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Li v.

United States District Court, D. Maryland

October 17, 2018

GUANYU LI, Plaintiff,
STOCKX.COM, Defendant.



         Guanyu Li (“Plaintiff”) filed this putative class action against (“Defendant, ” or “StockX”[1]), alleging violations of Maryland's Consumer Protection Act, fraud, and negligence in the operation of StockX's online marketplace. (Compl., ECF No. 2.) Defendant moved to compel arbitration and stay proceedings, or, in the alternative, to dismiss the action, under the Federal Arbitration Act, 9 U.S.C. §§ 3 and 4 [“FAA”]. (Mot. Compel Arbitration at 1, ECF No. 7.) No hearing is required. See Local Rule 105.6 (D. Md. 2016). For the reasons set forth below, Defendant's Motion will be granted in part, and the case will be stayed pending arbitration.

         I. Background

         According to undisputed facts, StockX maintains an online marketplace allowing users to buy and sell merchandise, including athletic wear. (Compl. ¶ 22; Luber Decl. ¶ 2, Exh. in Supp. Mot. Compel, ECF No. 7-2.) Li registered for an account on on November 2, 2017 (Li Decl. ¶ 3, Exh. in Opp'n to Mot. Compel, ECF No. 8-1; Luber Decl. ¶ 7), at which time he was provided with terms of service dated October 17, 2017. (Li Decl. ¶ 3 (misstating the year on the referenced document); Luber Decl. ¶ 14.) Those terms of service read in part:

14. Disputes with StockX. . . . You and StockX each agree that any and all disputes or claims that have arisen or may arise between you and StockX relating in any way to or arising out of the Terms or your use of or access to StockX's Services, shall be resolved exclusively through final and binding arbitration, rather than in court, except that you may assert claims in small claims court or tribunal located in your jurisdiction, if your claims qualify. IN ALL EVENTS, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THESE TERMS AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. The Federal Arbitration Act governs the interpretation and enforcement of this Agreement to Arbitrate.
. . . e. Opt-Out Procedure. You can choose to reject this Agreement to Arbitrate (‘opt-out') by mailing us a written opt-out notice (‘Opt-Out Notice'). The Opt-Out Notice must be postmarked no later than 30 days after the date you accept the User Agreement for the first time. You must mail the Opt-Out notice to 1046 Woodward Ave., Detroit, MI 48226.
For your convenience, we are providing an Opt-Out Notice form you must complete and mail to opt out of the Agreement to Arbitrate. You must complete the Opt-Out Notice form by providing the information called for in the form, including your name, address[, ] . . . phone number and the email address(es) used to log in to the StockX account(s) to which the opt-out applies. You must sign the Opt-Out Notice for it to be effective. This procedure is the only way you can opt out of the Agreement to Arbitrate. If you opt out of the Agreement to Arbitrate, all other parts of the User Agreement will continue to apply.

(Terms of Service, Li Decl. Exh. A, ECF No. 8-4, at 8-10; Terms of Service, Luber Decl. Exh. A, ECF No. 7-3, at 10-12.) According to Li, StockX did not provide an Opt-Out Notice form when he registered, nor did it provide one by email at a later date. (Li Decl. ¶¶ 4-8.)

         II. Legal Standard

         The FAA stipulates that, in any contract involving interstate commerce, a provision through which the parties agree to arbitrate their disputes 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 Act “reflects an ‘emphatic federal policy in favor of arbitral dispute resolution.'” KPMG LLP v. Cocchi, 565 U.S. 18, 21 (2011) (per curiam) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)). The “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).

         Despite this presumption favoring alternative dispute resolution, arbitrability is at bottom a question of contract interpretation: a party cannot be required to arbitrate a dispute if he has not contractually agreed to do so. Thus, in the Fourth Circuit,

a litigant can compel arbitration under the FAA if he can demonstrate ‘(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate and foreign commerce, and (4) the failure, neglect or refusal of the [opposing party] to arbitrate the dispute.'

Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991); see also Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002). Although arbitrability is a question of federal law, applicable state contract law controls whether the parties have a valid agreement to arbitrate. Adkins, 303 F.3d at 501. “[G]enerally applicable state contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [the FAA].” Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). However, state law defenses must not be applied “in a fashion that disfavors arbitration, ” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011), and they must not “rely on the uniqueness of an agreement to arbitrate” to invalidate it, id. (quoting Perry v. Thomas, 482 U.S. 483, 493 (1987)).

         When a party moves to compel arbitration and the validity of the purported arbitration agreement between the parties is disputed, the motion is treated as one for summary judgment. See, e.g., Roach v. Navient Sols., Inc., 165 F.Supp.3d 343, 347 (D. Md. 2015); accord Rose v. New Day Fin., LLC, 816 F.Supp.2d 245, 251 (D. Md. 2011). When evaluating a motion for summary judgment, the Court will grant judgment to a movant who “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to the current Rule 56(a)). No genuine issue of material fact exists if the opposing party fails to make a sufficient showing on an essential element of the case as to which he would bear the burden of proof. Celotex Corp., 477 U.S. at 322-23. The “mere existence of a scintilla of evidence in support of the [opposing party's] position” is insufficient to defeat the motion. Anderso ...

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