Henderson v. U.S Patent Commission, Ltd.

188 F. Supp. 3d 798, 2016 WL 3027895, 2016 U.S. Dist. LEXIS 70157
CourtDistrict Court, N.D. Illinois
DecidedMay 27, 2016
Docket15 C 3897
StatusPublished
Cited by3 cases

This text of 188 F. Supp. 3d 798 (Henderson v. U.S Patent Commission, Ltd.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Henderson v. U.S Patent Commission, Ltd., 188 F. Supp. 3d 798, 2016 WL 3027895, 2016 U.S. Dist. LEXIS 70157 (N.D. Ill. 2016).

Opinion

Memorandum Opinion and Order

Gary Feinerman, United States District Judge

Yolanda Henderson brought this putative class action against U.S. Patent Commission, Ltd. and several of its employees, The Gray Law Group and several of its employees, and two defendants who have been dismissed. Doc. 72. Earlier in the litigation, Defendants moved to compel arbitration, Docs. 33, 36, and the court granted the motion, Docs. 60-61 (reported at 2016 WL 6791396 (N.D.I11. Nov. 2, 2015)). Now, pursuant to § 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4, Defendants have moved to direct Plaintiff to proceed to arbitration on an individual, rather than class, basis. Doc. 76. The motion is granted.

Background

The relevant facts are set forth in the court’s prior opinion, familiarity with which is assumed. To summarize, Henderson, seeking to develop and sell what she believed to be her invention of “glitter paint,” entered into two contracts with U.S. Patent Commission, formerly known as Invent Worldwide Consulting. Doc. 72 at ¶¶ 22-26, 31-35. Pursuant to the first agreement, the “Step 1 Agreement,” U.S. Patent Commission would perform a search to determine the patentability of Henderson’s putative invention. Id. at ¶ 28. Defining U.S. Patent Commission and Invent Worldwide Consulting as “Consultants” and Henderson as “Client,” the agreement contained the following choice-of-law and arbitration clause:

This agreement, and all other agreements with Consultants, unless specifically noted otherwise are interpreted in accordance with the laws of the State of Illinois and the County of DuPage. Any and all disputes regarding this or other agreements between Client and Consultants will be subject to binding arbitration and submitted to the AAA (American Arbitration Association) or some other similar organization. ...

Doc. 33-2 at 3. Under the second agreement, the “Step 2 Agreemént,” U.S. Patent Commission would “creat[e] 2D and 3D drawings of the • invention, provid[e] [Henderson] with a list of manufacturers, and fil[e] a provisional patent application with the United States Patent and Trademark Office (‘USPTO’).” Doc. 72 at ¶ 32. The Step 2 Agreement included an arbitration clause identical to that in the Step 1 Agreement. Doc. 33-3 at 4. Henderson paid $100.00 for the services specified in the Step 1 Agreement and $2,600.00' for the services specified in the Step 2 Agreement. Doc. 72 at ¶¶ 28, 31.

Henderson alleges that Defendants conspired to deceive her from discovering that glitter paint was neither patentable nor profitable, violating both federal and state law. Doc. 72. As noted, the court compelled arbitration on November 1, 2015. On February 8, 2016, Henderson filed a demand for arbitration before the JAMS arbitral [801]*801forum seeking class treatment of her claims. Doc. 77-1.

Discussion

“An agreement to arbitrate is treated like' any other contract,” and a “party can be forced to arbitrate only those matters that-he or she has agreed to submit to arbitration.” Dr. Robert L. Meinders, D.C., Ltd. v. UnitedHealthcare, Inc., 800 F.3d 853, 857 (7th Cir.2015). Accordingly, “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Oxford Health Plans LLC v. Sutter, — U.S. —, 133 S.Ct. 2064, 2067, 186 L.Ed.2d 113 (2013) (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684, 130 S.Ct. 1758, 176 L.Ed.2d 605 (7th Cir.2010)) (internal quotation marks omitted). The FAA provides that a “party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition [the] court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4.

Defendants have so moved, contending that the Step 1 and Step 2 Agreements do not permit class arbitration. Docs. 76-77. To resolve the motion, the court must address two questions. The first is “who should decide whether the Agreements [allow for class] arbitration: [this] court, or the arbitrator?” Emp’rs Ins. Co. of Wausau v. Century Indem. Co., 443 F.3d 573, 576 (7th Cir.2006). The second, to be reached only if the arbitrability issue is for the court, is whether the Agreements in fact provide for class arbitration.

I. Whether the Court or the Arbitrator Decides the Availability of Class Arbitration

“[Q]uestion[s] of arbitrability ... which include certain gateway matters, such .as whether parties have a valid arbitration agreement or whether a concededly binding arbitration clause applies to a certain type of controversy ... are presumptively for courts to decide,” Oxford Health, 133 S.Ct. at 2068 n. 2 (internal quotation marks omitted), “unless the parties clearly and unmistakably provide otherwise,” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (internal quotation marks omitted). To resolve whether the availability of class arbitration is an issue for the court or the arbitrator, the. court must first decide whether the availability of class arbitration is a question of arbitrability presumptively for the court. If it is, then the court must decide whether the parties’ arbitration agreement clearly and unmistakably provides that the availability for class arbitration is for the arbitrator.

A. Whether the Availability of Class Arbitration Is a “Question of Arbi-trability”

The Supreme Court has “found the phrase [‘question of arbitrability’] applicable in the kind of narrow circumstances where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they had agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.” Wausau, 443 F.3d at 576 (quoting Howsam, 537 U.S. at 83-84, 123 S.Ct. 588) (internal quotation marks omitted). By contrast, “procedural questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator to decide.” Ibid, (quoting Howsam, 537 U.S. at 84, 123 S.Ct. 588) (internal quotation- marks omitted).

[802]*802The Supreme Court “has not yet decided whether the availability of class arbitration is a question of arbitrability.” Oxford Health, 133 S.Ct. at 2068 n. 2; accord Stolt-Nielsen, 559 U.S. at 680, 130 S.Ct. 1758. The Court came close in Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 123 S.Ct.

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188 F. Supp. 3d 798, 2016 WL 3027895, 2016 U.S. Dist. LEXIS 70157, Counsel Stack Legal Research, https://law.counselstack.com/opinion/henderson-v-us-patent-commission-ltd-ilnd-2016.