Case: 1:19-cv-01610 Document #: 208 Filed: 01/05/21 Page 1 of 18 PageID #:2909
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`CHRISTOPHER MOEHRL, MICHAEL
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`COLE, STEVE DARNELL, VALERIE
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`NAGER, JACK RAMEY, DANIEL
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`UMPA, and JANE RUH, on behalf of
`themselves and all others similarly situated, )
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`Plaintiffs,
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`v.
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`THE NATIONAL ASSOCIATION OF
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`REALTORS, REALOGY HOLDINGS
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`CORP., HOMESERVICES OF AMERICA, )
`INC., BHH AFFILIATES, LLC, HSF
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`AFFILIATES, LLC, THE LONG &
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`FOSTER COMPANIES, INC.,
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`RE/MAX LLC, and KELLER
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`WILLIAMS REALTY, INC.,
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`Defendants.
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`Case No: 1:19-cv-01610
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`Judge Andrea Wood
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`ORAL ARGUMENT REQUESTED
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`PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO THE
`HOMESERVICES DEFENDANTS’ MOTION TO STRIKE CERTAIN CLASS
`ALLEGATIONS
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`Case: 1:19-cv-01610 Document #: 208 Filed: 01/05/21 Page 2 of 18 PageID #:2910
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`INTRODUCTION
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`Seeking to avoid their obligation to produce relevant discovery within their control,
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`defendants HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC, and the
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`Long & Foster Companies, Inc. (“HSA” or the “HSA Defendants”) bring a premature and fruitless
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`motion to strike certain class allegations. HSA argues that some (though not all, or even most)
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`unnamed class members who contracted with non-party HSA affiliates may be required to arbitrate
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`their claims, and that the named plaintiffs lack “standing” to oppose a hypothetical and as-yet-
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`unfiled motion to compel arbitration. HSA’s arguments are meritless.
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`Motions to strike class allegations on the pleadings are disfavored, and HSA provides no
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`basis for making an exception here. Setting that aside, HSA’s argument rests on a string of faulty
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`logic. The motion assumes that the arbitration clauses in question can be invoked by non-signatory
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`HSA Defendants. But that proposition is contrary to law, and was recently rejected by the Sitzer
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`Court—a fact HSA neglects to mention. See Sitzer v. NAR, No. 4:19-cv-00332, 2020 WL 2787725
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`(W.D. Mo. Apr. 10, 2020). It is also inconsistent with authority from around the country rejecting
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`non-signatories’ attempts to use equitable estoppel to enforce arbitration agreements under similar
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`circumstances. See, e.g., Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1127 (9th Cir. 2013).
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`HSA nonetheless makes the puzzling argument that plaintiffs are constitutionally barred from
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`objecting to its position that some class members’ claims are subject to arbitration—regardless of
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`how frivolous that position may be. This argument is not supported by Seventh Circuit authority.
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`For good reason—how could it be that, merely by invoking the word “arbitration,” HSA is entitled
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`to deprive absent class members of their right to representation in this action without affording the
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`named plaintiffs an opportunity to dispute HSA’s arguments? The few decisions HSA does cite
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`1
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`are particularly inapplicable here, where the named plaintiffs plainly have a cognizable interest in
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`seeking full discovery on the class’s behalf, including from HSA and its subsidiaries.
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`But the Court need not reach these issues, because even if some limited number of class
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`members were ultimately compelled to arbitrate their antitrust claims against HSA (one of five
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`Defendant groups), the class’s composition would remain unchanged—as would the discovery
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`HSA is obliged to provide. The antitrust laws make co-conspirators jointly and severally liable.
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`As a result, class members who purchased services from HSA affiliates may pursue in litigation
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`claims against the remaining defendants. And the substantial majority of class members who
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`purchased services from defendants aside from HSA may pursue in litigation claims against HSA
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`even with respect to those affiliates that had arbitration agreements with their customers.
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`Accordingly, even if some future arbitration motion by HSA were successful, no sellers would be
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`wholly excluded from the class, nor would HSA’s or its subsidiaries’ role in the overall conspiracy
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`change. It would therefore be inappropriate to require modifying the class definition or to limit
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`discovery.
