Babcock v. Neutron Holdings, Inc.

• Decision Date: 13 April 2020
• Docket Number: Case Number: 20-60372-CIV-MORENO
• Citation: 454 F.Supp.3d 1222
• Court: U.S. District Court — Southern District of Florida
• Parties: Jordan Chelsea BABCOCK, Plaintiff, v. NEUTRON HOLDINGS, INC., a Delaware Corporation d/b/a Lime, Defendant.

454 F.Supp.3d 1222

Jordan Chelsea BABCOCK, Plaintiff,

v.NEUTRON HOLDINGS, INC., a Delaware Corporation d/b/a Lime, Defendant.

Case Number: 20-60372-CIV-MORENO

United States District Court, S.D. Florida, Miami Division.

Signed April 13, 2020

Alejandro Alberto Diaz, Andrew Markin Feldman, Klein Glasser Park Lowe & Pelstring, P.L., Miami, FL, Robert C. Solomon, Saban & Solomon, Plantation, FL, for Plaintiff.

April Marie Dahl, Alec Justin Zavell, Hinshaw & Culbertson LLP, Fort Lauderdale, FL, for Defendant.

ORDER GRANTING MOTION TO COMPEL ARBITRATION

FEDERICO A. MORENO, UNITED STATES DISTRICT JUDGE

This dispute is about the enforceability of an arbitration provision contained in a smartphone application contract to rent an electric scooter. To rent an "e-scooter" from Defendant Neutron Holdings, Inc. d/b/a Lime, Plaintiff Jordan Babcock created an account using Lime's smartphone application. In doing so, Babcock agreed to the User Agreement's terms—which include an Arbitration Provision that requires all disputes to be resolved in arbitration.

While riding the Lime e-scooter, Babcock lost control and sustained severe injuries. Instead of trying to arbitrate her dispute, Babcock filed in state court a single-count Complaint against Lime for negligence. Lime removed the case to federal court and moved to compel arbitration under the User Agreement. Babcock contests arbitration. She argues the Arbitration Provision is unenforceable under California law because the User Agreement did not put her on reasonable notice of the Arbitration Provision. Lime responds that Babcock had inquiry notice of the Arbitration Provision, as required by California law, and therefore her claim must be arbitrated.

THE COURT has considered the Motion to Compel, the Response in Opposition, the Reply, the pertinent portions of the record, and being otherwise fully advised in the premises, it is

ADJUDGED that the Motion to Compel Arbitration is GRANTED .

I. BACKGROUND

A. THE INCIDENT

On May 19, 2019, Plaintiff Jordan Babcock rented an electric scooter from Defendant Neutron Holdings, Inc. d/b/a Lime. (D.E. 1-2 at 7, ¶ 8.) Babcock rented the "e-scooter" by using the Lime smartphone application on her cell phone. Id. While "operating" the Lime e-scooter at or near the entrance of American Social, a bar and restaurant on Las Olas Boulevard in Fort Lauderdale, Babcock "suddenly lost control" and then "sustained severe personal injury." Id. at 7–8, ¶¶ 9–10. In a pre-suit demand letter asking for $300,000, Babcock states that she incurred $42,124.80 in medical bills, and asks for $10,000 for future medical expenses and $250,000 for pain and suffering, loss of enjoyment, mental anguish, and inconvenience. (See D.E. 1-3 at 3–4.)

B. THE REGISTRATION PROCESS TO USE LIME E-SCOOTERS

Before a user can rent a Lime e-scooter, the user must download the Lime smartphone application (the "Lime App"). (See D.E. 8-1 at 2, Exhibit 1, Declaration of Bajurin at ¶ 2.) After downloading the Lime App, the user is prompted to create an account. In doing so, the user is prompted to agree to Lime's User Agreement and Terms of Service (the "User Agreement"). (Id. at 3, ¶¶ 9, 11.) Then, the user must enter a telephone number or use a Facebook link to populate their user information. (See id. at 6, Ex. A to Decl. of Bajurin, Image of User Information Screen.) After completing the user information inputs, the user is directed to a sign-up page with a notice that states: "By tapping ‘I Agree’, I confirm that I am at least 18 years old or other legal age of majority, and that I have read and agreed to Lime's User Agreement and that I have read Privacy Note ." (See id. at 7, Ex. A to Decl. of Bajurin, Image of Sign-Up Screen (blue boldface in original).) The blue boldface "User Agreement" text is a hyperlink to the full terms of the User Agreement. (See id. at 3, Decl. of Bajurin at ¶ 12; id. at 9–61, Ex. B to Decl. of Bajurin, Copy of Babcock's User Agreement with Lime.)

If the user dares to inquire into the full terms of the User Agreement, the user can tap the "User Agreement" hyperlink, which takes the user to a webpage containing the full terms. Otherwise, the user can proceed to rent an e-scooter by tapping "I Agree" on the sign-up page.

C. THE TERMS OF THE USER AGREEMENT

If the user taps the "User Agreement" hyperlink, the first sentence of the first substantive paragraph instructs the user to carefully read the User Agreement and notifies the user that he or she is bound by the User Agreement's terms:

PLEASE READ EACH PROVISION OF THIS AGREEMENT CAREFULLY. IT SETS FORTH THE LEGALLY BINDING TERMS AND CONDITIONS FOR YOUR USE OF THE SERVICES (DEFINED BELOW). BY ACCESSING AND/OR USING OUR SERVICES, YOU AGREE TO BE LEGALLY BOUND BY THIS AGREEMENT.

