Ewell v. John C. Heath, Attorney at Law, PLLC
4:17-cv-11876
E.D. Mich.Jan 18, 2018Background
- Plaintiff Samantha Ewell hired Lexington Law (John C. Heath, Attorney at Law PLLC) under an Engagement Agreement for credit-repair services in October 2016 and paid $734.69.
- The Agreement contained an arbitration clause requiring individual (non-class) arbitration of “all disputes and claims.”
- Plaintiff alleges Lexington failed to provide validation letters to credit bureaus, did not improve her credit score, and later terminated the engagement; she sued for violations of the Credit Repair Organizations Act (CROA) and breach of contract.
- Plaintiff contends the Agreement is invalid under CROA because it waived class actions and included a severability clause.
- Defendant moved to compel arbitration and stay the case; the court limited its review to the validity of the arbitration clause.
- The court found a valid arbitration agreement covering Plaintiff’s claims and stayed the case pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists | Ewell argues the contract is void under CROA (so arbitration clause invalid as part of whole) | Lexington argues parties agreed to arbitrate all disputes and claims, covering this lawsuit | The arbitration clause is valid; court may only decide clause validity, not attacks on whole contract |
| Whether plaintiff’s CROA and breach claims fall within arbitration scope | Ewell says statutory claims and contract defects preclude arbitration | Lexington says the clause covers “all disputes and claims,” including these allegations | Claims fall within the arbitration clause scope and must be arbitrated |
| Whether court may decide contract-wide invalidity (e.g., fraud/illegality) | Ewell asks court to void contract based on CROA violations | Lexington argues challenges to the contract (other than the arbitration clause) belong to arbitrator | Court holds that challenges to the contract as a whole go to the arbitrator; court only decides arbitration-clause attacks |
| Whether case should be stayed pending arbitration | Ewell opposes arbitration and asks to proceed in court | Lexington requests stay and compel arbitration | Court grants motion to compel arbitration and stays proceedings |
Key Cases Cited
- Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17 (2012) (courts may decide validity of arbitration clause but not contract-wide challenges)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (challenges to the contract as a whole must be resolved by arbitrator)
- Great Earth Cos. v. Simons, 288 F.3d 878 (6th Cir. 2002) (district courts may consider only attacks on arbitration clause itself when deciding enforceability)