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`BACKGROUND
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`Plaintiffs filed their Consolidated Amended Complaint (“CAC”) on June 14, 2019. Dkt.
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`84. The CAC alleges that HSA, the other Corporate Defendants, and NAR conspired in violation
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`of the federal antitrust laws, and that the Corporate Defendants have played an active role in the
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`conspiracy, including by requiring their franchisees and subsidiaries to join and implement the
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`anticompetitive agreement. CAC ¶ 6. On October 2, 2020, the Court denied defendants’ motions
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`to dismiss. Dkt. 184. In doing so, the Court observed that “[p]erhaps most importantly, Plaintiffs
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`point to the allegation that each of the Corporate Defendants requires its franchisees, affiliates, and
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`realtors to comply with the NAR’s allegedly anticompetitive restraints to secure the benefits of
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`2
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`their brands, infrastructure and resources.” Id. at 9; see also id. at 14 (“Plaintiffs have sufficiently
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`alleged that the Corporate Defendants have control over their franchisees and realtors insofar as
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`the Corporate Defendants require them to join the NAR and local realtor associations, the entities
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`responsible for implementing and enforcing the alleged anticompetitive restraints here.”).
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`Discovery into HSA’s relationships with its subsidiaries and franchisees, and discovery from the
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`subsidiaries themselves, is therefore an important part of plaintiffs’ case.
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`Separately, in Sitzer, the court denied HSA’s motion to compel arbitration, strike class
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`allegations, and stay proceedings with respect to the HSA Defendants. The Sitzer Court rejected
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`HSA’s argument that incorporation of the AAA Rules was clear and unmistakable evidence of
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`intent to delegate arbitrability disputes with a non-party to the relevant contract, and held that HSA
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`as a non-signatory to the listing agreements could not enforce other entities’ arbitration clauses.
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`Sitzer, 2020 WL 2787725, at *4-7.
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`HSA now moves to strike class allegations relating to certain unnamed class members who
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`may have signed listing agreements with one of eleven HomeServices subsidiaries that contain an
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`arbitration clause. No HSA Defendant is a signatory to the listing agreements that HSA attaches
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`to its motion. In addition, the arbitration clauses at issue are limited by their language to
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`signatories—for example, they apply only to “claims, disputes or controversies between Seller and
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`Broker/Licensee” or “[a]ny controversy or claim between the parties to this Exclusive Right to
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`Sell Listing Contract.” Fox & Roach Decl., Ex. A, at 4-5; Edina Realty Decl., Ex. A, at 4 (emphasis
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`added). Nor does HSA provide evidence as to how many class members are subject to such
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`provisions, though it acknowledges that many sellers who contracted with its subsidiaries are not.
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`HSA claims that only two subsidiaries have used arbitration agreements for the entire class period,
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`and that most subsidiaries did not include arbitration provisions until 2018 or 2019. Nevertheless,
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`3
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`HSA argues that the Court should strike class allegations and assent to HSA’s refusal to provide
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`discovery from six subsidiaries (plus two subsidiaries’ Pennsylvania and Minnesota operations)
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`based on these arbitration agreements. See Ex. A, at 1-3.
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`No other defendant joined in HSA’s motion or otherwise moved to strike class allegations.
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`I.
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`HSA’s Motion is Premature
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`ARGUMENT
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`HSA styles its motion as one to “strike class allegations,” arguing that an unspecified
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`amendment to the class definition is required to exclude an unspecified number—at one point,
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`“tens of thousands,” at another point, just “thousands”—of potential class members. HSA Br. 1,
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`6. The motion, which rests on the purported inadequacy of the named plaintiffs, is premature.1
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`Courts in this District (and around the country) routinely reject motions to strike unnamed
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`class members filed before class certification.2 This is true even when a defendant challenges
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`inclusion of putative class members who may have signed arbitration agreements or litigation
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`waivers. See Delgado, 2017 WL 9939630, at *1 (declining to strike class allegations based on
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`arbitration agreements because of “[t]he numerous legal and factual issues that would need to be
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`resolved before enforcing any arbitration agreement” to which defendant was not a signatory);
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`1 While HSA’s motion to strike is premature, HSA is dilatory to the extent it seeks to delay
`discovery. HSA waited more than 19 months following the filing of plaintiffs’ original complaint
`to file this motion, including during substantial briefing on the motions to dismiss. HSA provides
`no explanation for its delay or its failure to raise this issue with the Court in advance of or during
`the November 2020 scheduling conference that set the discovery deadlines HSA now tries to avoid.
