United States District Court, District of Columbia
D. BATES UNITED STATES DISTRICT JUDGE.
is one of the largest wireless telecommunications carriers in
the United States. For years, Mobile Now acted as one of
Sprint's “authorized representatives, ”
selling Sprint-branded products in brick-and-mortar stores
and online in return for certain payments and commissions. In
2019, Sprint terminated its contracts with Mobile Now,
alleging that the company had engaged in fraudulent
practices. Mobile Now has since brought this action against
Sprint alleging, among other things, fraud, breach of
contract, and defamation. Currently pending before the Court
is  Sprint's motion to compel arbitration. Sprint
argues that Mobile Now executed an agreement with Sprint
containing a dispute resolution procedure that mandates
binding arbitration of Mobile Now's claims. Mobile Now
does not dispute that it executed the agreement, but argues,
among other things, that the dispute resolution procedure is
unenforceable because it was fraudulently induced and is
unconscionable. For the reasons that follow, the Court will
grant Sprint's motion to compel arbitration.
2018, Sprint Solutions, Inc. and Mobile Now, Inc. executed an
Authorized Representative Agreement. Am. Compl. [ECF No. 15]
¶¶ 48-49; Ex. 1 to Am. Compl.
(“Agreement”) [ECF No. 29-1]. The Agreement, a
version of which the parties negotiated and renewed every few
years, set forth the parties' basic business relationship
and granted Mobile Now the non-exclusive right to sell
customers Sprint products and services. See
Agreement at 2-3. The Agreement covered, among other things,
compensation-including for selling Sprint service plans and
“Sprint Prepaid” services-and, in a three-page
exhibit, dispute resolution. See Agreement at 2-3,
61-63; Am. Compl. ¶¶ 92-95. The parties
separately executed a Prepaid Distribution Agreement, which
pertained to Mobile Now's distribution of certain Sprint
prepaid products and services. Am. Compl. ¶¶ 92-95;
Def.'s 2nd Mot. & Mem. of Law in Supp. of Mot. to
Compel Arbitration (“Mot. to Compel”) [ECF No.
24] at 17 n.7.
dispute resolution exhibit set forth detailed procedures
governing any “Dispute, ” defined broadly to
include “any controversy, dispute, or claim of every
kind . . . and nature arising out of or relating to the
negotiation, construction, validity, interpretation,
performance, enforcement, operation, breach, continuation or
termination” of the Agreement. Agreement at 61. Except
as elsewhere provided in the Agreement, Mobile Now and Sprint
“each waive[d] its respective right . . . [t]o litigate
Disputes in court.” Id. at 62. If a Dispute
arose, Sprint first “ha[d] the right to require that
[it] be submitted to mediation.” Id. at 61. If
Sprint decided not to elect mediation or if mediation failed,
Disputes could be pursued “by filing an
arbitration.” Id. “[A]rbitration [would]
be governed by the Wireless Industry Arbitration Rules of the
[American Arbitration Association], ” at a location
chosen by Sprint, by arbitrators chosen by both parties, with
each party paying one-half of the arbitrator's expenses.
Id. The dispute resolution procedure
“continue[d] in full force and effect after the
expiration or termination of” the Agreement.
Id. at 63. Finally, the Agreement provided that
“[i]t [was] expressly understood by [Mobile Now] that
this dispute resolution process may only be invoked regarding
Sprint's right to terminate the . . . Agreement after the
termination has gone into effect.” Id. at 61.
Now does not dispute that the parties negotiated the
Agreement containing this dispute resolution procedure for
almost a year. See Am. Compl. ¶¶ 28-32.
During that time, the parties agreed to various changes
memorialized in an Addendum. See Ex. 3 to Pl.'s
Sealed Mot. for Leave to File Docs. Under Seal
(“Addendum”) [ECF No. 2-3] at 2-6. The Addendum
did not alter or affect the Agreement's dispute
resolution procedure. See id. Instead, the dispute
resolution provisions remained substantively identical to the
procedure Mobile Now had agreed to in previous years.
Compare Agreement at 61-63, with Ex. A to
Keen Decl. in support of First Mot. to Compel Arbitration
(“2011 Authorized Representative Agreement”) [ECF
No. 20] at 59-61, and Ex. B to Keen Decl. in support
of First Mot. to Compel Arbitration [ECF No. 21] (“2014
Authorized Representative Agreement”) at 97-100.
March 19, 2019, Sprint sent Mobile Now a notice that it was
terminating the Agreement. Am. Compl. ¶¶ 64-65; Ex.
3 to Compl. [ECF No. 18] at 1. Sprint alleged in its notice
that Mobile Now had engaged in a fraudulent practice called
“slamming” or “cramming, ” which
involved “automatically enrolling new customers into
[value-added service programs] irrespective of whether the
customer(s) knew of or asked to join those programs.”
