Cherdak v. Am. Arbitration Ass'n Inc.
| Decision Date | 09 March 2020 |
| Docket Number | Civil Action No. 19-3767 (CKK) |
| Citation | 443 F.Supp.3d 134 |
| Parties | Harrison M.C. CHERDAK, et al., Plaintiffs v. AMERICAN ARBITRATION ASSOCIATION INC., Defendant |
| Court | U.S. District Court — District of Columbia |
Harrison M.C. Cherdak, Gaithersburg, MD, pro se.
Erik B. Cherdak, Gaithersburg, MD, pro se.
Gordon Samuel Woodward, Schnader Harrison Segal & Lewis, LLP, Washington, DC, for Defendant.
COLLEEN KOLLAR-KOTELLY, United States District Judge Pro se Plaintiffs Harrison Cherdak and Erik Cherdak bring this suit against Defendant American Arbitration Association, Inc. ("AAA") concerning a now-denied motion to compel arbitration filed in a separate case by third-party ACT. Inc. Plaintiffs argue that the AAA has failed to act in accord with its own requirements to determine whether or not the relevant arbitration clause, the Individual Score Review Arbitration Clause ("ISR Clause") from the 2017-2018 testing year, complies with the AAA's Consumer Arbitration Rules and Consumer Due Process Protocol. Plaintiffs bring two claims for relief. In Count I, Plaintiffs request relief under the Declaratory Judgment Act and ask the Court to declare that the AAA has not fulfilled its requirement to determine whether or not the ISR Clause complies with due process requirements. In Count II, Plaintiffs contend that the AAA has violated the Maryland Consumer Protection Act ("MCPA") by falsely representing that it ensures due process compliance of arbitration clauses. Md. C.L. § 13-301(2). Defendant has moved for dismissal on multiple grounds, including jurisdictional grounds.
Upon consideration of the pleadings,1 the relevant legal authorities, and the record as a whole, the Court will GRANT Defendant's Motion to Dismiss for multiple, independent reasons. First, the Court finds that Plaintiffs do not have standing to bring their claims. Second, the Court finds that it does not have personal jurisdiction over the AAA. Third, the Court concludes that venue is improper in the District of Columbia. Fourth, the Court concludes it lacks subject matter jurisdiction over Plaintiffs' claims. Fifth, the Court finds that both claims are barred by arbitral immunity. For these independent reasons, the Court DISMISSES this case.
For the purposes of the Motion before the Court, the Court accepts as true the well-pled allegations in Plaintiffs' Amended Complaint. On a motion to dismiss, the Court does "not accept as true, however, the plaintiff's legal conclusions or inferences that are unsupported by the facts alleged." Ralls Corp. v. Comm. on Foreign Inv. in the United States , 758 F.3d 296, 315 (D.C. Cir. 2014). Ordinarily, when a plaintiff proceeds pro se, the Court must consider not only the facts alleged in the plaintiff's complaint, but also the facts alleged in the plaintiff's opposition to the defendant's motion to dismiss. See Brown v. Whole Foods Mkt. Grp., Inc. , 789 F.3d 146, 152 (D.C. Cir. 2015) (); Fillmore v. AT & T Mobility Servs. LLC , 140 F. Supp. 3d 1, 2 (D.D.C. 2015) (). However, the Court notes that Plaintiff Erik Cherdak, the father of Plaintiff Harrison Cherdak, has trained as a lawyer. The Court takes judicial notice of Fitistics, LLC v. Cherdak , No. 16-cv-112-LO-JFA, 2018 WL 4059375 (E.D. Va. Aug. 23, 2018). See Dupree v. Jefferson , 666 F.2d 606, 608 n.1 (D.C. Cir. 1981) (). In Fitistics , the court noted that Plaintiff Erik Cherdak was a "trained attorney," "ha[d] litigated cases before th[at] very [c]ourt in the past," and claimed that he "was recently employed by a top international law firm." 2018 WL 4059375 at *1. Accordingly, the Court finds that Plaintiff Erik Cherdak is not entitled the consideration normally due to pro se plaintiffs. See Youkelsone v. FDIC, 910 F. Supp. 2d 213, 228 (D.D.C. 2012) (); Halvonik v. Kappos , 759 F. Supp. 2d 31, 32 n.1 (D.D.C. 2011) ().
This case concerns the AAA's alleged failure to determine whether or not the ISR Clause contained in the ACT's 2017-2018 testing materials complies with the AAA's Consumer Due Process Protocol. According to Plaintiffs, the AAA asserts that it "administers consumer disputes that meet the due process standards contained in the Consumer Due Process Protocol and the Consumer Arbitration Rules." Am. Compl., ECF No. 5, ¶ 15 (quoting Ex. 3, ECF No. 5-3, Consumer Arbitration Rules). Plaintiffs further allege that the AAA represents that it "will accept cases after the AAA reviews the parties' arbitration agreement and if the AAA determines the agreement substantially and materially complies with the due process standards of these Rules and the Consumer Due Process Protocol." Id. Despite these internal requirements, Plaintiffs contend that the AAA has not determined whether or not the ISR Clause complies with the AAA Consumer Due Process Protocol. Id. at ¶ 23.