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`2 See, e.g., Delgado v. I.C. Systems, Inc., 17-cv-1366, 2017 WL 9939630, at *1 (N.D. Ill. May 18,
`2017); Dietrich v. C.H. Robinson Worldwide, Inc., 18-cv-4871, 2018 WL 6399199, at *1 (N.D.
`Ill. Dec. 6, 2018); Buonomo v. Optimum Outcomes, Inc., 301 F.R.D. 292, 299 (N.D. Ill. 2014);
`Figueroa v. Kronos Inc., 454 F. Supp. 3d 772, 790-91 (N.D. Ill. 2020); Boatwright v. Walgreen
`Co., 10-cv-3902, 2011 WL 843898, at *2-3 (N.D. Ill. Mar. 4, 2011); Murdock-Alexander v.
`Tempsnow Emp., 16-cv-5182, 2016 WL 6833961, at *3-4 (N.D. Ill. Nov. 21, 2016); E&G, Inc. v.
`Am. Hotel Register Co., 17-cv-1011, 2018 WL 1334934, at *2 (N.D. Ill. Mar. 15, 2018); Mauer v.
`Am. Intercontinental Univ., 16-cv-1473, 2016 WL 4698665, at *4 (N.D. Ill. Sept. 8, 2016).
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`4
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`Figueroa, 454 F. Supp. 3d at 790; Clark v. Pizza Baker, Inc., 18-cv-157, 2019 WL 4601930, at *7
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`(S.D. Ohio Sept. 23, 2019); Holt v. Waffle House, Inc., 06-cv-0002, 2006 WL 8437901, at *1-2
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`(S.D. Ala. Dec. 4, 2006) (“[T]here is persuasive case authority that strongly suggests that
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`consideration of arbitration agreements at the class certification stage is improper because such
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`challenges go to the merits of the action.”).
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`HSA’s motion is no exception. HSA itself appears to be uncertain as to how many class
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`members are purportedly subject to arbitration agreements. It acknowledges that many of its
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`subsidiaries used arbitration agreements for only limited time periods, or limited geographic
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`regions. The scope of claims and class members that are at stake apparently depends on the
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`outcome of hypothetical motions that may or may not be filed at some future date. And there has
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`been no discovery on the scope of HSA’s untested claims concerning which class members are
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`subject to arbitration agreements.
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`The cases on which HSA relies further illustrate why its motion fails. See HSA Br. 6-10.
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`In Santangelo, the principal case HSA cites, the parties did not dispute “that only a small
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`percentage of Santangelo’s putative class members opted out of Comcast’s arbitration provision,”
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`and therefore it appeared unlikely the case could proceed as a class action at all. Santangelo v.
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`Comcast Corp., 15-cv-0293, 2017 WL 6039903, at *3 (N.D. Ill. Dec. 6, 2017). The court noted
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`that “motions to strike class allegations have been disfavored,” but concluded an exception was
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`warranted because striking the vast majority of class members would “significantly impact the
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`scope of the remaining discovery.” Id. Notably, contrary to HSA’s standing argument, the court
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`still considered the enforceability of the arbitration clause. Id. at *4.
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`The class’s composition and claims here differentiate this case from Santangelo. HSA does
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`not dispute that only a minority of class members are signatories to the arbitration provisions.
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`Many HSA sellers did not sign arbitration agreements with subsidiaries; many more were
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`customers of HSA’s franchisees, not subsidiaries. And, as discussed below, it would make little
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`sense to strike even the minority of class members whom HSA asserts must arbitrate their claims
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`against HSA because those class members continue to have claims against every other defendant
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`that they may pursue in litigation. These facts distinguish this case from those like Santangelo
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`where courts have struck class allegations because arbitration agreements cover all or a substantial
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`portion of the potential class.3 Cf. Wright & Miller, 7B Fed. Prac. & Proc. Civ. § 1795 (3d ed.)
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`(“The most common order given under Rule 23(d)(4) is one eliminating all allegations as to class
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`representation because the court has decided against adjudicating the dispute as a class action.”).
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`HSA’s other decisions are similarly distinguishable. In Buonomo, the court struck only the
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`portion of the class definition that was facially overbroad, and refused to strike the rest of the class
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`allegations because the defendant’s arguments were premature before certification. 301 F.R.D. at
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`297-99. Avilez addressed adequacy after a class had been certified, and where plaintiff “did not
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`dispute that those who signed [class-action] waivers have potential defenses that Avilez would be
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`unable to argue on their behalf.” Avilez v. Pinkerton Gov’t Servs., Inc., 596 F. App’x 579, 579 (9th
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`Cir. 2015).4 Not a single one of HSA’s authorities addresses a pre-certification motion to strike a
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`3 See, e.g., Cholly v. Uptain Grp., Inc., 15-cv-5030, 2017 WL 449176, at *4 (N.D. Ill. Feb. 1, 2017)
`(holding the “case must proceed on an individual basis only”); Hill v. Wells Fargo Bank, N.A., 946
`F. Supp. 2d 817, 833 (N.D. Ill. 2013) (similar); Wright v. Family Dollar, 10-cv-4410, 2010 WL
`4962838, at *3 (N.D. Ill. Nov. 30, 2010) (similar); Tan v. Grubhub, Inc., 15-cv-5128, 2016 WL
`4721439, at *1 (N.D. Cal. July 19, 2016) (denying certification where plaintiff was one of only
`two potential class members who had opted out of arbitration and class waiver); Zieger v. Advance
`Am., 13-cv-1614, 2014 WL 7388365, at *7 (D. Del. Dec. 29, 2014) (similar); King v. Capital One
`Bank (USA), N.A., 11-cv-68, 2012 WL 5570624, at *14 (W.D. Va. Nov. 15, 2012) (striking class
`allegations where plaintiff was uniquely situated and there was no class she could represent).
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`4 See also Hobson v. Pizza Hut of S. Wisc., Inc., 17-cv-947, 2018 WL 4781147, at *3 (W.D. Wis.
`Oct. 3, 2018) (plaintiffs themselves agreed to amend class definition to exclude arbitrating
`members); In re H&R Block IRS Form 8863 Litig., 13-md-02474, 2015 WL 1334628, at *2 (W.D.
`Mo. Jan. 7, 2015) (striking class allegations related to named plaintiffs who had already been
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`portion of a class in the absence of any ruling on arbitration, much less in a multi-defendant
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`conspiracy case, where the class members who are potentially subject to arbitration continue to
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`have litigable claims against the remaining defendants.
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`Accordingly, the Court should follow the substantial weight of authority in this District
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`and reject HSA’s attempt to litigate the adequacy of plaintiffs’ representation at this early stage.
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`II.
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`The Subsidiary Arbitration Clauses Do Not Affect the Class’s Composition
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`HSA’s motion to strike should also be denied because the arbitration provisions at issue
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`are irrelevant to both class membership and defendants’ liability and, therefore, to the scope of
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`discovery. Even if HSA could enforce these provisions, the impact would be limited to arbitrating
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`class members’ ability to assert claims against HSA. These provisions would not affect either (1)
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`arbitrating HSA class members’ claims against the other defendants or (2) other class members’
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`claims against HSA. Accordingly, all class members would continue to have an interest in
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`obtaining discovery from HSA to support their claims.
