrators)
- Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707 (4th Cir. 2001) (dismissal is proper when all issues are arbitrable)
- Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002) (FAA §3 mandates stay of litigation pending arbitration)
- Sucampo Pharm., Inc. v. Astellas Pharma, Inc., 471 F.3d 544 (4th Cir. 2006) (motions enforcing forum-selection/arbitration clauses are properly analyzed under Rule 12(b)(3))
- Att’y Grievance Comm’n v. Donnelly, 458 Md. 237 (2018) (silence may constitute acceptance where offeree knows terms, takes benefit, and does not reject)
- Kolker v. Biggs, 203 Md. 137 (1953) (proof of mailing raises a presumption of receipt)