MICHAEL A. SHIPP, District Judge.
This matter comes before the Court upon Defendants JetSmarter, Inc. and Joshua Raia's (collectively "Defendants" or "JetSmarter") Motion to Dismiss and Compel Arbitration. (ECF No. 7.) Plaintiff Anne Koons ("Plaintiff" or "Ms. Koons") opposed (ECF No. 10), and Defendant replied (ECF No. 11).
This case arises out of two memberships that Plaintiff purchased from JetSmarter for private air transportation services.
In or about December 2017, Plaintiff began communicating with Joshua Raia ("Raia"), a JetSmarter representative, about purchasing JetSmarter's service. (Id. ¶¶ 3, 8.) Plaintiff expressed an interest in JetSmarter's service because she frequently flew to South Florida and Los Angeles. (Id. ¶ 9.) Plaintiff explained her concerns to JetSmarter "about the availability of flights sponsored by JetSmarter as well as the distance of the airport from which they would be based given the location of her residence in Voorhees, New Jersey." (Id. ¶ 10.) JetSmarter and Raia advised Plaintiff that Teterboro Airport regularly had flights to both Florida and Los Angeles, and that she would have access to those flights. (Id. ¶ 11.) JetSmarter and Raia further indicated that JetSmarter "intended to establish flights out of Philadelphia International Airport (a location closer to [Plaintiff's] residence)." (Id. ¶ 12.) Finally, JetSmarter and Raia informed Plaintiff that, by purchasing a JetSmarter membership, "she would be entitled to fly on flights with a duration of up to three hours at no additional cost." (Id. ¶ 13.)
Based on JetSmarter and Raia's representations, Plaintiff purchased a one-year membership from JetSmarter. (Id. ¶ 14.) Later, Plaintiff purchased a three-year "Sophisticated" level membership. (Id. ¶ 16.) Section Eighteen of the Membership Agreement,
(Defs.' Mot. to Dismiss, Ex. 4 ("Membership Agreement" ¶ 18), ECF No. 7-8.) The Membership Agreement also included a provision entitled, "Governing Law," which provided that the Membership Agreement "and all the rights of the parties hereunder shall be governed by, construed and enforced in accordance with the laws of the State of Florida without reference to the conflict of law principles of any jurisdiction." (Id. ¶ 17.)
Plaintiff alleges that JetSmarter unilaterally changed the terms of the contract, by, inter alia, eliminating services that were promised to her, such as complimentary helicopter service. (Compl. ¶ 17.) Moreover, Plaintiff contends that "the frequency of scheduled flights based out of Teterboro Airport have greatly decreased and service was never established out of the Philadelphia International Airport." (Pl.'s Opp'n Br. 2 (citing Compl. ¶ 18).) Finally, Plaintiff states that the cost of flights through JetSmarter has substantially increased. (Id. (citing Compl. ¶ 19).)
Plaintiff's Complaint raises the following three claims: (1) Violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1. et seq. ("NJCFA"); (2) "Respondeat Superior"; and (3) "Legal Fraud." (Compl. ¶¶ 22-39.) In the instant Motion, Defendants move to dismiss the Complaint and compel arbitration pursuant to the Dispute Resolution Clause of the Membership Agreement.
As a threshold matter, the parties dispute whether the Court should review the instant motion to compel arbitration under a Federal Rule of Civil Procedure
"As a general matter, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings," yet an exception to that rule is that the Court may consider "a document integral to or explicitly relied upon in the complaint . . . without converting the motion [to dismiss] into one for summary judgment." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (emphasis omitted). Here, Plaintiff explicitly relies upon the Membership Agreement in the Complaint, and therefore, the Court may consider that agreement in evaluating Defendants' Motion to Dismiss.
Moreover, in Guidiotti v. Legal Helpers Debt Resolution, LLC, the Third Circuit clarified the standard for district courts to apply in determining a motion to compel arbitration. 716 F.3d 764, 772 (3d Cir. 2013). The Third Circuit provided:
Id. at 776 (internal quotation marks and citations omitted).
Here, it is apparent from the face of the Membership Agreement, which Plaintiff's Complaint explicitly relies upon, that Plaintiff's claims are subject to an enforceable arbitration agreement as set forth in Section 18 of the Membership Agreement. As such, the Court declines to convert Defendants' Motion to Dismiss into a summary judgment motion, and reviews Defendants' motion pursuant to Rule 12(b)(6).
Congress enacted the Federal Arbitration Act, 9 U.S.C. §§ 1-14 ("FAA"), to thwart "widespread judicial hostility to arbitration agreements." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The FAA creates a body of federal substantive law establishing the duty to respect agreements to arbitrate disputes. Century Indem. Co. v. Certain Underwriters at Lloyd's, 554 F.3d 513, 522 (3d Cir. 2009). The FAA declares that "[a] written provision in any . . . contract. . . to settle by arbitration . . . 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.
"Whe[n] there is a contract between the parties that provides for arbitration, there is `an emphatic federal policy in favor of arbitral dispute resolution.'" Hoover v. Sears Holding Co., No. 16-4520, 2017 WL 2577572, at *1 (D.N.J. June 14, 2017) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)). Therefore, "as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Raynor v. Verizon Wireless, LLC, No. 15-5914, 2016 WL 1626020, at *2 (D.N.J. Apr. 25, 2016) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
"[I]n deciding whether a party may be compelled to arbitrate under the FAA," the Court must determine: "(1) whether there is a valid agreement to arbitrate between the parties and, if so, (2) whether the merits-based dispute in question falls within the scope of that valid agreement." Flintkote Co. v. Aviva PLC, 769 F.3d 215, 220 (3d Cir. 2014) (quotation marks omitted) (quoting Certain Underwriters at Lloyd's, 584 F.3d at 527). Under Section 2 of the FAA, "an arbitration provision is severable from the remainder of the contract"; therefore, only challenges specifically to the validity of the arbitration agreement are relevant to "a court's determination of an arbitration agreement's enforceability." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445 (2006)).