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`Under “the rule of joint and several liability . . . each member of a conspiracy is liable for
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`all damages caused by the conspiracy’s entire output.” Paper Sys. Inc. v. Nippon Paper Indus. Co.,
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`281 F.3d 629, 632 (7th Cir. 2002). Plaintiffs allege that each HSA Defendant is a co-conspirator
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`in the anticompetitive scheme, and that the HSA Defendants facilitate and perpetrate the
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`conspiracy. CAC ¶¶ 102-103. Even if every class member who sold a home with a HomeServices
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`affiliate listing agreement was required to arbitrate her claims against HSA, HSA would be jointly
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`and severally liable for its role in the conspiracy as to claims brought by the non-HSA home sellers
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`in the class. And the HSA class members can pursue their claims against the non-HSA defendants,
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`ordered to arbitrate); In re Online Travel Co., 953 F. Supp. 2d 713, 725-26 (N.D. Tex. 2013)
`(striking class allegations for unnamed class members with arbitration agreements after granting
`motion to compel arbitration).
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`who are also jointly and severally liable. See, e.g., In re Wholesale Grocery Prods. Antitrust Litig.,
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`707 F.3d 917, 924 (8th Cir. 2013) (non-signatory co-conspirator could not enforce arbitration
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`clause); In re Humana Managed Care Litig., 285 F.3d 971, 975 (11th Cir. 2002) (similar), rev’d
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`in part on other grounds sub nom. PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (2003); In
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`re TFT-LCD (Flat Panel) Antitrust Litig., No. 13-cv-3349, 2014 WL 1395733, at *3 (N.D. Cal.
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`Apr. 10, 2014) (denying motion to compel arbitration as to claims for co-conspirator or joint and
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`several liability). As the court found in Nitsch v. Dreamworks Animation SKG Inc.:
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`[J]oint and several liability defeats Defendants’ argument that release agreements
`will significantly complicate resolution of the major issues of liability in this case.
`In contrast to a single-defendant case, joint and several liability among Defendants
`here means that a class member who has signed a release against one Defendant is
`not precluded from pursuing this action against the other Defendants. As a result,
`the existence of releases appears to relate primarily to allocation of liability among
`Defendants, as opposed to liability of the Defendants to the class. Similarly,
`arbitration agreements are unlikely to preclude class members from proceeding
`with their claims against other Defendants in the instant case.
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`315 F.R.D. 270, 314 (N.D. Cal. 2016) (citation omitted).
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`This is doubly true here, where each Corporate Defendant represents both home buyers
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`and home sellers. HSA asserts only that the arbitration agreements apply to sellers who signed
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`listing agreements with certain subsidiaries. Those subsidiaries will have represented home buyers
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`in other transactions where the seller was represented by another defendant. Those non-HSA
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`sellers have claims against HSA for its subsidiaries’ role on the buyer-broker side of the
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`conspiracy. CAC ¶ 45. Similarly, the HSA sellers can assert non-arbitrable claims against the other
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`defendants, including those who represented the home buyers in their transactions.
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`This means that the arbitration agreements are irrelevant. They exclude no class member
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`from this case. And it means that HSA’s attempt to limit discovery based on the agreements is a
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`non sequitur. HSA does not contest that its subsidiaries’ documents are within its control—it has
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`already agreed to produce discovery from “non-arbitrating” subsidiaries, and it represented to the
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`Court that it needed nearly a year to produce documents and data because of the difficulty in
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`collecting discovery from HSA’s many subsidiaries doing business in the Covered MLSs. See Dkt.
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`No. 191, at 10-11. All class members are entitled to seek discovery into the ways HSA, and the
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`other defendants, participated in and facilitated the conspiracy. This includes discovery from
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`HSA’s subsidiaries and affiliates, which is indisputably relevant to the parties’ claims and
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`defenses. See Fed. R. Civ. P. 26(b)(1). Whether an HSA affiliate includes an arbitration provision
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`in its listing agreements has no import on whether discovery from that affiliate will bear on
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`plaintiffs’ proofs in this case as to the overall conspiracy.
