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`
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`Exhibit 1
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`Case 4:19-cv-00332-SRB Document 807-1 Filed 06/16/22 Page 1 of 23
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`

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`Case: 1:19-cv-01610 Document #: 205 Filed: 12/07/20 Page 1 of 4 PageID #:2668
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`Plaintiffs,
`
`CHRISTOPHER MOEHRL, MICHAEL
`COLE, STEVE DARNELL, VALERIE
`NAGER, JACK RAMEY, DANIEL UMPA,
`And JANE RUH, on behalf of themselves and
`all others similarly situated
`
`
`
`v.
`
`THE NATIONAL ASSOCIATION OF
`REALTORS, REALOGY HOLDINGS
`CORP., HOMESERVICES OF AMERICA,
`INC., BHH AFFILIATES, LLC, HSF
`AFFILIATES, LLC, THE LONG & FOSTER
`COMPANIES, INC., RE/MAX LLC,
`and KELLER WILLIAMS REALTY,
`INC.
`
`
`
`
`Defendants.
`
`
`
`Judge Andrea R. Wood
`
`
`
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`) Case No. 1:19-cv-01610
`)
`)
`)
`)
`)
`) ORAL ARGUMENT REQUESTED
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`
`THE HOMESERVICES DEFENDANTS’
`MOTION TO STRIKE CERTAIN CLASS ALLEGATIONS
`
`Defendants HomeServices of America, Inc., BHH Affiliates, LLC, HSF Affiliates, LLC,
`
`
`
`
`
`
`
`and the Long & Foster Companies, Inc. (“HomeServices Defendants”) respectfully move the
`
`Court to strike the class definition and require its amendment to excise arbitrating class members
`
`under Fed. R. Civ. P. 23(d)(1)(D). In support of their Motion, the HomeServices Defendants
`
`state as follows.1
`
`
`1 The HomeServices Defendants request oral argument on this Motion. Pursuant to this Court’s
`Eighth Amended General Order 20-0012, the HomeServices Defendants do not notice this
`motion for presentment, nor do they submit courtesy copies. The HomeServices Defendants
`stand ready to notice this Motion for presentment and to submit courtesy copies at the Court’s
`request.
`
`
`
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`
`
`
`
`1.
`
`Plaintiffs’ putative class action Complaint makes no effort to exclude arbitrating
`
`class members from the class definition. More than ten of HomeServices Defendants’ subsidiaries
`
`potentially relevant to this matter utilized Listing and Arbitration Agreements containing binding
`
`arbitration clauses with putative class members here. Those Listing and Arbitration Agreements
`
`require arbitration of this dispute. Therefore, the putative class members who signed a Listing and
`
`Arbitration Agreement should be excised from the class definition.
`
`2.
`
`For the reasons set forth in the accompanying Memorandum of Law in Support, the
`
`Court should strike the class definition and require its amendment to excise class members who
`
`agreed to arbitrate this dispute.
`
`WHEREFORE, for the reasons set forth in the accompanying Memorandum of Law in
`
`Support, the HomeServices Defendants respectfully request the Court enter an Order granting
`
`this Motion and striking the class definition and requiring its amendment to excise putative class
`
`members who agreed to arbitrate this dispute, all pursuant to Federal Rule of Civil Procedure
`
`23(d)(1)(D).
`
`Dated: December 7, 2020
`
`
`
`
`
`
`
`Respectfully submitted by:
`
`Counsel for HomeServices of America,
`Inc., BHH Affiliates, LLC, HSF
`Affiliates, LLC, and The Long & Foster
`Companies, Inc.
`
`/s/ Robert D. MacGill
`Robert D. MacGill
`Matthew T. Ciulla
`MACGILL PC
`55 Monument Circle
`Suite 1200C
`Indianapolis, IN 46204
`(317) 721
`1253
`-
`
`robert.macgill@macgilllaw.com
`matthew.ciulla@macgilllaw.com
`
`
`
`-2-
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`
`Jay N. Varon
`Jennifer M. Keas
`FOLEY AND LARDNER LLP
`3000 K Street NW, Suite 600
`Washington, DC 20007
`(202) 672-5436
`jvaron@foley.com
`jkeas@foley.com
`
`James D. Dasso
`Erik Kennelly
`FOLEY AND LARDNER LLP
`321 North Clark Street Suite 2800
`Chicago, IL 60654
`(312) 832-4500
`jdasso@foley.com
`ekennelly@foley.com
`
`
`
`
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`Case: 1:19-cv-01610 Document #: 205 Filed: 12/07/20 Page 4 of 4 PageID #:2671
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`
`
`CERTIFICATE OF SERVICE
`I hereby certify that on December 7, 2020, I electronically filed the foregoing MOTION
`TO STRIKE CERTAIN CLASS ALLEGATIONS with the Clerk of the Court using the CM/ECF
`system, which will send notice to counsel for all parties that have appeared in this case.