Preliminarily, the parties disagree as to whether the Court should apply New Jersey or Florida state law to determine the validity of the arbitration provision. Plaintiff contends that the Court should apply New Jersey law, arguing, "In the instant case, Plaintiff executed the Membership Agreement and paid substantial sums of money based on the false representations made to her by Defendants. All such activity (the execution, the payment and the receipt of the false representations) occurred while Plaintiff was in New Jersey."
In considering motions to compel arbitration, "the Court applies `ordinary state-law principles that govern the formation of contracts[.]'" Emcon Assocs. v. Zale Corp., No. 16-1985, 2016 WL 7232772, at *3 (D.N.J. Dec. 14, 2016) (quoting Kirleis v. Dickie, McCamey & Chilcote, 560 F.3d 156, 160 (3d Cir. 2009)). Typically, "when parties to a contract have agreed to be governed by the laws of a particular state, New Jersey courts will uphold the contractual choice if it does not violate New Jersey's public policy." Id. (quoting N. Bergan Rex Transp. v. Trailer Leasing Co., 730 A.2d 843, 847 (N.J. 1999)); see also Prescription Counter v. AmerisourceBergan Corp., No. 04-5802, 2007 WL 3511301, at *10 (D.N.J. Nov. 14, 2007) (finding that because the defendant corporation's principal place of business was in Georgia, there was "a reasonable basis for the parties' choice of law").
Here, the Membership Agreement expressly provides that any disputes shall be governed by Florida law, and the Complaint alleges that JetSmarter's principal place of business is in Florida. (Membership Agreement ¶ 18; Compl. ¶ 2.) Additionally, upholding a governing law provision mandating application of Florida Law will not violate New Jersey's public policy because both New Jersey and Florida "favor[] arbitration as a mechanism [for] resolving disputes." Martindale v. Sandvik, Inc., 800 A.2d 872, 877 (N.J. 2002) ("[O]ur courts have held on numerous occasions that agreements to arbitrate are not violative of public policy"); see also Rey v. Bonati, No. 08-806, 2008 WL 11335106, at *1 (M.D. Fla. July 30, 2008) (citation omitted) ("It is well settled under Florida law that arbitration is a favored means of dispute resolution and that courts should indulge every reasonable presumption to uphold these agreements."). The Court, accordingly, finds Florida law applies.
The arbitration provision at issue is valid under Florida law. Plaintiff, via a click wrap agreement, assented to the terms of the Membership Agreement, which included the subject arbitration provision. Florida routinely enforces click wrap agreements.
Moreover, the arbitration provision clearly and unambiguously states that Plaintiff must submit to binding arbitration in the event any issue arises. (Membership Agreement ¶ 18.) The provision also provides that all disputes "shall be resolved
Finally, Plaintiff's arguments pertaining to the Membership Agreement's validity as a whole (see Pl.'s Opp'n Br. 14), and not the arbitration provision specifically, must be decided by the arbitrator. See Hoover, 2017 WL 3923295, at *2 (quoting Buckeye Check Cashing, Inc., 546 U.S. at 446 ("[U]nless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator [.]")). The Court, accordingly, finds the subject arbitration provision is valid.
The Court next turns to the issue of arbitrability, i.e., whether the issue falls within the scope of the Membership Agreement. See, e.g., Berture v. Samsung Elecs. Am., Inc., No. 17-5757, 2018 WL 4621586, at *9 (D.N.J. July 18, 2018). "[P]arties can agree to arbitrate gateway questions of arbitrability, such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Ctr., 561 U.S. at 68-69. "[W]hen the parties' contract delegates the arbitrability question to an arbitrator, the courts must respect the parties' decision as embodied in the contract." Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524, 528 (2019). The Court may not decide the issue of arbitrability if a valid arbitration agreement delegates the issue of arbitrability to an arbitrator. Id. at 530.
Here, the arbitration provision expressly delegates the issue of arbitrability to an arbitrator; namely, it provides that
The Court, therefore, finds the arbitration provision valid and the scope of that provision an issue for the arbitrator to review. The Court, accordingly, grants Defendants' Motion to Compel Arbitration.
Finally, the Court notes that Defendants move to both dismiss this action and compel arbitration. Defendants' only argument in support of the Court's dismissing, rather than staying, the matter consists of a single footnote, which provides in its entirety: "While the FAA requires a stay of any action subject to a valid arbitration agreement, this Court has the discretion to dismiss this action if all the issues raised are arbitrable." (Defs.' Moving Br. 10 n. 1 (citing Hoffman v. Fid. & Deposit Co., 734 F.Supp. 192, 195 (D.N.J. 1990).) Defendants' bare assertion fails to persuade the Court that it should dismiss, and not stay, the matter. See, e.g., Mendez v. Puerto Rican Int'l Cos., 553 F.3d 709, 710-12 (3d Cir. 2009) (discussing, inter alia, Section 3 of the FAA, which "imposes a mandatory stay"). The Court, therefore, denies Defendants' Motion to Dismiss, and stays the matter pending the completion of arbitration pursuant to Section 3 of the FAA.
For the reasons set forth above, it is hereby ordered that Defendants' Motion to Dismiss and Compel Arbitration is granted in part and denied in part. The Court will issue an order consistent with this Memorandum Opinion.