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`III. HSA Cannot Enforce Arbitration Provisions That It Did Not Sign
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`“[T]he strong public policy in favor of arbitration does not extend to those who are not
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`parties to an arbitration agreement.” Kramer, 705 F.3d at 1126 (internal citation omitted)). As HSA
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`acknowledged in Sitzer, “neither the named plaintiffs nor any purported class member has any
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`contract or direct relationship with HomeServices relevant to the claims asserted in this case.”
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`Sitzer v. NAR, No. 4:19-cv-00332-SRB, Dkt. 218, at 7 (W.D. Mo. Feb. 28, 2020). If the Court
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`reaches the question whether certain unnamed class members who retained non-party HSA
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`affiliates are nonetheless required to arbitrate their claims against HSA, the Court should hold as
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`Judge Bough did in Sitzer that: (i) the arbitration clauses at issue do not delegate threshold
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`questions about non-signatories to the arbitrator, and (ii) as a non-signatory, HSA cannot enforce
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`the arbitration provisions under equitable estoppel or any other doctrine.
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`On the first issue (delegation), “[c]ourts should not assume that the parties agreed to
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`arbitrate arbitrability unless there is ‘clear and unmistakable’ evidence that they did so.” First
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`Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (brackets omitted). HSA fails to
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`proffer “clear and unmistakable” evidence that any class member agreed to delegate to an arbitrator
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`the resolution of threshold arbitrability disputes involving non-signatories to the arbitration
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`provisions it cites. HSA Br. 11-12. To the contrary, many of the arbitration provisions that HSA
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`attaches to its motion expressly provide that even arbitrability disputes between signatories must
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`be resolved by this Court. See, e.g., Long & Foster Decl., Ex. B, at 1 (providing that a court, and
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`not an arbitrator, must decide “any dispute about the validity, enforceability, coverage, or scope”
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`arbitration “policies and procedures”); Fox & Roach Decl., Ex. A, at 5 (same).
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`Other provisions HSA cites expressly limit any delegation to “the parties” of those
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`contracts. See infra, at 10-11. Because HSA is not a signatory or “party” to the arbitration
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`provisions it cites, those provisions do not delegate gateway arbitrability disputes between class
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`members and HSA.5 For example, in Kramer, the Ninth Circuit held that arbitration agreements
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`between the plaintiffs and non-defendant Toyota dealerships, which included delegation language,
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`did not reflect clear and unmistakable evidence that plaintiffs agreed to arbitrate arbitrability
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`disputes with the defendant Toyota, a non-signatory. The court explained, “[w]hile Plaintiffs may
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`have agreed to arbitrate arbitrability in a dispute with the Dealerships, the terms of the arbitration
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`clauses are expressly limited to Plaintiffs and the Dealerships.” 705 F.3d at 1127; see also In re
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`Dealer Mgmt. Sys. Antitrust Litig., 362 F. Supp. 3d 510, 526 (N.D. Ill. 2019); Sitzer, 2020 WL
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`2787725, at *5-6.
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`On substantive arbitrability, HSA cannot enforce the arbitration provisions because they
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`are limited to “claims, disputes or controversies between” the parties or signatories to those
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`provisions, which HSA concedes it is not. See, e.g., Fox & Roach Decl., Ex. A, at 4-5 (arbitration
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`limited to “claims, disputed or controversies between Seller and Broker/Licensee”—where the
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`5 HSA’s argument that reference to the AAA rules evinces “clear and unmistakable” intent to
`delegate arbitrability is irrelevant because HSA is a non-signatory that falls outside of the
`delegation clause. See, e.g., Rep. of Iraq v. ABB AG, 769 F. Supp. 2d 605, 610-11 (S.D.N.Y. 2011)
`(“[S]imply because a party has agreed to arbitrate questions of arbitrability with its contractual
`counterpart ‘does not mean that it must arbitrate with any non-signatory’ to the contract.”).
