Ingram v. Neutron Holdings, Inc.

• Decision Date: 26 May 2020
• Docket Number: Case No. 3:20-cv-00037
• Citation: 467 F.Supp.3d 575
• Parties: Kelcie INGRAM and Cynthia Ingram, Plaintiffs, v. NEUTRON HOLDINGS, INC. d/b/a LimeBike a/k/a Lime, Defendant.
• Court: U.S. District Court — Middle District of Tennessee

467 F.Supp.3d 575

Kelcie INGRAM and Cynthia Ingram, Plaintiffs,

v.NEUTRON HOLDINGS, INC. d/b/a LimeBike a/k/a Lime, Defendant.

Case No. 3:20-cv-00037

United States District Court, M.D. Tennessee, Nashville Division.

Filed May 26, 2020

Alisha M. Toll, Rocky McElhaney, Rocky McElhaney Law Firm, P.C., Hendersonville, TN, for Plaintiffs.

Robert R. McLeod, Travis B. Swearingen, Butler Snow LLP, Nashville, TN, for Defendant.

MEMORANDUM

ALETA A. TRAUGER, United States District Judge

Before the court is the Motion to Compel Arbitration and dismiss the case or, alternatively, stay it pending arbitration, filed by defendant Neutron Holdings, Inc. d/b/a LimeBike a/k/a Lime ("Lime") (Doc. No. 10). For the reasons set forth herein, the motion will be granted, and this action will be stayed pending the completion of arbitration.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs Kelcie Ingram and Cynthia Ingram, both residents of Davidson County, Tennessee, filed a Complaint in the Circuit Court for Davidson County, Tennessee on December 6, 2019, asserting a claim of negligence against defendant Lime and seeking damages of up to $750,000, arising from personal injuries suffered by plaintiff Kelcie Ingram and medical expenses incurred by both plaintiffs.¹ Lime, a Delaware corporation whose principal place of business is in California, removed the action to federal court on the basis of diversity jurisdiction on January 10, 2020. (Doc. No. 1.)

According to the allegations in the Complaint, Lime is in the business of providing, among other things, dockless electric scooter rentals in downtown Nashville, among other locations, through a downloadable software application accessible through a smartphone (the "Lime app"). To locate and unlock a Lime scooter, a user must first download the Lime app to her telephone and create a user account. As part of that process, the user confirms, by proceeding, that she is "at least 18 years old" and has "read and agreed to Lime's User Agreement and Terms of Service." (Compl. ¶ 11.) Lime's terms of service also require users to be at least 18 years old to use a scooter. (Id. ¶ 14.) The plaintiffs allege, however, that "the only requirement to open [a user account] is a valid payment source" and that the Lime app is "designed to make it easy to create an account so that the only obstacle to its use [is] proving an ability to pay [Lime's] fees." (Id. ¶¶ 12, 15.) Moreover, the app "has no procedure in place to ensure [Lime's] scooters are only accessible to a legal adult who is at least 18 years old." (Id. ¶ 16.)

Kelcie Ingram was 17 years old on December 29, 2018. On that date, she accessed the Lime app on her smartphone and, through the app, located, rented, and began riding a Lime scooter on Second Avenue in downtown Nashville, Tennessee. Lime did not request any verification of her age to rent the scooter. Shortly after she began riding the Lime scooter, as she was crossing a street, Kelcie Ingram "struck a large rock, causing the scooter to flip." (Id. ¶ 23.) The plaintiffs allege that Lime is "100% at fault for the crash." (Id. ¶ 25.) As a result of the crash, Kelcie Ingram "suffered serious and painful personal injuries which have required and continue to require medical treatment," and the plaintiffs "have incurred and continue to incur ... significant medical expenses." (Id. ¶¶ 27, 28.) The plaintiffs allege that Lime was negligent in attempting to contract with a minor, in allowing a minor to use its services, and in failing to verify that its user met the age requirements specified by its own Terms of Service and the municipal code of Metropolitan Nashville and Davidson County.

Lime answered the Complaint, denying liability and asserting various defenses, including that the claims are subject to a binding arbitration agreement. (Doc. No. 6.) On March 19, 2020, Lime filed its Motion to Compel Arbitration. (Doc. No. 10.) The plaintiffs have filed a Response, generally arguing that (1) the contract containing the arbitration provision is voidable based on Kelcie Ingram's age at the time of contracting, has been repudiated by Kelcie's having brought the lawsuit, and is therefore unenforceable; and (2) the arbitration provision is unconscionable and therefore unenforceable. (Doc. No. 11, at 1.) The defendant filed a Reply (Doc. No. 12), asserting that the issues raised by the plaintiff must be decided by the arbitrator and that, in any event, Kelcie is estopped from repudiating the contract, having misrepresented her age upon entering into the contract.

