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McNamara v. S.I. Logistics, Inc.

United States District Court, D. Massachusetts

December 13, 2018

TIM McNAMARA, Plaintiff,
v.
S.I. LOGISTICS, INC. F/K/A GREEN SMOKE, INC. and NU MARK LLC, Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO COMPEL ARBITRATION AND TO DISMISS

          ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE.

         Plaintiff Tim McNamara filed this action against Defendants Green Smoke, Inc. (“Green Smoke”), Nu Mark, LLC, and Altria Group, Inc. (collectively, “Defendants”) alleging claims for breach of contract, quantum meruit, conversion, breach of the covenant of good faith and fair dealing, promissory estoppel, civil conspiracy, fraud, unjust enrichment, and interference with advantageous business relations. [ECF No. 1-3 (hereinafter, “Complaint” or “Compl.”)]. Currently before the Court is Defendants' motion to compel arbitration and dismiss the Complaint. [ECF No. 22]. For the reasons set forth below, the motion is DENIED.

         I. BACKGROUND

         As Defendants' motion to compel arbitration was made in connection with a motion to dismiss, the Court “draw[s] the relevant facts from the operative complaint and the documents submitted to the district court in support of the motion to compel arbitration.” Cullinane v. Uber Techs., Inc., 893 F.3d 53, 55 (1st Cir. 2018) (citation omitted). The facts outlined herein are undisputed except where noted.

         During the time period relevant to the Complaint, Green Smoke was in the business of selling electronic cigarettes online. Compl. ¶ 6. Green Smoke hired third-party contractor “Affiliates” to market Green Smoke's products on independent websites and paid them commissions on the sales that they generated. Id. ¶¶ 7, 9. Green Smoke was eventually acquired by Defendant Nu Mark, LLC, which is a subsidiary of Defendant Altria Group, Inc. Id. ¶¶ 4-5, 25.[1]

         Plaintiff became an Affiliate of Green Smoke some time between October 2009 and February 2010. Id. ¶ 8; [ECF No. 24 ¶ 4].[2] Green Smoke Affiliates had access, through user accounts, to an online portal called “Back Office, ” which displayed announcements, marketing materials, and administrative and customer information. [ECF No. 28 at 4]. In fall 2011, Green Smoke released a New Affiliate Terms of Services Agreement (the “2011 Agreement”) through the Back Office portal. [ECF No. 24 ¶ 7; ECF No. 24-1]. The terms of the 2011 Agreement were electronically displayed in a text box that contained a scroll feature. [ECF No. 24 ¶ 8]. The 2011 Agreement begins:

Please review the following terms carefully. If you do not agree to these terms, you have no right from Green Smoke® to obtain information from or otherwise use this Web site. . . .
BY CHECKING THE BOX STATING THAT YOU HAVE READ AND AGREE TO THE TERMS AND CONDITIONS OF THIS AFFILIATE PROGRAM AGREEMENT AS PART OF YOUR REGISTRATION WITH THE COMPANY, YOU AGREE AND CONSENT TO BE CONTRACTUALLY BOUND BY THE TERMS AND CONDITIONS OF THIS AFFILIATE PROGRAM AGREEMENT FOR AS LONG AS YOU ARE A PART OF THE COMPANY'S AFFILIATE PROGRAM.

[ECF No. 24-1 at 2].

         Three provisions of the 2011 Agreement that are relevant to the Complaint include a termination provision, an arbitration provision, and an integration provision. First, the termination provision set forth in Section 2.5 states:

You warrant and agree that You understand that this Affiliate Program Agreement is an at-will agreement, meaning the Company can terminate this Agreement for any or no reason by serving You with a thirty (30) day notice of termination in accordance with Section 19 of this Affiliate Program Agreement. Such termination at-will by the Company shall not entitle You to any type of payment or compensation whatsoever.

[ECF No. 24-1 at 5]. In addition, “SECTION 23 - ARBITRATION” provides:

In the event any controversy or claim arises out of this Agreement and cannot be settled by the Parties, such dispute shall be resolved by arbitration only in accordance with the then current rules of the American Arbitration Association or the International Chamber of Commerce, in Miami, Florida, and ...

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