(Id. at 9, Ex. B to Decl. of Bajurin, Copy of Babcock's User Agreement with Lime (boldface and caps in original).) The next sentence further warns the user to forgo using the service if the user does not agree with the arbitration provision:

IF YOU DO NOT AGREE TO THIS AGREEMENT AND THE CONDITIONS OF USE STATED HEREIN, INCLUDING THE ARBITRATION ... PROVISION[ ], DO NOT USE THE SERVICES .

(Id. (boldface and caps in original).) If the user proceeds to read the Arbitration Provision set forth in Section 2.3 of the User Agreement, the user will learn that all disputes arising under the User Agreement must be resolved in arbitration:

2.3 Binding Arbitration: ... ANY AND ALL DISPUTES ... MUST BE RESOLVED BY FINAL AND BINDING ARBITRATION.... BY AGREEING TO ARBITRATE, EACH PARTY IS GIVING UP ITS RIGHT TO GO TO COURT AND HAVE ANY DISPUTE HEARD BY A JUDGE OR JURY.

(Id. at 22 (boldface, underline, and caps in original).) The Arbitration Provision further provides that the Federal Arbitration Act governs the arbitrability of all disputes under the User Agreement:

The Federal Arbitration Act ("FAA"), not state law, shall govern the arbitrability of all Disputes regarding this Agreement ....

(Id. (boldface in original).) Finally, the User Agreement also includes a Delegation Clause in Section 2.4, which provides that "[a]ll issues are for the arbitrator to decide, including arbitrability ." (Id. at 23 (boldface in original).)

Like every user that rents a Lime e-scooter through the Lime App, Babcock tapped the "I agree" button, which confirmed that she "read and agreed to Lime's User Agreement." (Id. at 7, Ex. A to Decl. of Bajurin, Image of Sign-Up Screen; id. at 3, Ex. 1, Decl. of Bajurin at ¶¶ 9, 11.)

D. THE PROCEDURAL HISTORY

Despite the Arbitration Provision, Babcock filed in state court a single-count Complaint alleging negligence against Lime. (See D.E. 1-2 at 6–10.) Babcock alleges that Lime owed her a duty to ensure that the e-scooter she used was safe to operate, and that Lime breached that duty by, among other reasons, failing to properly and timely inspect the subject e-scooter and failing to warn Babcock that the subject e-scooter was not working properly. (See id. at 8–9, ¶¶ 14(a)–(k).)

Lime removed the case to federal court on diversity of citizenship grounds.¹ (See D.E. 1 at 1–2.) A week later, Lime filed its Motion to Compel Arbitration. (D.E. 8.) Babcock filed a Response in Opposition (D.E. 14), and Lime subsequently filed its Reply memorandum (D.E. 15).

II. LEGAL STANDARD

A motion to compel arbitration is treated as a Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction. See Tracfone Wireless, Inc. v. Simply Wireless, Inc. , 229 F. Supp. 3d 1284, 1292 (S.D. Fla. 2017) (citing McElmurray v. Consol. Gov't of Augusta–Richmond Cnty. , 501 F.3d 1244, 1251 (11th Cir. 2007) ). As such, the Court may consider matters outside the four corners of the Complaint. See id. (citing Mamani v. Sanchez Berzain , 636 F. Supp. 2d 1326, 1329 (S.D. Fla. 2009) ). Furthermore, "a summary judgment-like standard is appropriate" when determining the existence of an arbitration agreement. Bazemore v. Jefferson Capital Sys., LLC , 827 F.3d 1325, 1333 (11th Cir. 2016). Thus, the Court "may conclude as a matter of law that [the] parties did or did not enter into an arbitration agreement," but only if "there is no genuine dispute as to any material fact" concerning the agreement's formation. Id. (quoting Fed. R. Civ. P. 56(a) ).

In ruling on a motion to compel arbitration, state law governs the interpretation and formation of the arbitration agreement; while federal law governs the enforceability of the arbitration agreement. See Emp'rs Ins. of Wausau v. Bright Metal Specialties, Inc. , 251 F.3d 1316, 1322 (11th Cir. 2001) (citing Perry v. Thomas , 482 U.S. 483, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) ). Finally, under the Federal Arbitration Act, it is "a matter of federal law [that] any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

III. DISCUSSION

Lime asks the Court to compel arbitration under the Arbitration Provision in the User Agreement. Babcock's Opposition argues the Arbitration Provision is unenforceable under California law because she was not on "reasonable notice" of the Arbitration Provision. In its Reply, Lime argues that Babcock had "inquiry notice" of the Arbitration Provision, which is all that California law requires, and therefore Babcock's negligence claim must be arbitrated.

Before the Court can compel arbitration, Lime must meet its burden of establishing that: (1) a written agreement to arbitrate exists; (2) a nexus to interstate commerce exists; and (3) the arbitration clause covers Babcock's claim. See Tracfone Wireless, Inc. , 229 F. Supp. 3d at 1293 (citation omitted).²

The threshold question of whether the parties entered into an agreement to arbitrate is "simply a matter of contract," Bazemore , 827 F.3d at 1329 (quoting First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ), for which the Court applies "ordinary state-law...