`
`
`
`
`/s/ Robert D. MacGill
`
`
`
`
`
`
`
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`Case: 1:19-cv-01610 Document #: 206 Filed: 12/07/20 Page 1 of 18 PageID #:2672
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`Plaintiffs,
`
`CHRISTOPHER MOEHRL, MICHAEL
`COLE, STEVE DARNELL, VALERIE
`NAGER, JACK RAMEY, DANIEL UMPA,
`And JANE RUH, on behalf of themselves and
`all others similarly situated
`
`
`
`v.
`
`THE NATIONAL ASSOCIATION OF
`REALTORS, REALOGY HOLDINGS
`CORP., HOMESERVICES OF AMERICA,
`INC., BHH AFFILIATES, LLC, HSF
`AFFILIATES, LLC, THE LONG & FOSTER
`COMPANIES, INC., RE/MAX LLC,
`and KELLER WILLIAMS REALTY,
`INC.
`
`
`
`
`Defendants.
`
`
`
`Judge Andrea R. Wood
`
`
`
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`) Case No. 1:19-cv-01610
`)
`)
`)
`)
`)
`) ORAL ARGUMENT REQUESTED
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`)
`
`
`MEMORANDUM OF LAW IN SUPPORT
`OF THE HOMESERVICES DEFENDANTS’
`MOTION TO STRIKE CERTAIN CLASS ALLEGATIONS
`
`
`
`
`
`
`Robert D. MacGill
`Matthew T. Ciulla
`MACGILL PC
`55 Monument Circle
`Suite 1200C
`Indianapolis, IN 46204
`
`
`Jay N. Varon
`Jennifer M. Keas
`FOLEY & LARDNER LLP
`3000 K Street NW
`Suite 600
`Washington, DC 20007
`
`
`James D. Dasso
`Erik Kennelly
`FOLEY & LARDNER LLP
`321 North Clark Street
`Suite 2800
`Chicago, IL 60654
`
`
`
`
`Case 4:19-cv-00332-SRB Document 807-1 Filed 06/16/22 Page 6 of 23
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`

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`
`
`
`
`INTRODUCTION
`
`Plaintiffs’ putative class includes tens of thousands of individuals who executed a listing
`
`agreement containing a binding arbitration provision with a HomeServices of America
`
`subsidiary (“Arbitrating Class Members”). Plaintiffs’ Complaint makes no attempt to exclude
`
`these individuals from the putative class. The Arbitrating Class Members have no advocate to
`
`assure protection of their interests. The named plaintiffs are not typical of the proposed class they
`
`propose to represent or adequate to protect the interests of the putative class.
`
`The Court should take action now to excise the Arbitrating Class Members from the
`
`putative class so that the discovery to be directed to the HomeServices Defendants1 can be
`
`limited to an appropriate scope and be made proportional to the claims to be litigated against
`
`them. For example, certain HomeServices subsidiaries utilized binding arbitration agreements in
`
`Pennsylvania, Minnesota, Arizona, and North Carolina for virtually all of their customers for the
`
`entire class period—as such, these subsidiaries as a practical matter have no customers in those
`
`states who could litigate claims or recover damages in this action. As demonstrated below, the
`
`Court should strike the class allegations now and require them to be amended to exclude those
`
`class members who agreed to arbitrate this type of dispute with a HomeServices subsidiary.
`
`
`
`FACTUAL BACKGROUND
`
`A.
`
`The Class Definition.
`
`Plaintiffs’ class begins on March 6, 2015. Doc. 84 ¶¶ 18, 142. It encompasses “home
`
`sellers who paid a broker commission . . . in connection with the sale of residential real estate”
`
`listed on a “Covered MLS.” Id. ¶ 18. Plaintiffs define a Covered MLS as the Bright MLS and
`
`My Florida Regional MLS, as well as the MLSs covering the metropolitan areas of Cleveland,
`
`
`1 The “HomeServices Defendants” are HomeServices of America, Inc., BHH Affiliates, LLC,
`HSF Affiliates, LLC, and the Long & Foster Companies, Inc.
`
`
`
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`Case 4:19-cv-00332-SRB Document 807-1 Filed 06/16/22 Page 7 of 23
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`

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`
`
`Ohio; Columbus, Ohio; Detroit, Michigan; Milwaukee, Wisconsin; Minneapolis, Minnesota;
`
`Austin, Texas; Dallas, Texas; Houston, Texas; Las Vegas, Nevada; Phoenix, Arizona; San
`
`Antonio, Texas; Colorado Springs, Colorado; Denver, Colorado; Salt Lake City, Utah; Fort
`
`Myers, Florida; Miami, Florida; Charlotte, North Carolina; or Raleigh, North Carolina. Id.
`
`Plaintiffs exclude from the class only “Defendants and their officers and directors, the
`
`judicial officers presiding over this action and the members of their immediate families and
`
`judicial staff, and Plaintiffs’ counsel and employees of their law firms.” Id. ¶ 143.