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`Broker/Licensee is the non-defendant subsidiary, not one of the HSA Defendants); Long & Foster
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`Decl., Ex. B, at 1 (arbitrable claims are limited to controversies between “the Parties”); Ebby Decl.,
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`Ex. A, at 6 (limiting arbitration to “any dispute or claim between the parties to this Agreement”);
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`Edina Realty Decl., Ex. A, at 4 (limiting arbitration to “Any controversy or claim between the
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`parties to this Exclusive Right to Sell Listing Contract”). Here, “the fact that [each] arbitration
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`clause expressly limits its scope to disputes [between parties named in the agreements] suggests
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`that the clause was not intended to cover disputes against other third parties”—such as HSA. In re
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`Liberty Refund, 2014 WL 3639189, at *5 (N.D. Ill. July 23, 2014).6
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`HSA nonetheless seeks to evade this plain language by citing the equitable estoppel
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`doctrine. Courts look to “traditional principles of state law” to determine whether an arbitration
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`provision may “be enforced by or against nonparties to the contract.” Arthur Andersen LLP v.
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`Carlisle, 556 U.S. 624, 631 (2009).7 Many states narrowly limit the equitable estoppel doctrine’s
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`application to cases where a non-signatory proffers specific facts showing a plaintiff took actions
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`to induce the non-signatory’s detrimental and reasonable reliance on the arbitration provision. See,
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`e.g., Scheurer v. Fromm Family Foods LLC, 863 F.3d 748, 753 (7th Cir. 2017) (Wisconsin law
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`requires detrimental reliance); In re Dealer Mgmt. Sys. Antitrust Litig., 362 F. Supp. 3d 510, 528
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`6 See also Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845 F.3d 1351, 1356-
`57 (11th Cir. 2017) (declining to compel arbitration where the agreement was limited to “disputes
`arising between the[ parties]” because “the doctrine of equitable estoppel can only cover so much”
`and “does not provide a non-signatory with a scalpel to re-sculpt what appears on the face of a
`contract”); Subaru Distrib. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 125 (2d Cir. 2005).
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`7 Based on pre-Arthur Andersen authority, HSA incorrectly implies there is a federal law
`arbitration doctrine of equitable estoppel. HSA Br. 14 n. 16; see, e.g., Warciak v. Subway
`Restaurants, Inc., 880 F.3d 870, 872 (7th Cir. 2018) (“We recently clarified that—even in the
`arbitration context—the court must apply traditional state promissory estoppel principles to decide
`whether a non-party should be bound by the terms of another's contract.”). HSA acknowledges
`that it has not met its burden to show that the various state law equitable estoppel doctrines apply
`here. See HSA Br. 14 n.16 (conceding that it has not conducted an “analysis of each state”).
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`Case: 1:19-cv-01610 Document #: 208 Filed: 01/05/21 Page 13 of 18 PageID #:2921
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`
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`(N.D. Ill. 2019) (Illinois and Ohio law require detrimental reliance). HSA has not even attempted
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`to show that the class members at issue acted to induce it, as a non-signatory expressly excluded
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`from the arbitration provisions, to reasonably and detrimentally rely on those provisions.
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`Furthermore, state law around the country demands that, in order for a non-signatory to
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`avail itself of arbitration, “the contract must form the legal basis of [the plaintiff’s] claims; it is not
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`enough that the contract is factually significant to the plaintiff’s claims or has a but-for relationship
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`with them.” In re Liberty Refund, 2014 WL 3639189, at *5 (citing Lenox MacLaren Surgical Corp.
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`v. Medtronic, Inc., 449 F. App’x 704, 709 (10th Cir. 2011) and Lawson v. Life of the S. Ins. Co.,
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`648 F.3d 1166, 1173 (11th Cir. 2011)); see also, e.g., Weingarten Realty Investors v. Miller, 495
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`F. App’x 418, 421-22 (5th Cir. 2012) (declining to apply equitable estoppel where arbitration
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`agreement expressly limited arbitration to the contracting parties and plaintiff did not seek to hold
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`defendant liable for breach of agreement); In re Wholesale Grocery Prods., 707 F.3d at 923
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`(equitable estoppel not appropriate where antitrust claims did not arise “directly from violations
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`of the terms of a contract containing an arbitration clause”); Fox v. Nationwide Credit, Inc., 09-
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`cv-7111, 2010 WL 3420172, at *5-6 (N.D. Ill. Aug. 25, 2010); Abdurahman v. Prospect CCMC,
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`LLC, No. 20-cv-3609, 2020 WL 6888228, at *5-6 (E.D. Pa. Nov. 24, 2020). HSA ignores this
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`authority. And, as in cases like these, plaintiffs’ antitrust claims are not premised on any breach of
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`contractual duties; they are rooted in defendants’ violation of statutory interests that exist
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`independently of any contract.