Mot. to Compel at 4 (emphasis omitted); Am. Compl.
¶¶ 67. The same day, Sprint sent a notice that it
was terminating the Prepaid Distribution Agreement on the
same grounds. Am. Compl. ¶ 96.
Now brings five claims against Sprint. Am. Compl.
¶¶ 103-142. Count One alleges that Sprint engaged
in a fraudulent scheme to induce Mobile Now to sign the
Agreement. Id. at ¶¶ 103-12. Count Two
alleges that Sprint breached the Agreement by, among other
things, failing to pay Mobile Now certain amounts owed under
its terms. Id. at ¶¶ 113-16. Count Three
alleges that Sprint breached the Prepaid Distribution
Agreement by failing to pay commissions owed under that
contract. Id. at ¶¶ 117-19. Count Four
alleges that Sprint breached a contract implied in fact
concerning the resale of certain Sprint products and
accessories in exchange for commissions. Id. at
¶¶ 120-27. Count Five alleges that Sprint defamed
Mobile Now by sharing the notice of termination of the
Agreement with at least two third parties in the
telecommunications industry. Id. at ¶¶
response, Sprint has filed a motion to compel arbitration of
all five claims under the Agreement's dispute resolution
procedures. Mot. to Compel at 16-18. Mobile Now opposes the
motion, arguing, among other things, that the dispute
resolution procedure was fraudulently induced and is
unconscionable. Mem. in Opp'n to Mot. to Compel
(“Opp'n”) [ECF No. 26] at 1, 28-29, 36-37.
Mobile Now further contends that, even if the dispute
resolution procedure is valid, at least two of Mobile
Now's claims fall outside the scope of the
Agreement's dispute resolution procedures. Id.
at 35-36. The motion has been fully briefed and is ripe for
standard governing a motion to compel arbitration is the same
one used to resolve summary judgment motions pursuant to
Federal Rule of Civil Procedure 56(c). The motion is treated
“as if it were a request for summary disposition of . .
. whether or not there had been a meeting of the minds on the
agreement to arbitrate.” Aliron Int'l, Inc. v.
Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C.
Cir. 2008) (internal citation and quotation marks omitted).
The party moving to compel-here, Sprint-must first present
evidence sufficient to show an enforceable agreement to
arbitrate. Skrynnikov, 943 F.Supp.2d at 175-76. The
burden then shifts to the party opposing arbitration-here,
Mobile Now-to establish a genuine issue of material fact as
to the making or validity of that agreement. Id.
“The Court will compel arbitration if the pleadings and
the evidence show that there is no genuine issue as to any
material fact and that the moving party is entitled to
judgment as a matter of law.” Mercadante v. XE
Servs., LLC, 78 F.Supp.3d 131, 136 (D.D.C. 2015)
(quoting Haire v. Smith, Currie & Hancock LLP,
925 F.Supp.2d 126, 129 (D.D.C. 2013)).
party disputes that this case is governed by the Federal
Arbitration Act (“FAA”), 9 U.S.C. §§
1-14. See Mot. to Compel at 8; Opp'n at 19-20.
The FAA “create[s] a body of federal substantive law of
arbitrability, applicable to any arbitration agreement within
the coverage of the Act.” Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
“[E]nacted . . . in response to widespread judicial
hostility to arbitration agreements, ” the FAA
“reflect[s] both a liberal federal policy favoring
arbitration, and the fundamental principle that arbitration
is a matter of contract.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (internal citations
and quotation marks omitted).
2 of the FAA provides that:
A written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract . . .
shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of
9 U.S.C. § 2. When a party moves to arbitrate in a case
governed by section 2 of the FAA, a court's role is
limited to determining whether there is a valid agreement to
arbitrate, and whether the specific dispute falls within the
scope of the arbitration agreement. Shelton v. The Ritz
Carlton Hotel Co., 550 F.Supp.2d 74, 79 (D.D.C.
2008); see also Nelson v. Insignia/Esg, Inc., 215
F.Supp.2d 143, 149-150 (D.D.C. 2002). In so doing, courts
must, “as a matter of federal law, ” resolve
“any doubts concerning the scope of arbitrable issues .
. . in favor of arbitration.” Moses H.
Cone, 460 U.S. at 24-25.
Validity of the Agreement to Arbitrate
determine whether the parties have executed a valid
arbitration agreement, federal courts apply state contract
law. Doctor's Assocs., Inc. v. Casarotto, 517
U.S. 681, 686-87 (1996); First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 944 (1995). Before turning to
the merits, the Court must therefore address the parties'
preliminary dispute concerning what state law applies. Sprint
contends that Kansas law applies, pointing to a choice-of-law
provision in the Agreement. See Mot. to Compel at
10. Mobile Now disagrees, arguing that, because the entire
Agreement is unenforceable as a matter of law, the