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Abraham v. Jetsmarter Inc.

United States District Court, E.D. Wisconsin

April 2, 2019

JASON ABRAHAM and ANDREA ABRAHAM, Plaintiffs,
v.
JETSMARTER INC. and SAM KIMMELL, Defendants.

          DECISION AND ORDER

          WILLIAM E. DUFFIN U.S. Magistrate Judge

         INTRODUCTION

         Plaintiffs Jason and Andrea Abraham filed this action against defendants JetSmarter Inc. and Sam Kimmell, alleging violations of the Wisconsin Deceptive Trade Practices Act (Wis. Stat. § 100.18), common law fraud, breach of contract, breach of good faith, and punitive damages. (ECF No. 1.) Defendants move for dismissal in favor of mandatory arbitration pursuant to Federal Rule of Civil Procedure 12(b)(3) and the Federal Arbitration Act, 9 U.S.C. §§ 1-16. (ECF No. 12.) All parties have consented to the full jurisdiction of a magistrate judge. (ECF Nos. 4, 17.) Defendants' motion is ready for resolution.

         FACTS

         In late 2016 the Abrahams became interested in a membership with JetSmarter. (ECF No. 15, ¶ 2.) On December 27, 2016, Mr. Abraham spoke with JetSmarter's sales representative Sam Kimmell. (ECF No. 15-2 at 23.) Kimmell stated that, if the Abrahams enrolled in a JetSmarter membership before January 1, 2017, they would receive membership benefits, including but not limited to complimentary flights over three hours in flight time with no additional fees, and they would be allowed to book a minimum of four seats on a large jet or a minimum of two seats on a "light" jet. (ECF No. 1, ¶¶ 8-9.)

         After some price negotiation, Mr. Abraham agreed to purchase JetSmarter memberships for himself and his wife, plaintiff Andrea Abraham. (See ECF No. 15-2 at 2-4.) Kimmell sent Mr. Abraham an email containing a hyperlink to access the Abrahams' electronic Membership Invoice. (ECF No. 15-2 at 2-3.) Below the itemized charges, the Membership Invoice contained a "toggle button" next to the phrase, "I ACCEPT TERMS AND CONDITIONS OF THE MEMBERSHIP AGREEMENT":

         (Image Omitted)

         (ECF No. 15-3 at 2.) A hyperlink was embedded within the phrase, "TERMS AND CONDITIONS OF THE MEMBERSHIP AGREEMENT," which, when clicked, would have directed the Abrahams to a webpage displaying a complete Membership Agreement, which included an arbitration provision. (ECF No. 15, ¶¶ 5, 7.) The arbitration provision, entitled “Dispute Resolution, ” stated in relevant part:

Any claim or dispute between the parties and/or against any agent, employee, successor, or assign of the other, whether related to this Agreement, any of the Terms and Conditions or the relationship or rights or obligations contemplated herein, including the validity of this clause, shall be resolved exclusively by binding arbitration by the American Arbitration Association, under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes then in effect, by a sole arbitrator. The place of arbitration shall be Broward County, Florida.

(ECF No. 15-5 at 10.) The Abrahams were required to click the “toggle button” in order to pay for their JetSmarter memberships. (Id., ¶¶ 4, 6.)

         On May 9, 2017, Kimmell communicated to Mr. Abraham that “JetSmarter was offering a three-year membership at a discounted rate with the same benefits included in their annual membership plan if members pre-purchase all three years.” (ECF No. 1, ¶¶ 11-12; ECF No. 15-6 at 8-10.) The Abrahams accepted the offer and pre-purchased two, three-year memberships, normally priced at $45, 000.00 each, for a discounted rate of $21, 877.28 per membership. (ECF No. 1, ¶ 13.) As before, Kimmell emailed Mr. Abraham an email containing two hyperlinks, one corresponding to the Membership Extension Invoice for Mr. Abraham and the second corresponding to the Membership Extension Invoice for Mrs. Abraham. (ECF No. 15-6 at 2.) Once clicked, the hyperlinks would have taken the Abrahams to an invoice that was nearly-identical to their original invoice. (ECF Nos. 15-7, 15-8.) As before, in order to pay for their JetSmarter Membership Extensions, the Abrahams were required to click the “toggle button” next to the phrase, “I ACCEPT TERMS AND CONDITIONS OF MEMBERSHIP AGREEMENT.” (ECF No. 15, ¶ 10.)

         After enrolling and extending their memberships, the Abrahams discovered on or about September 5, 2018, that, in addition to their membership fees, there would be a required fee per flight in order to use the flights offered by JetSmarter. (ECF No. 1, ¶ 15.) They also discovered that they were now required to book a minimum of approximately ten seats in order to fly on a large jet, and that the option to book seats on a “light” jet was no longer available. (Id., ¶ 17.) The Abrahams allege that these new conditions and requirements are contrary to the express representations made by JetSmarter and Kimmell. (Id., ¶ 18.)

         On October 16, 2018, the Abrahams filed this action. (ECF No. 1.) On November 28, 2018, the defendants moved to dismiss the complaint for improper venue, alleging that the Abrahams are required to arbitrate their claims in Broward County, Florida before the American Arbitration Association. (ECF No. 12.)

         STANDARD OF REVIEW

         Since the arbitration clause calls for arbitration outside the Eastern District of Wisconsin, a motion to dismiss for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure is the proper vehicle for dismissal of this action. Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 808 (7th Cir. 2011). When ruling on a motion to dismiss under Rule 12(b)(3), “the district court is not ‘obligated to limit its consideration to the pleadings [or to] convert the motion to one for summary judgment' if the parties submit evidence outside the pleadings.” Id. at 809-10 (quoting Cont'l Cas. Co. v. American Nat. Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005)). However, the district court shall assume “the truth of the allegations in the plaintiff's complaint, unless contradicted by the defendant's affidavits.” Deb v. Sirva, Inc., 832 F.3d 800, 809 (7th Cir. 2016) (emphasis in original).

         A party opposing a motion to compel arbitration bears the burden of identifying a triable issue of fact as to the existence of the purported arbitration agreement. Tinder v. Pinkerton Security, 305 F.3d 728, 735 (7th Cir. 2002). “[A] party cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests; the party must identify specific evidence in the record demonstrating a material ...


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