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`HSA’s cases are not to the contrary. See HSA Br. 13-14. In most, the plaintiffs’ claims
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`were premised on an alleged breach of the agreement containing the arbitration provision. See
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`Hughes Masonry Co. v. Greater Clark Cty. Sch. Bldg. Corp., 659 F.2d 836, 838 (7th Cir. 1981)
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`(“In substance . . . Hughes is attempting to hold J.A. to the terms of the Hughes-Clark agreement.”).
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`
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`In Hoffman, for instance, the plaintiffs asserted they were fraudulently induced to enter into the
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`operative contracts—not that there were “independent acts of fraud.” Hoffman v. Deloitte &
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`Touche, LLP, 143 F. Supp. 2d 995, 1004 (N.D. Ill. 2001).8 And in none of the cases did the court
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`analyze language explicitly limiting arbitration to claims between the signatories, as exists here.
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`Cf. Advanced Aerofoil, 2011 WL 6009616, at *8 (observing that non-signatories were arguably
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`covered by language in settlement agreement extending to “members, partners . . . affiliates, and
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`assigns”); Hoffman, 143 F. Supp. 2d at 1003 (noting the “extremely broad” arbitration clause).
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`IV.
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`Plaintiffs Can Challenge HSA’s Attempt to Limit Discovery
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`The purpose of HSA’s motion is clear: “so that the discovery to be directed to the
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`HomeServices Defendants can be limited . . . .” HSA Br. 1 (footnote omitted). But in arguing that
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`it has standing to enforce arbitration provisions it did not sign to limit discovery and the class,
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`HSA incongruously claims that plaintiffs lack “standing” to oppose HSA’s arguments. As
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`explained above, HSA’s arguments are irrelevant to the scope of discovery from HSA subsidiaries.
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`If the Court does reach this issue, however, plaintiffs plainly have a cognizable interest in seeking
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`discovery relevant to proving up the claims they assert individually on the class’s behalf, and,
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`accordingly, have standing to challenge HSA’s attempts to invoke those clauses as non-signatories.
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`HSA’s “standing” arguments are doctrinally incoherent because constitutional standing
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`requires only that a plaintiff allege a concrete and particularized injury. See, e.g., Fox v. Dakkota
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`Integrated Sys., LLC, -- F.3d --, 2020 WL 6738112, at *4 (7th Cir. Nov. 17, 2020). Including
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`because standing is assessed based on the causes of action asserted (not defenses), see United
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`8 See also Affymax, Inc. v. Johnson & Johnson, 420 F. Supp. 2d 876, 882-83 (N.D. Ill. 2006);
`Advanced Aerofoil Techs., Inc. v. Todaro, No. 11-cv-7866, 2011 WL 6009616, at *8-9 (N.D. Ill.
`Nov. 30, 2011); Dime Group Int’l, Inc. v. Soyuz-Victan USA, LLC, No. 07-cv-4178, 2008 WL
`450825, at *4 (N.D. Ill. Feb. 13, 2008); Field Sys.Mach., Inc. v. Vestas-Am. Wind Tech., Inc., No.
`13-cv-301, 2013 WL 1943307, at *4 (N.D. Ill. May 9, 2013).
`
`13
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`Case: 1:19-cv-01610 Document #: 208 Filed: 01/05/21 Page 15 of 18 PageID #:2923
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`
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`States v. Funds in the Amount of $574,840, 719 F.3d 648, 651 (7th Cir. 2013), “standing in a class
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`suit is typically measured simply by the class rep