`
`B.
`
`The HomeServices Defendants and Their Relevant Subsidiaries.
`
`Plaintiffs’ Complaint, Doc. 84 (the “Complaint”), attempts to state an antitrust class
`
`action claim against four “Corporate Defendants” and the National Association of Realtors, a
`
`trade association. One of these Corporate Defendants is what Plaintiffs call “HomeServices”—
`
`really a combination of HomeServices of America, Inc., three of its subsidiaries (HSF Affiliates,
`
`LLC, BHH Affiliates, LLC, and The Long & Foster Companies, Inc.), and “their wholly-owned
`
`or controlled subsidiaries or affiliates.” Doc. 84 ¶ 34. Movants here will refer to themselves in
`
`the collective, as the “HomeServices Defendants.”
`
`HomeServices of America, Inc. is a holding company. Strandmo Decl., attached as
`
`Exhibit 1, ¶ 4. It is not a real estate broker, does not sell real estate, does not charge listing
`
`commissions, and does not enter into listing agreements with homeowners. Id. However,
`
`HomeServices of America, Inc. has at least twelve subsidiaries that operate brokerages that list
`
`homes on one or more Covered MLS. Of these, eleven subsidiaries provided home seller
`
`purported class members with listing agreements containing binding arbitration clauses (“Listing
`
`and Arbitration Agreements”) for at least some part of the class period:
`
`
`
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`
`
`Fox &
`Roach2
`
`Subsidiary Relevant Time Period of
`Arbitration Rights
`Entire class period in
`Pennsylvania, and
`September 2018-present in
`Delaware. Ex. 2 ¶¶ 6–18.
`October 2018-present. Ex. 3
`¶¶ 6-12.
`
`Ebby
`Halliday3
`
`April 2019-present. Ex. 4
`¶¶ 6-9.
`April 2019-present. Ex. 5
`¶¶ 6-9.
`Entire class period in
`Minnesota, and April 2019-
`present in Wisconsin. Ex. 6
`¶¶ 5-11.
`August 2018-present. Ex. 7
`¶¶ 5-9.
`
`Lovejoy
`Realty4
`Midwest
`Preferred5
`Edina
`Realty6
`
`Esslinger-
`Wooten-
`Maxwell7
`Florida
`Realty8
`
`Citation to Arbitration Clauses
`
`Ex. 2 ¶¶ 8, 10-13, 17-18 (authentication); Ex. 2 at
`Fox & Roach Decl. Exs. A p.5 § 33(b); B p.3
`§ 16(b); C p.3 § 16(b); D p.3 § 16(b); E p.3 § 15;
`F p.3 § 15; G p.1 (arbitration provisions).
`Ex. 3 ¶¶ 10-12 (authentication); Ex. 3 at Ebby
`Decl. Exs. A p.6 §§ 16-17; B p.6 §§ 16-17; C p.6
`§§ 16-17 (arbitration provisions).
`Ex. 4 ¶ 9 (authentication); Ex. 4 at Lovejoy
`Realty Decl. Ex. A p.1 (arbitration provisions).
`Ex. 5 ¶ 9 (authentication); Ex. 5 at Midwest
`Preferred Decl. Ex. A p.1 (arbitration provisions).
`Ex. 6 ¶¶ 10-11 (authentication); Ex. 6 at Edina
`Realty Decl. Exs. A p.4:141; B p.8 (arbitration
`provisions).
`
`Ex. 7 ¶ 9 (authentication); Ex. 7 at EWM Decl.
`Ex. A p.3 § 9 (arbitration provisions).
`
`November 2019-present for
`homes listed on a Covered
`MLS. Ex. 8 ¶¶ 6-10.
`
`Ex. 8 ¶ 10 (authentication); Ex. 8 at Florida
`Realty Decl. Ex. A p.3 § 12 (arbitration
`provisions).
`
`
`2 Fox & Roach is a 99.9% owned subsidiary of Fox & Roach/Trident Limited Partnership, which
`is a 99.9% owned subsidiary of HomeServices Northeast, LLC. HomeServices Northeast, LLC is a
`wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 5. Fox & Roach lists on at least one
`Covered MLS. Fox & Roach Decl., attached as Exhibit 2, ¶ 4.
`3 Ebby Halliday is a wholly owned subsidiary of HomeServices of Texas, LLC, which is a wholly
`owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 6. Ebby Halliday lists on at least one
`Covered MLS. Ebby Decl., attached as Exhibit 3, ¶ 4.
`4 Lovejoy Realty is a wholly owned subsidiary of HomeServices of Minnesota, LLC, which is a
`wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 7. Lovejoy Realty lists on at least one
`Covered MLS. Lovejoy Realty Decl., attached as Exhibit 4, ¶ 5.
`5 Midwest Preferred is a wholly owned subsidiary of HomeServices of Minnesota, LLC, which is
`a wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 8. Midwest Preferred lists on at
`least one Covered MLS. