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Whoop, Inc. v. Ascent International Group Co., Ltd

United States District Court, D. Massachusetts

May 10, 2019

Whoop, Inc., Plaintiff,
Ascent International Holdings, Ltd., International Group Co., Ltd; Ascent International Corporation; Ascent Batteries International. Inc. and Alium Batteries, Defendants.


          Leo T. Sorokin United States District Judge

         Plaintiff Whoop, Inc. (“Whoop”) contracted with Defendants Ascent International Group Co., Ltd. (“AI”) and Ascent Batteries International, Inc. (“AB”), collectively “Ascent, ” to manufacture batteries for Whoop's fitness tracking devices. Whoop alleges that some of the batteries overheated, thereby harming its customers and their property. Whoop sued Ascent for breach of contract, products liability, violation of chapter 93A, and indemnification. Doc. No. 1-1 at 12-19. Ascent moved to compel arbitration, asserting that the claims against it fall within the scope of an arbitration provision contained in the parties' contract. Doc. No. 12 at 1-2. Whoop opposed. Doc. No. 15. For the reasons discussed below, Ascent's motion to compel arbitration is DENIED.

         I. FACTS[1]

         Plaintiff Whoop offers fitness tracking products that help “individuals and teams perform at a higher level.” Doc. No. 1-1 ¶ 2. Whoop has sued four related manufacturers and sellers of the batteries installed in these products, [2] claiming certain batteries it purchased from the defendants were defective in various ways. Id. at ¶¶ 2-10. Two defendants, AI and AB, move to compel arbitration of the claims relating to batteries described in a January 12, 2017, purchase order (PAR-70018). Doc. No. 11. They say claims arising from those batteries are subject to mandatory arbitration. Id.

         The parties dispute whether the allegedly defective batteries also came from other purchase orders. However, this dispute is not presently before the Court since Ascent has only moved to compel arbitration of the claims arising from batteries produced under the January 12, 2017, purchase order. The following facts bear mention with respect to that purchase order.

         In or around February 2015, Whoop engaged Ascent to design battery specifications and manufacture two different batteries for its fitness bands-the “Kenmore” and “Ortiz” batteries. Id. ¶ 25. The specifications describe the batteries' technical details, such as performance, safety testing, operating instructions, and warranty period. Doc. No. 17-2 at 11-22. Based on these specifications, Whoop placed various purchase orders for Kenmore and Ortiz batteries between 2015 and 2017. Each of these orders sought small numbers of batteries.

         On January 12, 2017, Whoop emailed purchase order PAR-70018 to Ascent, requesting 7, 300 Kenmore batteries and 5, 200 Ortiz batteries, both at a price of $3.38/unit with net 30[3] payment terms. Doc. No. 13-4 at 2-3. The purchase order (“PO”) is addressed to AB and provides Whoop's shipping address and requested delivery date. Id. at 3. In the description column, the purchase order specifies the type of battery ordered and includes the following instructions:

PO to provide coverage for Ascent to begin work on order immediately Volume pricing should be consistent with quote of 5/19 from Brett Kacura[4]: 5k @ 3.375 USD, 10k @ 3.30 USD Awaiting formal quote per Chas Esposito[5]

Id. In its email accompanying the purchase order, Whoop also instructs Ascent to “use this PO to begin preparation of this material immediately.” Id. at 2. Under “quote number, ” the purchase order references Ascent's “[e]mail of 5/19, ” which discusses volume pricing for large battery orders. See Doc. No. 17-3 at 9. Neither the January 12, 2017, purchase order, Doc. No. 13-4 at 3, nor the May 19 Brett Kacura email quote, id. at 2, discuss any terms or conditions involving arbitration.

         On January 14, 2017, Ascent emailed quote #100183 to Whoop. Doc. No. 26-1 at 2, 4. The email was sent from an AB email address and the quote is on AI's letterhead. The quote states that Ascent would sell 10, 000 Kenmore batteries for $3.38/unit and 10, 000 Ortiz batteries for $3.51/unit with net 10 payment terms. Id. at 4. The quote further recites that “all quotes are subject to Ascent International Group Co., Ltd. standard terms and conditions of sale . . . Please go to the following link for complete list of terms and conditions of sale[6] Id. The terms and conditions linked in quote #100183 include the following relevant provisions:

3. ACCEPTANCE OF BUYER'S ORDER. Seller's terms and conditions herein apply to all Offers made, and all Orders accepted, by Selle [sic] Seller's acceptance of Buyer's Order, and any changes or amendments thereto is strictly limited to and conditioned up on Seller's terms and conditions. Unless otherwise agreed in writing by a duly authorized representative of Seller, Seller objects to and is not bound by terms or conditions that differ from, add to, or modify Seller's terms and conditions. . . . Unless Seller agrees otherwise, Buyer's issuance of an Order in response to Seller's Offer shall conclusively evidence Buyers unconditional acceptance of Seller's terms and conditions irrespective of any different terms and conditions Buyer may offer or include in its Order. . . .
28. DISPUTES AND ARBITRATION. The Parties shall attempt to resolve any dispute, controversy, or claim arising under or relating to Seller's Offer or buyer's Order, or to a material breach, including its interpretation, performance, or termination. If the parties are unable to resolve such dispute, either Party may refer the dispute to arbitration. The arbitration shall be conducted in English and in accordance with the Commercial Rules of the American Arbitration Association, which shall administer the arbitration and act as appointing authority. The arbitration, including the rendering of the decision and/or award, shall take place in Philadelphia, Pennsylvania United States of America, and shall be the exclusive forum for resolving the dispute, controversy, or c[7]

Doc. No. 17-3 at 20, 27.

         On January 18, 2017, Whoop emailed Ascent to inquire whether the prices listed in quote #100183 applied to smaller orders and attached a revised purchase order. Doc. No. 13-5 at 2. The revised purchase order references Ascent's quote #100183 and requests 7, 300 Kenmore for $3.38/unit and 5, 200 Ortiz batteries for $3.51/unit with net 30 payment terms. Id. at 4.

         On February 8, 2017, Whoop emailed to inform Ascent that it had inadvertently switched the requested quantities of the two batteries in its January 18, 2017 revised purchase order. Doc. No. 13-6 at 2. Whoop attached a second revised purchase order requesting 5, 200 Kenmore batteries for $3.38/unit and 7, 300 Ortiz for $3.51/unit with net 30 payment terms. Id. at 9. The February 8, 2017 purchase order is otherwise substantively identical to the January 18, 2017 purchase order.

         Sometime after February 8, 2017 (the record does not reflect the specific date), Ascent sent Whoop sales order #300465 to confirm Whoop's order for 7, 300 Ortiz batteries at a price of $3.51/unit and 5, 200 Kenmore batteries at a price of $3.38/unit, with net 30 payment terms. Doc. No. 14-4 at 2. The price, quantity, and payment terms exactly matched the February 8 purchase order sent by Whoop. As with quote #100183, the order confirmation is on AI's letterhead and includes a link to terms and conditions of sale involving a Philadelphia arbitration clause. Id. Based on the record before the Court, neither party sent any other forms regarding this order of batteries after Ascent's sales order #300465.

         Ascent fulfilled Whoop's order in two shipments on March 25, 2017, and April 8, 2017. Doc. No. 12 at 5. Both shipments were accompanied by invoices (#500614 and #500637) that contain links to terms and conditions involving a Philadelphia arbitration clause. Doc. No. 17-3 at 17 and Doc. No. 14-3 at 2.[8] Whoop accepted the batteries shipped by Ascent.

         Nearly one year later, on February 10, 2018, Whoop notified Ascent of an issue with batteries overheating in Whoop's fitness bands. Doc. No. 1-1 ¶ 32. After additional testing, Whoop began recalling and replacing products with the allegedly defective batteries. Doc. No. 17-1 ¶ 36.

         On January 31, 2019, Whoop filed an eight-count complaint in the Massachusetts Superior Court alleging: breach of contract (Count I), negligence (Count II), strict products liability for defective design and failure to warn (Count III), breach of implied warranties of merchantability and fitness for a particular purpose (Count IV), breach of express warranty (Count V), negligent interference with prospective economic relations (Count VI), unfair and deceptive business practices under Mass. Gen. Laws ch. 93A (Count VII), and implied indemnity (Count VIII). Doc. No. 1-1. Ascent timely removed the case to this Court. Doc. No. 1.

         On February 15, 2019, Ascent[9] moved to compel arbitration in Hong Kong, asserting that all of Whoop's claims are subject to an arbitration provision contained in the parties' contract. Doc. No. 12 at 1. Whoop opposed and asserted that Ascent submitted an incorrect copy of quote #100183 containing a link that was inoperative in January 2017. Doc. No. 15 at 22-23. Ascent conceded this point and submitted a corrected exhibit (discussed above). The correct link, which Ascent confirmed in its reply brief, leads to terms and conditions requiring arbitration in Philadelphia, not Hong Kong. Doc. No. 24 at 1. The Court heard oral argument from the parties on April 12, 2019.

         II. L ...

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