Crewe v. Rich Dad Education, LLC
884 F. Supp. 2d 60
S.D.N.Y.2012Background
- Plaintiffs Crewe and Maurice bring state-law claims (breach of contract, fraud, FDUTPA, unjust enrichment, negligent misrepresentation, and alter-ego).
- Crewe signed a one-page Agreement with Rich Dad Education LLC (RDE) for a three-day Stock Success program, incorporatingTerms and Conditions that include a broad arbitration clause.
- Maurice signed contracts with RDE for a real estate training track, containing Florida choice-of-law, jurisdiction, and venue provisions but no arbitration clause in the March 30, 2008 contract.
- Crewe attended a free workshop and a three-day training; Maurice attended a repeat workshop and later advanced classes, alleging the programs yielded no promised education but were up-sell schemes.
- Defendants move to dismiss: Crewe based on arbitration clause; Maurice based on forum-selection clauses and other defenses; court must decide enforceability of arbitration and forum clauses and related issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of Crewe’s arbitration clause | Crewe did not assent; clause in Terms and Conditions not seen; non-signatories scope; NAF unavailability; potential unconscionability. | Arbitration clause valid; Crewe signed and had notice; broad affiliates/agents covered; delegation to arbitrator; FAA governs. | Arbitration clause enforced; Crewe’s claims dismissed and referred to arbitration; Crewe bound to arbitrate despite assent arguments. |
| NAF unavailability and substitution of forum | NAF ceased consumer-arbitration; no clear substitute forum; would violate agreement to arbitrate. | Agreement allows substitute forum if NAF ceases; language shows non-integral role of NAF. | Court may appoint substitute forum; language indicates willingness to arbitrate elsewhere; arbitration can proceed. |
| Vindication of federal statutory rights under FAA (Green Tree/Amex line) | Arbitration terms may burden federal rights (no class action, cost-shifts). | Claims are state-law; Green Tree Am. rights analysis not applicable; any concerns are state-law unconscionability. | Crewe’s federal statutory-rights analysis not applicable to state-law claims; FAA does not preclude arbitration here. |
| Maurice's forum-selection clauses enforceability and dismissal | Forum clauses should not bar New York suit; possible transfer. | Clauses mandatory, broad scope; claims must be in Florida; premature to transfer; first-filed rule not controlling. | Maurice’s claims dismissed for forum-selection compliance; may refile in Florida venues consistent with contracts. |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (FAA preemption and arbitration framework; enforceability of arbitration agreements)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (U.S. 1974) (Arbitration alignment with contract law principles; FAA framework)
- Glencore Ltd. v. Degussa Engineered Carbons, L.P., 848 F.Supp.2d 410 (S.D.N.Y. 2012) (Interpretation of arbitration scope; presumption of arbitrability with consent issues)
- In re Salomon Inc. S’holders’ Derivative Litig., 68 F.3d 554 (2d Cir. 1995) (Arbitration forum integral to agreement; substitution limited when forum is central)
- Dover Ltd. v. A.B. Watley, Inc., No. 04-cv-7366, 2006 WL 2987054 (S.D.N.Y. 2006) (When designated forum becomes unavailable, substitute forum analysis applies)
- PaineWebber, Inc. v. Rutherford, 903 F.2d 106 (2d Cir. 1990) (Arbitration terms specifying a forum control who arbitrate; named SROs and forum constraints)
- Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772 (U.S. 2010) (Delegation of gateway questions to arbitrator; enforceability standard)
- Amex I, 554 F.3d 300 (2d Cir. 2009) (Vindication of federal rights analysis in antitrust/arbitration context)
- Amex II, 634 F.3d 187 (2d Cir. 2011) (Vindication of statutory rights limited to federal claims; state-law claims unaffected)
- Amex III, 667 F.3d 204 (2d Cir. 2012) (Affirming Amex I; interaction with Concepcion; federal statutory rights analysis scope)
- Amex IV, 681 F.3d 139 (2d Cir. 2012) (Concurring view on limits of vindication doctrine; state-law claims distinguished)
- Cruz v. Cingular Wireless, LLC, 648 F.3d 1205 (11th Cir. 2011) (Public policy/fee-shifting; class-action waiver preemption under FAA)