Mystic Retreat Med Spa & Weight Loss Ctr. v. Ascentium Capital, LLC
| Decision Date | 23 January 2023 |
| Docket Number | 1:21cv00515 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | MYSTIC RETREAT MED SPA & WEIGHT LOSS CENTER, PLLC, AND MISTY SINCLAIR, M.D., Plaintiffs, v. ASCENTIUM CAPITAL, LLC, ZELTIQ AESTHETICS LLC, AND ALLERGAN USA, INC., Defendants. |
This case returns to the court on the second motion to compel arbitration and stay proceedings by Defendants Zeltiq Aesthetics LLC (“Zeltiq”) and its successor Allergan USA, Inc. (“Allergan”). (Doc. 84.) Plaintiffs Mystic Retreat Med Spa & Weight Loss Center PLLC (“Mystic”) and Misty Sinclair, M.D. oppose the motion. (Doc. 87.) Plaintiffs also move to strike evidence submitted with Defendants' reply brief. (Doc 90.) The court held a hearing on the motions on December 15 2022. For the reasons set forth below, Plaintiffs' motion to strike will be denied, and because the court finds a genuine dispute of material fact whether the arbitration provision was incorporated into the parties' contract, Defendants' motion to compel arbitration will be set for resolution by a jury.
As Defendants previously moved unsuccessfully to compel arbitration and stay proceedings (Doc. 73), the court relies on the factual record developed in that motion as supplemented by the current record, which demonstrates the following:
Zeltiq sold,[1] and Ascentium financed, the purchase of medical devices designed to assist with weight loss. (Doc. 7 ¶ 8.) Plaintiff Sinclair is a board-certified neurologist with a subspecialty in sleep disorders. (Doc. 34-1 ¶ 4.) She is also a member-manager of Plaintiff Mystic, a spa and weight loss center, with her business partner, Marcia Ballard, a nurse practitioner who is a principal at Mystic. (Id. ¶¶ 2-4; Doc. 34-2 ¶¶ 2-4.)
According to Plaintiffs, in the summer of 2016, Wes Lev, Zeltiq's sales manager,[2] approached Sinclair about Zeltiq's CoolSculpting technology for weight loss, spoke with Sinclair several times, and met with her in person.[3] (Doc. 34-1 ¶¶ 6-9; Doc. 34-2 ¶¶ 6-8.) On June 19, 2016, Lev sent an email to Sinclair and Ballard at 8:14 p.m., with a copy to Jason Wise at Ascentium, regarding the purchase of Zeltiq's CoolSculpting System and services. (Doc. 29-2.) The email states:
(Doc. 29-2 at 1.) The email also includes as attachments two proposed MSA Sales Orders, each with Attachments A, B, and C. (Doc. 29-2.) The significant difference between the two MSA Sales Orders is that one proposes the sale of one CoolSculpting System, and the other proposes the sale of two such systems. Pertinent here, Attachment A to both is a three-page document entitled “Attachment A: Terms & Conditions of Sale” and includes, among other terms, the following:
APPLICABLE LAW; DISPUTE RESOLUTION
The laws of the State of California govern this agreement without regard to conflict of laws principles or any other principles that would result in the application of a different body of law. The United Nations Convention on Contracts for the International Sale of Goods is expressly excluded from this Agreement. Any controversy or claim arising out of or relating to this Agreement, or its breach, shall be subject to non-binding mediation prior to binding arbitration in Alameda County, California under the then-current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with such Rules. The arbitrator shall issue a written report to the parties, detailing the basis of any arbitration award. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction. Subject to the parties' obligation to submit disputes to binding arbitration in accordance with this paragraph, the California state courts of Alameda County, California (or if there is federal jurisdiction, the United States District Court for the Northern District of California) have exclusive jurisdiction and venue over any dispute arising from or related to this Agreement. Customer hereby, irrevocably, consents to the jurisdiction of such courts, and waives any objection thereto. Notwithstanding the foregoing, neither party shall be precluded, at any time, from seeking injunctive relief or other provisional relief, or submitting any decision of an arbitrator reached in accordance with this paragraph, in any court of law in connection with the enforcement of this Agreement or such party's intellectual property rights.
(Doc. 29-2 at 7 (emphasis added).)[5]
Neither Sinclair nor Ballard in either of their affidavits denies having received and seen Lev's June 19 email.[6] Rather, they contend that they never saw or “knew of the terms” of the email's attachments until November 18, 2020. (Doc. 34-1 ¶ 16; Doc. 34-2 ¶ 14-15.) Thus, they contend they never intended to agree to these attachments as part of the MSA Sales Order. (Doc. 34-1 ¶ 17; Doc. 34-2 ¶ 15.)
