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CaringOnDemand, LLC v. Ventive LLC

United States District Court, S.D. Florida

June 22, 2018

VENTIVE LLC, Defendant.



         THIS CAUSE is before the Court upon Plaintiffs' Urgent Verified Motion to Compel Arbitration, ECF No. [5] (“Motion to Compel Arbitration”), and Defendant's Motion to Dismiss or Alternatively Stay Plaintiffs' Complaint to Compel Arbitration, ECF No. [10], (the “Motion to Dismiss”) (collectively “the Motions”). The Court has carefully reviewed the Motions, the applicable law, the parties' supporting and opposing briefs, and is otherwise fully advised of the record in this case. For the reasons that follow, the Motion to Compel Arbitration is granted and the Motion to Dismiss is denied as moot.

         I. BACKGROUND

         On February 21, 2018, Plaintiffs, CaringOnDemand, LLC and Avior Sciences, LLC (collectively “Plaintiffs”) filed their Complaint in the Southern District of Florida seeking an order compelling Defendant, Ventive LLC (“Defendant”), to arbitration in Delray Beach, Florida.[1] See ECF No. [1]. According to the Complaint, on October 23, 2017, Plaintiffs and Defendant entered into a Master Consultant Agreement (“Consultant Agreement”) in which Defendant would provide consulting and technical services to Plaintiffs in exchange for a fee and Plaintiffs would be the sole owner of the intellectual property Defendant created. Id. at ¶ 1. A few months later, a dispute arose between the parties involving performance under the Consultant Agreement. Id. at ¶¶ 26-30. On February 16, 2018, Plaintiffs sent a written notice to Defendant in which they demanded arbitration of such disputes in Delray Beach, Florida. Id. at ¶¶ 3, 13. Plaintiffs made this demand pursuant to the arbitration provision contained in Section 13 of the Consultant Agreement. ECF No. [1-3]. Defendant allegedly did not comply with the arbitration provision and Plaintiffs' written demand for arbitration. Id. at ¶ 4. As a result, five days later, Plaintiffs filed their Complaint in this venue asserting violations of the Consultant Agreement and demanding arbitration in Delray Beach. Id.

         One day after the Complaint was filed in this action, Defendant filed its own Petition to Compel Arbitration, Stay Arbitration and for Appointment of Mediator against Plaintiffs in the District Court of the Fourth Judicial District of the State of Idaho in and for the County of Ada, No. CV01-18-03619. See ECF No. [5-1] (“the Idaho action”). On March 13, 2018, Plaintiffs removed the Idaho action to the District Court of Idaho, No. 18-cv-00120-CWD. See ECF No. [21-4]. Thereafter, on May 4, 2018, the assigned magistrate judge in the Idaho action, the Honorable Candy W. Dale, stayed those proceedings pending this Court's ruling on the Motions. See ECF No. [45-4].

         In the meantime, in this action, Plaintiffs filed the Motion to Compel Arbitration seeking an “urgent” ruling from this Court as to the arbitrability of the dispute in Delray Beach, Florida. See ECF No. [5]. Defendant filed a Response agreeing that the disputed issues were subject to arbitration but contesting Plaintiffs' position that the Consultant Agreement requires arbitration in Delray Beach.[2] See ECF No. [15]. In support of its position, Defendant argues that Plaintiffs' claim truly involves a dispute over compensation under Section 5 of the Consultant Agreement, not a dispute over intellectual property rights under Section 2. Id. Because the arbitration clause requires arbitration in Boise when disputes solely involve compensation under Section 5, Defendant argues that arbitration in Delray Beach is improper. Id. Alternatively, Defendant states that, while this lawsuit was filed first, it was filed in bad faith and in anticipation of Defendant's own lawsuit. Id. For that reason, it asks the Court to stay this action and allow the issues to be decided in the District Court of Idaho. Id. Plaintiff thereafter filed a Reply and Defendant was given leave of Court to file a Sur-reply. See ECF Nos. [21] and [28].

         While the parties were briefing the Motion to Compel Arbitration, Defendant separately filed a Motion to Dismiss, challenging whether Plaintiffs' chosen venue for this lawsuit is proper and alternatively seeking a stay of these proceedings to allow the District Court of Idaho to decide the appropriate arbitration venue. See ECF No. [10]. In the briefing that followed, the parties vehemently contested matters of venue, Avior Sciences' corporate standing in Florida, and the indispensability of a non-party Caring People. See ECF Nos. [27], [38], and [45]. Plaintiffs also filed two Requests for Judicial Notice. See ECF Nos. [34] and [39].[3] All issues are now ripe for review.


         The Federal Arbitration Act (“FAA”) provides that pre-dispute agreements to arbitrate “evidencing a transaction involving commerce” are “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 reflects “a liberal federal policy favoring arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Section 3 of the FAA further states:

If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3.

         “Under both federal and Florida law, there are three factors for the court to consider in determining a party's right to arbitrate: (1) a written agreement exists between the parties containing an arbitration clause; (2) an arbitrable issue exists; and (3) the right to arbitration has not been waived.” Sims v. Clarendon Nat. Ins. Co., 336 F.Supp.2d 1311, 1326 (S.D. Fla. 2004) (citing Marine Envtl. Partners, Inc. v. Johnson, 863 So.2d 423, 426 (Fla. 4th DCA 2003) and Seifert v. U.S. Home Corp., 750 So.2d 633 (Fla. 1999)).

         Confronted with a facially valid arbitration agreement, the burden is on the party opposing arbitration to demonstrate that the agreement is invalid or the issue is otherwise non-arbitrable. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 92 (2000) (“[T]he party seeking to avoid arbitration bears the burden of establishing that Congress intended to preclude arbitration of the statutory claims at issue.”); In re Managed Care Litig., No. 00-1334-MD, 2009 WL 856321, at *3 (S.D. Fla. Mar. 30, 2009) (“It is the burden of the party challenging a facially valid arbitration agreement to demonstrate that the agreement is in fact unconscionable.”). “By its terms, the [FAA] leaves no room for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 213 (1985) (emphasis in original). Thus, if the aforementioned criteria are met, the Court is required to issue an order compelling arbitration. John B. Goodman Ltd. P'ship v. THF Const., Inc., 321 F.3d 1094, 1095 (11th Cir. 2003) (“Under the FAA, 9 U.S.C. § 1 et seq., a district court must grant a motion to compel arbitration if it is satisfied that the parties actually agreed to arbitrate the dispute.”); Hemispherx Biopharma, Inc. v. Johannesburg Consol. Invs., 553 F.3d 1351, 1366 (11th Cir. 2008) (“The role of the courts is to rigorously enforce agreements to arbitrate.”) (citation omitted).

         III. ...

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