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Goplin v. Weconnect, Inc.

United States Court of Appeals, Seventh Circuit

June 21, 2018

Brooks Goplin, Plaintiff-Appellee,
v.
WeConnect, Incorporated, Defendant-Appellant.

          Argued May 24, 2018

          Appeal from the United States District Court for the Western District of Wisconsin. No. 3:17-cv-00773-jdp - James D. Peterson, Chief Judge.

          Before Manion and Barrett, Circuit Judges, and Gettleman, District Judge.[*]

          Barrett, Circuit Judge.

         WeConnect, Inc. asks us to reverse the district court for making a factual mistake. The district court found that WeConnect was not a party to the arbitration agreement it sought to enforce. WeConnect says that the district court misunderstood the nature of its relationship with the entity named in the arbitration agreement. Because the district court did not clearly err, we affirm its ruling.

         I.

         Brooks Goplin worked for WeConnect, Inc. When he began his employment, he signed an arbitration agreement called the "AEI Alternative Entertainment Inc. Open Door Policy and Arbitration Program." The agreement referred to an entity named AEI throughout; it never mentioned We-Connect. This error became significant several months later, when Goplin sued WeConnect in federal court.

         Goplin brought a collective action under the Fair Labor Standards Act and a class action asserting claims under Wisconsin law. Invoking the agreement Goplin had signed, We-Connect filed a motion to dismiss and compel arbitration. Fed.R.Civ.P. 12(b)(3). It attached an affidavit from its Director of Human Resources stating, among other things, that "I am employed by WeConnect, Inc.-formerly known as Alternative Entertainment, Inc. or AEI-as Director of Human Resources."

         Goplin raised several arguments in opposition, but only one is relevant here: he claimed that WeConnect was not a party to the agreement and therefore could not enforce it.[1] He directed the district court to language on WeConnect's website, which stated the following:

WeConnect formed when two privately held companies, Alternative Entertainment, Inc. (AEI) and WeConnect Enterprise Solutions, combined in September 2016… Working together, AEI and WeConnect Enterprises could be as nimble as the next great technological innovation required. Our founders… saw that we were stronger together. And we officially became one company, WeConnect.

         Goplin contended that this language supported his position that AEI and WeConnect were two distinct legal entities. His arbitration agreement was with the now-defunct AEI, and WeConnect could not enforce an agreement that he had entered with another company. Under Wisconsin law, which applies here, "[t]he general rule is that only a party to a contract may enforce it." Sussex Tool & Supply, Inc. v. Mainline Sewer & Water, Inc., 605 N.W.2d 620, 622-23 (Wis. Ct. App. 1999).

         In its reply, WeConnect disputed Goplin's characterization of its relationship with AEI.[2] It asserted that WeConnect and AEI were not two different legal entities, but rather two names for the same legal entity-AEI was the company's original name and WeConnect is its new one. It emphasized that the affidavit from the Director of Human Resources referred to WeConnect as a company "formerly known" as AEI. Thus, WeConnect argued, a contract with AEI was a contract with WeConnect. This was a name change, not a merger.

         The district court held that WeConnect failed to meet its burden of demonstrating that it was a party to the arbitration agreement or otherwise entitled to enforce it. It discounted the affidavit from the Director of Human Resources as conclusory and noted that "WeConnect's own website indicates that AEI ceased to exist in September 2016, when it merged with WeConnect Enterprise Solutions to form We-Connect, Inc." Because the court found that "AEI isn't just another name for WeConnect, " it denied WeConnect's motion to compel arbitration.

         WeConnect filed a motion for reconsideration. This time, it attached more substantial evidence-including some corporate-form documents and affidavits from its lawyer and CEO-to support its claim that AEI had undergone a name change rather than a merger. But the district court pointed out that new evidence cannot be introduced in a motion for reconsideration unless the moving party shows "not only that [the] evidence was newly discovered or unknown to it until after the hearing, but also that it could not with reasonable diligence have discovered and produced such evidence [during the pendency of the motion]." Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996) (citations omitted). ...


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