On June 20, Wise replied to all recipients of Lev's email, attaching financing options for Plaintiffs' purchase of the CoolSculpting equipment. (Doc. 89-2 at 2 ¶ 5, 45-56.)
On June 22, 2016, Sinclair and Ballard met with Lev regarding the purchase of Zeltiq's CoolSculpting System and services. Lev presented a single-page “Master Sales Agreement Sales Order” for Mystic's purchase of the equipment and services.[7] (Doc. 29-3; Doc. 34-1 ¶ 13; Doc. 34-2 ¶ 12.) Sinclair made two handwritten changes to the MSA Sales Order; first, to change the address to the new Mystic facility in Carthage, North Carolina; and second, to note $1,000 in marketing funds that Zeltiq would provide. (Doc. 34-1 ¶ 14, Doc. 29-3.) Lev and Sinclair both initialed and dated the two changes, and Sinclair signed the document on behalf of Mystic. (Doc. 29-3.) The bottom of the document, just above Sinclair's signature, states:
Included Terms and Attachments. The agreement between Customer and ZELTIQ Aesthetics regarding the products described above (the ‘Master Sales Agreement') includes this Sales Order and the attachments (A-C) hereto which are incorporated herein in their entirety by this reference.
(Doc. 29-3.) However, attachments A, B, and C were not appended to the MSA Sales Order or otherwise presented at the June 22 meeting. (Doc. 34-1 ¶¶ 13-16; Doc. 34-2 ¶¶ 12-13.)
The next day, June 23, Lev sent Sinclair, Ballard, and Wise an email and attached a copy of Plaintiffs' executed, single-page MSA Sales Order.[8] (Doc. 34-1 ¶ 18; Doc. 34-2 ¶ 16.) In an affidavit, Sinclair states: “[a]fter the pendency of this litigation, I was shown an email that Mr. Lev apparently sent on June 23, 2016, the morning after the meeting when I signed the one-page physical document.” (Doc. 34-1 ¶ 18.) Similarly, Ballard states that “[a]fter the pendency of this litigation, I found an email that Mr. Lev apparently sent on June 23, 2016.” (Doc. 34-2 at 16.) Neither affidavit denies having received or known of the email at the time.
On June 24, Michael Ballard, apparently Plaintiff Ballard's husband, responded to Lev's June 23 email (using the same email address for Ballard to which Lev had sent his email) stating, “Look forward to our venture” and “Thanks for your help,” before asking a question about the system's voltage. (Doc. 89-2 at 59.)
On July 1, Lev emailed another Zeltiq employee, with copies to Sinclair and Ballard, seeking to confirm shipment of the equipment and noting a delivery address of 75 Magnolia Avenue in Pinehurst, North Carolina. (Doc. 89-2 at 60.) Seventeen minutes later, Sinclair emailed a response (from her iPhone), “No, please deliver to Marcia's practice 1001 Monroe St Ste D Carthage, NC 28327.” (Id. at 61.)
In August 2016, Michael Ballard, responding from the same email address as before, emailed Lev from his iPhone and copied Sinclair (again using her same email address), noting that “Our Coolsculpting machine comes with a warranty” and asking Lev to “Please send to Ascentium” as the latter needed it for insurance purposes to avoid a $100-a-month premium. (Id. at 62.) Less than a minute later, Michael Ballard sent a second email to the same recipients, attaching a copy of the inquiry from Ascentium that noted that “property insurance is required under the terms of your Financing Agreement.” (Id. at 63-64.)
Sometime later, a dispute arose between the parties, and Plaintiffs sought to return the system and terminate their business relationship, claiming that the system did not work as represented. (Doc. 7 ¶¶ 25-26.) Plaintiffs allege Ascentium took possession of the CoolSculpting system but wrongfully demanded the balance due under the equipment financing agreements. (Id. ¶¶ 27, 31.) On May 10, 2021, Plaintiffs sued Defendants in North Carolina state court. (Doc. 7.) Defendants timely removed the action to this court. (Doc. 1 ¶ 8.)
In January 2022, Defendants moved to stay proceedings and compel arbitration (Doc. 29), which the court denied without prejudice because “Defendants [] failed to produce admissible evidence that there was an arbitration agreement.” (Doc. 73 at 13.) This was due at least in part to Defendants' failure to submit a declaration or other proper basis to authenticate the proffered documents, relying instead on assertions in their briefing, which the court determined was not admissible evidence. (Doc. 73 at 13.) Defendants now move a second time to compel arbitration, having filed declarations to authenticate the relevant documents. (Docs. 84, 84-1 and 84-2.) In response, Plaintiffs move to strike Defendants' evidence,...
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