United States District Court, S.D. Ohio, Eastern Division
OPINION AND ORDER
C. SMITH, JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on Defendants Idea Buyer, LLC,
Eric Corl, John Weller, Alexis Chambers, Michael Corradini,
Jess McPherone, and Ari Marcellino's Motion to Dismiss
pursuant to Rule 12(B)(1) of the Federal Rules of Civil
Procedure, or in the alternative, to stay litigation and
compel arbitration. (Doc. 17). This Motion is fully briefed
and ripe for review. For the reasons that follow,
Defendants' Motion to Dismiss is GRANTED and the Motion
to Stay is DENIED AS MOOT.
Myron Knight and Royce Dickerson, on behalf of themselves and
all other similarly situated, initiated this class action
lawsuit on December 15, 2016. (Doc. 1, Compl.). Plaintiffs
bring this claim against Defendant Idea Buyer, LLC, and the
individual Defendants who are current and former officers
and/or employees of Idea Buyer, LLC, for violations of the
American Inventor's Protection Act, 35 U.S.C. § 297
(“AIPA”), unjust enrichment, fraudulent
inducement, and injunctive relief.
Knight and Dickerson are individuals, and customers as
defined by 35 U.S.C. §297(c)(2), who entered into
contracts with Idea Buyer, an invention promoter, for
invention promotion services. Defendant Idea Buyer is an Ohio
limited liability company, with its principal place of
business in Dublin, Ohio. Idea Buyer offers invention
promotion services as defined in 35 U.S.C. § 297(c)(4),
as it works to find a firm, corporation, or other entity to
develop and market products or services that include the
invention of the customer. Plaintiffs claim that Defendants
have engaged in a deceptive pattern and practice in their
invention promotion services and failed to provide the
mandatory pre-contract disclosures under the AIPA.
November 12, 2014, Plaintiff Knight entered into a
“Fast Track Agreement” with Idea Buyer, and on
May 23, 2015, Plaintiff Dickerson entered into the same
agreement with Idea Buyer (hereinafter the
“Agreements”). Plaintiffs asserts that at no time
prior to, during, or after negotiations and entering into the
Agreements for services with Idea Buyer, did Idea Buyer ever
comply with 35 U.S.C. § 297(a) of the AIPA.
Agreements between Plaintiffs and Idea Buyer contain an
arbitration provision, which states:
Any and all disputes shall be submitted to binding
arbitration. In the event that a dispute arises concerning
this Agreement or performance under this Agreement, the
dispute shall be submitted to binding arbitration through and
pursuant to the rules of the American Arbitration
(Doc. 17-1, Knight and Dickerson Fast Track Agreements).
Defendants argue by virtue of the above provision, that this
case must be submitted to arbitration.
however, contend that “[b]ecause 35 U.S.C. §
297(a) of the AIPA applies to precontract negotiations,
before any meetings of the minds occurs with respect to any
contractual obligations, any arbitration provision that may
be relied upon by Defendants is inapplicable to this action,
and therefore, void.” (Doc. 1, Compl. ¶ 34).
STANDARD OF REVIEW
move to dismiss this case pursuant to Rule 12(b)(1) of the
Federal Rules of Civil Procedure for lack of subject matter
jurisdiction based on their argument that Plaintiffs'
claims are subject to an arbitration agreement. “When
an agreement to arbitrate encompasses claims asserted in
court, dismissal is appropriate under Fed. Rule Civ. P.
12(b)(1) for lack of subject matter jurisdiction. . .
.” Deck v. Miami Jacobs Bus. College Co., No.
3:12-cv-63, 2013 U.S. Dist. LEXIS 14845, 26 (S.D. Ohio Jan.
31, 2013) (Black, J). In the alternative, Defendants seek to
have this case stayed pending arbitration.
the Federal Arbitration Act, 9 U.S.C. §§ 1-16
(“FAA”), a written agreement to arbitrate
disputes arising out of a contract involving interstate
commerce “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
requirements set forth in the FAA were “designed to
override judicial reluctance to enforce arbitration
provisions, to relieve court congestion, and to provide
parties with a speedier and less costly alternative to
litigation.” Stout, 228 F.3d at 714.
4 of the FAA sets forth the procedure to be followed by the
district court when presented with a petition to compel
arbitration and provides, in relevant part, that:
[a] party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement for
arbitration may petition any United States district court ...
for an order directing that such arbitration proceed in the
manner provided for in such agreement.... The court shall
hear the parties, and upon being satisfied that the making of
the agreement for arbitration or the failure to comply
therewith is not in issue, the court shall make an order
directing the parties to proceed to arbitration in accordance
with the terms of the agreement.... If the making of the
arbitration agreement ... be in issue, the court shall
proceed summarily to the trial thereof.
9 U.S.C. § 4. Thus, the Court must first inquire as to
whether the parties have agreed to arbitrate the dispute at
issue. If the district court is satisfied that the agreement
to arbitrate is not “in issue, ” it must compel
arbitration. If the validity of the agreement to arbitrate is
“in issue, ” the court must proceed to a trial to
resolve the question. Id.
order to show that the validity of the agreement is “in
issue, ” the party opposing arbitration must show a
genuine issue of material fact as to the validity of the
agreement to arbitrate. See Doctor's Assocs., Inc. v.
Distajo, 107 F.3d 126, 129-30 (2d Cir. 1997). The
required showing mirrors that required to withstand summary
judgment in a civil suit. Id.; see also Aiken v.
City of Memphis, 190 F.3d 753, 755 (6th Cir. 1999)
(citing Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986)).
“party resisting arbitration bears the burden of
proving that the claims at issue are unsuitable for
arbitration.” Green Tree Fin. Corp. Ala. v.
Randolph, 531 U.S. 79, 91 (2000). But “[i]n order
to show that the validity of the agreement is ‘in
issue' [under 9 U.S.C. § 4], the party opposing
arbitration must show a genuine issue of material fact as to
the validity of the agreement to arbitrate.” Great
Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002).
establishes a liberal policy favoring arbitration agreements,
and any doubts regarding arbitrability should be resolved in
favor of arbitration over litigation. See Nestle Waters
North America, Inc. v. Bollman, 505 F.3d 498, 503 (6th
Cir. 2007) (“[W]e examine arbitration language in a
contract in light of the strong federal policy in favor of
arbitration, resolving any doubts as to the parties'
intentions in favor of arbitration.”). However,
“[w]hile ambiguities … should be resolved in
favor of arbitration, we do not override the clear intent of
the parties, or reach a result inconsistent with the plain
text of the contract, simply because the policy favoring
arbitration is implicated.” EEOC v. Waffle House,
Inc., 534 U.S. 279, 294 (2002) (internal citation
Sixth Circuit applies “the cardinal rule that, in the
absence of fraud or willful deceit, one who signs a contract
which he has had an opportunity to read and understand, is
bound by its provisions.” Allied Steel &
Conveyors, Inc. v. Ford Motor Co., 277 F.2d 907, 913
(6th Cir. 1960). It is settled authority that doubt regarding
the applicability of an arbitration clause should be resolved
in favor of arbitration. Id. Indeed, “any
doubts are to be resolved in favor of arbitration unless it
may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers
the asserted dispute.” See Nestle, 505 F.3d at
504. If parties contract to resolve their disputes in
arbitration rather than in the courts, a party may not renege
on that contract absent the most extreme circumstances.