Shah v. CrowdStreet, Inc.
1:25-cv-00383
| W.D. Tex. | Jul 11, 2025Background
- Plaintiffs are investors who purchased real estate securities via CrowdStreet's online platform between 2019 and 2022.
- Plaintiffs allege CrowdStreet acted as an unregistered securities broker-dealer, violating the Texas Securities Act, and also assert claims of unjust enrichment related to fraudulent offerings (notably, Nightingale Properties).
- To invest, plaintiffs agreed to CrowdStreet’s Terms of Service/Use, which included arbitration and class action waiver clauses and were periodically updated.
- Defendants moved to compel individual arbitration, stay litigation, and strike class claims, citing the Federal Arbitration Act and applicable Terms.
- Plaintiffs concede they entered arbitration agreements but argue some claims are excluded (specifically, brokerage disputes), and contest whether the scope of arbitrability (including class claims) is a matter for the Court or arbitrator.
- The Magistrate Judge considered the existence and scope of arbitration agreements, the effect of delegation clauses, and whether class claims should be stricken at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did parties enter valid arbitration agreements? | Plaintiffs do not dispute agreement was formed. | Defendants show users agreed by registering and accepting. | Yes, valid agreements were formed under Texas law. |
| Are plaintiffs’ claims covered by arbitration clauses? | Claims are brokerage disputes and exempt; court decides scope. | Arbitrability (including scope/exemptions) is for arbitrator via delegation clause. | Arbitrator to decide if claims are arbitrable due to delegation clause. |
| Should class claims be stricken at this stage? | Not directly addressed beyond brokerage carve-out. | Class claims must be stricken per arbitration waiver. | Arbitrator to decide if class claims are precluded. |
| Is oral argument necessary on the motion to compel? | Plaintiffs request a hearing. | Defendants oppose or are silent. | Denied; not necessary. |
Key Cases Cited
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (arbitration agreements are enforceable and favored under FAA)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (any doubts should be resolved in favor of arbitration)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (courts must enforce delegation clauses and refer arbitrability questions to arbitrator)