Shye v. Bookspan LLC
| Decision Date | 09 March 2022 |
| Docket Number | 1:21-cv-12285 |
| Court | U.S. District Court — Eastern District of Michigan |
| Parties | JILL SHYE, individually and on behalf of all others similarly situated, Plaintiff, v. BOOKSPAN LLC, Defendant. |
SUPPLEMENTAL BRIEFING
This is a putative class action seeking damages for alleged violations of Michigan's Preservation of Personal Privacy Act (PPPA), Mich. Comp. Laws § 445.1711 et seq.[1] Plaintiff, a Michigan resident and book-club member, alleges that Defendant, an online book seller, sold her personal information to data aggregators without her permission, resulting in “a barrage of unwanted junk mail.” ECF No. 1 at PageID.1. Defendant has filed a motion to compel arbitration and dismiss the case, claiming that Plaintiff agreed to arbitrate any claims arising out of her membership. ECF No. 7. Because there is a genuine dispute of fact regarding whether Plaintiff consented to an arbitration agreement, Defendant's motion will be held in abeyance, and the parties will be directed to conduct targeted discovery and file supplemental briefing.
Following the enactment of similar federal legislation, [2] in 1989, Michigan enacted the PPPA, creating a private right of action for the unauthorized disclosure of personal information related to purchase or rental of books, videos, and other materials. See Mich. Comp Laws § 445.1712. As relevant here, a business engaged in selling or renting books, videos and similar materials may not disclose “to any person, other than the customer, a record or information that personally identifies the customer as having purchased, leased, rented or borrowed materials, ” except with the “written permission of the customer.” Id. §§ 445.1712-13. Businesses that violate the PPPA may be liable for actual damages, attorney's fees, and-under the pre-July 2016 version of the PPPA-$5, 000 in statutory damages. Id. § 445.1715 (amended 2016).
Before (and perhaps after) July 2016, [3] Plaintiff Jill Shye was a member of two book clubs offered by Defendant Bookspan LLC: Doubleday Book Club and Literary Guild Book Club. ECF No. 1 at PageID.5-6. During Plaintiff's membership, Defendant allegedly compiled her and other members' personal information into mailing lists, which it then sold to data aggregators. Id. at PageID.17-19. According to Plaintiff, Defendant never disclosed this practice to its members or sought their permission, despite “profit[ing] handsomely.” Id. at PageID.5.
In September 2021, Plaintiff brought this action on behalf of herself and all similarly situated subscribers, seeking $5, 000 in statutory damages per subscriber. ECF No. 1 at PageID.25. Two months later, Defendant filed a motion to compel arbitration and dismiss the complaint. ECF No. 7. Defendant claims that when Plaintiff subscribed to the book clubs, she consented to a written arbitration agreement covering “any dispute between [them].” Id. at PageID.554. As a result, Defendant argues, Plaintiff cannot maintain this action in federal court and must submit to arbitration. Id. at PageID.554-55.
In response, Plaintiff denies awareness of and consent to an arbitration agreement. ECF No. 18 at PageID.618-19. She also argues that the alleged arbitration agreement would not cover this dispute. Id. at PageID.619-20.
Having reviewed the parties' briefing, this Court finds that a hearing is unnecessary and will proceed to address Defendant's motion on the papers. See E.D. Mich. LR 7.1(f)(2).
Defendant's motion is premised on the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. The FAA creates “a substantive body of federal arbitration law that requires courts to enforce arbitration contracts ‘according to their terms.'” Anderson v. Charter Commc'ns, Inc., 860 Fed.Appx. 374, 376 (6th Cir. 2021) (unpublished) (quoting Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524, 529 (2019)). Under the FAA, arbitration agreements “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.
The FAA provides two means for addressing arbitration. See Id. §§ 3-4. Under § 3, a court “shall” stay a case for purposes of arbitration if it is “satisfied that the issue involved in such suit or proceeding is referable to arbitration under [a written arbitration agreement.]” Id. § 3. Similarly, under § 4, a court “shall make an order directing the parties to proceed to arbitration in accordance with the terms of [their] agreement” if it is “satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue.” Id. § 4.
The difference between the two sections is largely procedural. Section 3 is usually invoked by the defendant in a federal suit, while § 4 is usually invoked by a plaintiff seeking specific performance of an arbitration agreement. See Boykin v. Fam. Dollar Stores of Mich., LLC, 3 F.4th 832, 836-37 (6th Cir. 2021). Even so, a defendant's motion to compel arbitration arises under § 4 even if the motion does not cite the section. See Id. at 837 ( defendant's motion under § 4 because it sought to compel arbitration).
Historically, courts in this circuit have struggled to identify the appropriate standard of review for a motion to compel arbitration. In this district alone, courts have treated motions to compel arbitration as jurisdictional challenges under Rule 12(b)(1), see, e.g., Citizens Bank v. Margolis, 509 F.Supp.3d 967, 971 (E.D. Mich. 2020); as venue challenges under Rule 12(b)(3), see, e.g., Big City Small World Bakery Café, LLC v. Francis David Corp., 265 F.Supp.3d 750, 757 (E.D. Mich. 2017); and as facial challenges under Rule 12(b)(6), see, e.g., High v. Cap. Senior Living Props. 2-Heatherwood, Inc., 594 F.Supp.2d 789, 795 (E.D. Mich. 2008).
Acknowledging this confusion, the Sixth Circuit recently held that a court reviewing a motion to compel arbitration must apply the same standard of review as it would for a motion for summary judgment under Rule 56. See Boykin, 3 F.4th at 838. The Sixth Circuit's holding rested largely on the FAA's requirement that, before compelling arbitration, a court must find that the “making of the agreement” is not “in issue.” Id. (quoting 9 U.S.C. § 4). “The question whether the party opposing arbitration has put the making of the arbitration contract ‘in issue, '” the Sixth Circuit noted, “looks a lot like the question whether a party has raised a ‘genuine issue as to any material fact.'” Id. (quoting Fed.R.Civ.P. 56(c)). So, in deciding whether the making of an arbitration agreement is “in issue, ” courts should apply the same standard of review that they would under Rule 56. Id.; see also Fed. R. Civ. P. 81(a)(6) (providing that the Federal Rules of Civil Procedure shall govern proceeding under the FAA “to the extent applicable”).
Despite its endorsement of Rule 56, the Sixth Circuit did suggest that motions to compel arbitration could, in some circumstances, also be analyzed under Rule 12(b)(6). See Boykin, 3 F.4th at 838 ().
But in this case, Defendant's motion relies extensively on exhibits not referenced in Plaintiff's complaint. See generally ECF No. 7. So even if Defendant's motion could have been construed as a facial challenge under Rule 12(b)(6), it must be analyzed as a motion for summary judgment under Rule 56. See Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.”).
Accordingly, this Court will analyze Defendant's motion to compel arbitration as if it was a motion for summary judgment under Rule 56.
When considering a motion to compel arbitration, a court has four tasks:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
McGee v. Armstrong, 941 F.3d 859, 865 (6th Cir. 2019) (quoting Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)).
Accordingly, the threshold question is whether the parties agreed to arbitrate. Id.; see also Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 299 (2010) .
As the moving party, Defendant has the initial burden of identifying evidence “demonstrat[ing] the absence of a genuine issue of material fact.” Celotex Corp. v Catrett, 477 U.S. 317, 323 (1986). If Defendant meets its burden, the burden then shifts to Plaintiff to set out specific facts showing “a...
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