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Cellular Sales of Knoxville, Inc. v. Chapman

United States District Court, M.D. North Carolina

January 2, 2020

CELLULAR SALES OF KNOXVILLE, INC., a corporation; CELLULAR SALES OF NORTH CAROLINA, LLC, a limited liability company; CELLULAR SALES OF PENNSYLVANIA, LLC, a limited liability company, Petitioners,
DAVID CHAPMAN, Respondent.



         Petitioners Cellular Sales of Knoxville, Inc. (“Cellular Sales TN”), Cellular Sales of North Carolina, LLC (“Cellular Sales NC”), and Cellular Sales of Pennsylvania, LLC (“Cellular Sales PA”) (collectively, “Cellular Sales”) filed a petition against Respondent David Chapman on July 29, 2019, seeking an order to compel arbitration pursuant to Section 4 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 4. (Doc. 1.)[1] Before the court is Chapman's motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(4), and 12(b)(5), or, in the alternative, to stay the proceedings pending a decision in a related action before a district court in the Eastern District of Pennsylvania. (Doc. 11.)[2] Recognizing an issue with proper service, Cellular Sales filed a motion for leave to re-serve Chapman. (Doc. 13.) The motions are fully briefed and ready for decision. For the reasons set forth below, Cellular Sales's motion for leave to serve Chapman with sufficient process will be granted and Chapman's motion to dismiss or stay will be denied.

         I. BACKGROUND

         A. Facts

         Cellular Sales TN is a Tennessee corporation and the parent company of Cellular Sales NC, a North Carolina limited liability company, and Cellular Sales PA, a Pennsylvania limited liability company. (Doc. 1 ¶¶ 1-3.) Cellular Sales NC and Cellular Sales PA are authorized dealers of Verizon Wireless products and services and market and sell cellular products and wireless services in North Carolina and Pennsylvania, respectively. (Id. ¶ 8.) Additionally, both “employ sales representatives to assist with marketing and selling the [Verizon] products and services.” (Id.)

         Chapman, a citizen of North Carolina, became employed by Cellular Sales NC in March of 2017. (Id. ¶¶ 4, 9.) Upon his employment, Chapman executed a Dealer Compensation Agreement which set forth the terms of his compensation and the formula for calculating commissions. (Id. ¶ 9.) The agreement (Doc. 1-2) also contained a binding arbitration clause under which Chapman agreed to submit disputes to arbitration on an individual basis. (Doc. 1 ¶ 9.) On December 26, 2017, Chapman executed a new Dealer Compensation Agreement (“DCA”) (Doc. 1-1) which “superseded and replaced” the original Dealer Compensation Agreement executed earlier that year. (Doc. 1 ¶ 10.) The DCA contains an arbitration clause, which states in relevant part:

All Disputes Must Be Arbitrated. Any controversy or dispute (whether pre-existing, present, or future) between Dealer and any one or more Cellular Sales Parties arising from or in any way related to Dealer's work with any one or more Cellular Sales Parties or the termination thereof, including, but not limited to, (i) any dispute about the interpretation, validity, construction, scope, or enforceability of this Agreement, . . . (iii) any claim for compensation or benefits, including any claim under the Fair Labor Standards Act, or any other federal or state statute or regulation related to payment of wages, . . . (vi) any other claim of any nature, whether based upon contract, tort, intentional or otherwise, constitution, statute, regulation, common law, or equity, arising from, or in any way related to, Dealer's work with any one or more Cellular Sales Parties, the termination thereof, or any other matter incident thereto, must be resolved exclusively by final and binding arbitration under the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”) then applicable to the dispute except that the AAA's Supplemental Rules for Class and/or Collective Action Arbitration will not apply because the parties agree not to arbitrate class or collective action claims . . . . Dealer is encouraged to review these rules prior to executing this Agreement.

(Doc. 1-1 at 8-9.) The DCA defines “Dealer” as the “undersigned employee, ” David Chapman, and “Cellular Sales Parties” as Cellular Sales and all of its affiliates, including Cellular Sales TN and all of its subsidiaries. (Id. at 2, 11.) The DCA also contains a class and collective action waiver, which states in relevant part:

Waiver of Class and Collective Standing or Action. Dealer agrees that, in the presentation and resolution of any dispute, controversy, or claim between Dealer and any one or more Cellular Sales Parties, Dealer expressly waives the right to participate in any class or collective action and, rather, expressly agrees that Dealer will resolve any dispute or claim in a single action between only Dealer and the applicable Cellular Sales Parties. Accordingly, Dealer shall neither serve as a class or collective action representative nor shall Dealer join, seek, or agree to join, actively or passively, or participate in any capacity in any class or collective action, no matter how small or minor, of a claimants' or plaintiffs' group, against any one or more Cellular Sales Parties.

(Id. at 9.) The parties further agreed that the DCA would be governed by the FAA, that the laws of the state where the Dealer provided services for Cellular Sales would apply, and that arbitration would occur in the county or parish where the Dealer did work for Cellular Sales. (Id.)

         The present dispute arose on June 18, 2019, when Chapman allegedly disregarded his arbitration agreement and filed a lawsuit against Cellular Sales in the United States District Court for the Eastern District of Pennsylvania, claiming that Cellular Sales violated the Fair Labor Standards Act and the North Carolina Wage and Hour Act. (Doc. 1 ¶¶ 14-15.) The lawsuit seeks the certification of a collective action and a class action. (Id. ¶ 15.)

         B. Procedural History

         Cellular Sales filed the present action on July 29, 2019. (Doc. 1.) A summons naming Chapman was issued on August 6, 2019 (Doc. 5), and Cellular Sales filed an affidavit of service as to Chapman on August 7, 2019 (Doc. 7). Although the affidavit of service states that this action was commenced on July 27, 2019 (Doc. 7 ¶ 4), it was in fact commenced on July 29, 2019. Further, the affidavit of service declares that a copy of the complaint initiating this action was sent along with the summons issued to Chapman (Id. ¶ 6), but a copy of the petition was not sent (Doc. 11 at 1; Doc. 16 at 5).

         Chapman filed the present motion to dismiss, or alternatively to stay, on August 28, 2019. (Doc. 11.) Cellular Sales filed its motion for leave to serve Chapman with ...

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