Plaintiffs further claim that the AAA maintains a Consumer Clause Registry which "lists businesses whose consumer arbitration clauses have been submitted for review by the AAA and determined to substantially and materially comply with the due process standards of the AAA Consumer Due Process Protocol." Id. at ¶ 15 (quoting Ex. 6, ECF No. 5-4, Consumer Clause Registry). According to Plaintiffs, the AAA has never listed the ISR Clause on the Consumer Clause Registry. Id. at ¶ 13. Instead, Plaintiffs allege that "the AAA has combined the ISR Clause with other contractual type language and other arbitration clauses into what can only be described as a ‘combined text’ and has deceivingly registered that combined text on behalf of arbitration customer on the AAA Consumer Clause Registry in order to provide knowingly false impressions of the quality and compliance of the ISR Clause." Id.
Despite the AAA's failure to comply with its requirements, Plaintiffs allege that the "AAA has threatened Plaintiffs that it will administer an arbitration proceeding involving Plaintiffs under the ISR Clause without making a threshold determination of ISR Clause compliance with the AAA Consumer Due Process Protocol." Id. at ¶ 9. Plaintiffs' allegation relates to a separate, ongoing proceeding before the United States District Court for the District of Maryland, Cherdak v. ACT, Inc. , No. 19-cv-1513-TDC (D. Md.). The Court takes judicial notice of the records and proceedings in this related case. See Dupree , 666 F.2d at 608 n.1 ().
In Cherdak , these same Plaintiffs brought various claims against the defendant ACT. Plaintiffs' claims all stemmed from the ACT's threat to cancel Plaintiff Harrison Cherdak's ACT score based on suspicion of cheating. Cherdak v. ACT, Inc. , No. 19-cv-1513-TDC, Am. Compl., ECF No. 19, 2. Following Plaintiffs' initiation of suit to bar the ACT from cancelling Plaintiff Harrison Cherdak's score, the ACT filed a Motion to Compel Arbitration and to Stay Proceedings Pending Arbitration. Id. at ECF No. 21. The ACT argued that under both the ISR Clause as well as the "General Arbitration Agreement," an arbitration clause not at issue in this lawsuit, Plaintiffs could challenge the ACT's decision to cancel Plaintiff Harrison Cherdak's score and bring other claims against the ACT only through arbitration. Id. at ECF No. 21-1, 8-10. In response, Plaintiffs filed an opposition presenting multiple arguments as to why the arbitration clauses were invalid and unenforceable. Id. at ECF No. 26. However, in their initial response, Plaintiffs failed to raise the argument that the AAA was an unavailable arbitration forum. Plaintiffs later moved for leave to file a sur-reply arguing that the ACT had no good faith basis to compel arbitration because the arbitration clauses did not comply with the AAA's Consumer Due Process Protocol. Id. at ECF No. 39. However, the District Court of Maryland denied leave to file a sur-reply, finding that there was no basis for such a filing. Id. at ECF No. 42. Leave to file Plaintiffs' requested sur-reply was denied on December 9, 2019. On December 18, 2019, Plaintiffs filed this case against the AAA which is currently pending before the Court.
On February 4, 2019, the District Court of Maryland resolved Defendant ACT's motions to compel arbitration and to dismiss. As is relevant to this case, the court denied the ACT's motion to compel arbitration. The Court concluded that the ISR clause was unenforceable because Plaintiff Harrison Cherdak had not been provided any consideration. Additionally, the Court concluded that both arbitration clauses, the ISR Clause and the General Arbitration Agreement, were unenforceable because Plaintiff Harrison Cherdak was a minor when he signed the contracts. Id. at ECF No. 51, 11-20.
Turning back to the case currently pending before the Court, the Court notes a somewhat lengthy and convoluted procedural history. As is relevant here, Plaintiffs filed this case on December 18, 2019 and also filed an Emergency Motion for a Temporary Restraining Order. ECF No. 1. The Court held a teleconference and set a briefing schedule for the motion. Prior to the AAA's response deadline, on January 2, 2020, Plaintiffs withdrew their Emergency Motion. ECF No. 4. Plaintiffs then filed an Amended Complaint and a new Emergency Motion on January 13, 2020. ECF Nos. 5, 6. On January 17, 2019, Plaintiffs filed a Motion for Partial Summary Judgment. ECF No. 10. The Court...
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