United States District Court, D. South Carolina, Florence Division
Bryan Harwell United States District Judge.
pending before the Court is Defendant's motion to dismiss
and compel arbitration [ECF #4] and Defendant's motion to
dismiss and compel arbitration of second amended complaint
[ECF #10]. Both parties have had the opportunity to
extensively brief the issues raised in the motions to
dismiss, and this Court has thoroughly considered all
pleadings filed in this case.
Background and Procedural History
HSGCHG Investments, LLC ("HSGCHG") is a limited
liability company organized under the laws of Delaware and
doing business in Marion County, South Carolina. [ECF #6, p.
1]. According to Mr. Teja Shariff, Plaintiff's Chief
Financial Officer, HSGCHG holds title to a certain piece of
property where the Swamp Fox Entertainment Complex (the
"Complex") is located. [ECF #14-2, p. 1]. The
Complex is a venue for staging and producing live
entertainment events. [ECF #14-2, p. 1]. Defendant Time
Warner Cable Enterprises, LLC ("Time Warner") is a
corporate entity organized under the laws of the state of
Delaware and doing business in Marion County, South Carolina.
[ECF #6, p. 1].
facts, as alleged in Plaintiff's second amended
complaint, are as follows: on January 9, 2015, Plaintiff and
Defendant entered into a contract, known as the Business
Class Phone and Business Class Trunk Service Agreement (the
"Agreement") wherein Plaintiff agreed to utilize
the services provided by Defendant, including internet
access, voice and data services, and fiber optic cable
service as part of an event, the Swamp Fox Biker Bash, to be
held at the Complex. [ECF #6, pp. 1-2]. The Agreement
incorporates by reference Time Warner's Terms and
Conditions ("Terms and Conditions"), which include,
among other provisions, an arbitration provision in Section
21.0. [ECF #6, p.3, ¶ 12).
alleges that Defendant defaulted on the Agreement by failing
to install fiber optic cable in accordance with the
agreed-upon schedule. [ECF #6, p. 2]. As a result, Plaintiff
was forced to cancel the Swamp Fox Biker Bash, thereby
causing Plaintiff damage and injury, including significant
lost profits. [ECF #6, p. 2]. Thereafter, Plaintiff filed
suit seeking a declaratory judgment regarding the rights and
responsibilities of the parties under S.C. Code Ann. §
15-53-10 et seq. [ECF #6, p. 2]. Specifically,
Plaintiff seeks a declaratory judgment rendering
unenforceable Section 22.0 of the Terms & Conditions
concerning venue and Section 14.0 limiting Defendant's
liability. [ECF #6, p. 4]. Plaintiff acknowledges that the
Terms and Conditions contains an arbitration provision in
Section 21.0, and accordingly, also demand arbitration of its
dispute with Defendant. [ECF #6, p. 3, ¶ 13]. Plaintiff
does not otherwise dispute the validity of the arbitration
about October 29, 2015, Time Warner removed this lawsuit to
this Court from the Marion County Court of Common Pleas
pursuant to 28 U.S.C. § 1332(a). [ECF #1]. On November
5, 2015, Defendant filed a motion to dismiss Plaintiff's
complaint and compel arbitration. [ECF #4]. Thereafter,
Plaintiff twice amended its complaint. [ECF #5; ECF #6].
Defendant then filed a subsequent motion to dismiss the
second amended complaint and compel arbitration. [ECF #10],
which is nearly identical to the original motion to dismiss.
Plaintiff does not dispute that this lawsuit is subject to
arbitration. [ECF #6, p. 3, ¶ 13]. Instead, the parties
disagree on the arbitrability of two specific provisions
within the Terms and Conditions.
files its motion pursuant to 9 U.S.C. § 4, of the
Federal Arbitration Act. The parties are in agreement that
the currently-pending claim is subject to arbitration.
Whether the parties have agreed to arbitrate their disputes
is a jurisdictional question. See Bhd of Ry. & S.S.
Clerks v. Norfolk S. Ry. Co., 143 F.2d 1015, 1017 (4th
Cir. 1944). Here, the issue before this Court is whether
certain specific provisions found in the Terms and
Conditions, a document incorporated into the Agreement, are
enforceable. Defendant argues that pursuant to the Agreement,
the arbitrability of these provisions are questions for the
arbitrator to determine based upon the plain language of the
Agreement. [ECF #10, p. 2]. Plaintiff argues that this Court
must determine whether these provisions are unconscionable,
and therefore, enforceable, prior to subjecting the
substantive claims to arbitration. [ECF #14, p. 2]. Because
the issue before the Court is the jurisdictional question of
arbitrability, the Court ordinarily considers the motion
under a Rule 12 standard. Joyner v. GE Healthcare,
No. 08-2563, 2009 WL 3063040, at *2 (D.S.C. Sept. 18, 2009).
For the purposes of deciding a motion to compel arbitration,
the court may properly consider documents outside the
pleadings. Joyner v. GE Healthcare, No. 08-2563,
2009 WL 3063040, at *2 (D.S.C. Sept. 18, 2009).
Delegation of Arbitrability to Arbitrator
and Defendant agree that the Agreement governing their
dispute incorporated another document entitled Terms and
Conditions, which provides for arbitration of this dispute.
[ECF #6, p. 3; ECF #10, pp. 1-2]. In fact, Plaintiff makes a
demand for arbitration in its second amended complaint
pursuant to Section 21.0 of the Terms and Conditions. [ECF
#6, p. 3]. However, Plaintiff seeks a judicial determination
that certain specific provisions within the Terms and
Conditions, notably the forum selection clause contained
within Section 21.0, Section 22.0 covering venue of the
arbitration, and Section 14.0 limiting Defendant's
liability, are unenforceable prior to submitting the actual
dispute to arbitration. [ECF #6, p. 3]. In so arguing,
Plaintiff argues that these provisions are unconscionable as
a matter of state law. [ECF #6, p. 3]. Interestingly,
Plaintiff relies on New York state law because the Terms and
Conditions provide for New York law to govern all legal
actions brought "under or in connection with the subject
matter of the Master Agreement, " and therefore cite to
New York state law in analyzing its unconscionability claim.
[ECF #14, p. 3].
Terms and Conditions contains the following ...