II. STANDARD OF REVIEW

The Federal Arbitration Act ("FAA") allows parties to a "contract evidencing a transaction involving commerce" to agree that certain disputes between them arising from such "contract or transaction" will be decided by an arbitrator rather than by a court. 9 U.S.C. § 2. Described by the Supreme Court as the "primary substantive provision" of the FAA, Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), Section 2 further provides that any such agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This section embodies "a liberal federal policy favoring arbitration."

AT & T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quoting Moses H. Cone , 460 U.S. at 24, 103 S.Ct. 927 ). The principal purpose of the FAA is to ensure the enforcement of private arbitration agreements according to their terms; the broader purpose of allowing parties to submit grievances to arbitration is to facilitate "efficient, streamlined procedures tailored to the type of dispute" at issue. Id. at 344, 131 S.Ct. 1740 (citations omitted); see also Stout v. J.D. Byrider , 228 F.3d 709, 714 (6th Cir. 2000) ("The FAA was designed to override judicial reluctance to enforce arbitration agreements, to relieve court congestion, and to provide parties with a speedier and less costly alternative to litigation.").

At the same time, despite this liberal federal policy favoring arbitration agreements, arbitration is a "matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Techs. v. Commc'ns Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ; see also GGNSC Louisville Hillcreek, LLC v. Estate of Bramer , 932 F.3d 480, 485 (6th Cir. 2019) ("An agreement to arbitrate is fundamentally a matter of consent."). When considering a motion to compel arbitration, a district court must determine, as a threshold matter, if the parties agreed to arbitrate. McGee v. Armstrong , 941 F.3d 859, 865 (6th Cir. 2019) ; Stout , 228 F.3d at 714. The court must "use state law to assess the existence of an agreement." GGNSC Louisville , 932 F.3d at 485 (citations omitted). Generally, "[t]he question of arbitrability is one for the courts unless the parties ‘clearly and unmistakably provide otherwise.’ " McGee v. Armstrong , 941 F.3d 859, 865–66 (6th Cir. 2019) (quoting Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) ).

III. DISCUSSION

A. The Parties’ Arguments

In its Motion, the defendant argues that Kelcie Ingram entered into a valid, enforceable contract with Lime when she registered to use the Lime app and rented a scooter using the app, the terms of which are set forth in Lime's User Agreement & Terms of Service ("User Agreement"), which contained a valid and enforceable binding arbitration provision ("Arbitration Provision"). (Doc. No. 10, at 2.) The Arbitration Provision specifies in bold, capitalized font that any and all disputes between the user and Lime are to be submitted to "FINAL AND BINDING ARBITRATION" (id. at 5), and any dispute will be governed by the "then-current Commercial Arbitration Rules of the Judicial Arbitration and Mediation Services Inc. (‘JAMS’)" (id. at 6). The defendant maintains that the Arbitration Provision and the JAMS rules both contain "delegation provisions" that require the arbitrator to decide all issues of arbitrability, "including disputes over the formation, existence, [and] validity" of the agreement. (Id. ). The defendant also contends that the delegation provisions are sufficiently broad to require an arbitrator to decide any claim that the contract is voidable or void based on Kelcie Ingram's age at the time of contracting or that the arbitration provision is unconscionable. Alternatively, Lime asserts that, even if the court considers these issues rather than referring them to arbitration, Kelcie Ingram should be estopped from disaffirming the transaction based on her age as a result of having misrepresented her age upon entering into the contract. Further, it contends that, because Cynthia Ingram appears to be asserting only a claim to recover medical expenses incurred as a result of injuries to a minor child, her claim is derivative of Kelcie's, making her claim subject to arbitration as well. Lime argues that, because all claims are subject to arbitration, the lawsuit should be dismissed rather than stayed.

In their Response (Doc. No. 11), the plaintiffs do not dispute that Kelcie Ingram entered into the User Agreement with Lime, which included an Arbitration Provision, and they do not contest Lime's characterization of the terms of the Arbitration Agreement or the delegation provisions. They also do not contest Lime's assertion that Cynthia Ingram's derivative claim will be subject to arbitration to the same extent as Kelcie's claims. Instead, they contend only that the entire contract containing the Arbitration Provision was voidable as a result of Kelcie's having been a minor at the time of contracting and that she repudiated it upon filing this lawsuit, rendering it unenforceable as a whole. In addition, they assert that the Arbitration Provision itself is invalid because...