Pazol v. Tough Mudder Inc.

          ORDER AND MEMORANDUM ON DEFENDANT'S MOTION TO DISMISS AND PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (DOCKET NOS. 18 & 25)

          TIMOTHY S. HILLMAN, DISTRICT JUDGE

         Lisa C. Pazol, Maria A. Newman, Lisa Russ, and Audrey J. Bennet (“Plaintiffs”) bring this action asserting several claims against Tough Mudder Inc. (“Tough Mudder”) resulting from its failure to hold an event in the advertised location and the subsequent mediation of those claims, which resulted in a settlement.

         Tough Mudder now moves to dismiss Plaintiffs' claims for breach of contract (Count I), breach of the covenant of good faith and fair dealing (Count II), unjust enrichment (Count (III), violations of Mass. Gen. Laws ch. 93A (Counts IV and VII), and declaratory judgment (Count VIII). For the reasons stated below, Tough Mudder's motion (Docket No. 18) is granted.

         In addition, Plaintiffs move for summary judgment on breach of the settlement agreement (Count V). For the reasons stated below, Plaintiffs' motion (Docket No. 25) is also granted. As explained below, however, the Court will not rescind the parties' settlement agreement.

         Background

         Plaintiffs registered and paid to participate in Tough Mudder's Boston-area “Mudderella” obstacle course event, scheduled to take place on September 6, 2014 in Haverhill, Massachusetts. Just days before the event, Tough Mudder moved the location to Westbrook, Maine. Plaintiffs were unable to attend, and Tough Mudder refused to refund their registration fees.

         When registering for the Mudderella Boston event on the Tough Mudder website, each of the Plaintiffs agreed to the “Participant Assumption of Risk, Waiver of Liability, and Indemnity Agreement.” (Docket No. 10-3, at 6-12). That agreement contained an agreement to arbitrate claims, reading in relevant part:

Mediation and Arbitration: In the event of a legal issue, I agree to engage in good faith efforts to mediate any dispute that might arise. Any agreement reached will be formalized by a written contractual agreement at that time. Should the issue not be resolved by mediation, I agree that all disputes, controversies, or claims arising out of my participation in the Mudderella event shall be submitted to binding arbitration.

Id. at 9.

         In November 2014, Plaintiffs served their complaint on Tough Mudder. Tough Mudder removed the case to this Court. See 28 U.S.C. § 1446(b). Tough Mudder asserted that removal was proper under the Class Action Fairness Act of 2005 (“CAFA”), which permits federal courts to adjudicate class actions asserting state-law claims. 28 U.S.C. § 1332(d)(2). This Court found jurisdiction proper under CAFA, granted Tough Mudder's motion to compel mediation and arbitration, and denied Plaintiffs' motion to remand. Pazol v. Tough Mudder Inc., 100 F.Supp.3d 74 (D. Mass. 2015). On appeal, the First Circuit reversed and held that this Court did not have jurisdiction because the amount in controversy was insufficient to warrant CAFA jurisdiction, and consequently, reversed this Court's ruling on Plaintiffs' motion to remand. Pazol v. Tough Mudder Inc., 819 F.3d 548 (1st Cir. 2016). The First Circuit did not reach the arbitration issue. Id. at 551.

         In Worcester Superior Court, Tough Mudder again moved to compel arbitration. On January 24, 2017, that court dismissed Plaintiffs' action and compelled individual mediation and arbitration of Plaintiffs' claims. On May 7, 2018, the Massachusetts Appeals Court affirmed. Pazol v. Tough Mudder Inc., 93 Mass.App.Ct. 1109 (2018). The Appeals Court reasoned that “[n]othing in the setting of its execution suggests that the arbitration provision was procedurally unconscionable.” Id. Further, when discussing the scope of the arbitration agreement, the court noted that “[i]n a number of contexts, we have construed the phrase ‘arising out of' and similar phrases . . . in an arbitration clause as constituting ‘broad' language that invokes the FAA's . . . presumption in favor of arbitration” Id. (quoting Warfield v. Beth Israel Deaconess Medical Center, Inc., 454 Mass. 390, 396-397, 910 N.E.2d 317 (2009)). The Supreme Judicial Court subsequently denied Plaintiffs' application for further appellate review. 480 Mass. 1104 (2018).

         While Plaintiffs' application for further appellate review was pending, the parties agreed to mediate their claims. That mediation resulted in a settlement agreement mandating that Tough Mudder pay Plaintiffs $225, 000 on or before November 26, 2018. (Docket No. 10-3, at 16-27). Tough Mudder, however, failed to make the payment when it became due.

         Thereafter, Plaintiffs filed an emergency motion in the Worcester Superior Court for a temporary restraining order and preliminary injunction pursuant to Mass. R. Civ. P. 60(b)(6) seeking to enjoin Tough Mudder from dissipating its assets or from forming a new company. On January 7, 2019, Plaintiffs moved to amend their Complaint to include several new counts related to Tough Mudder's breach of the settlement agreement. On January 11, 2019, that motion was allowed by a Superior Court Judge.

         On January 10, 2019, Tough Mudder removed to this Court on the grounds of diversity jurisdiction. See 28 U.S.C. §§ 1332, 1441. On February 1, 2019, Tough Mudder filed ...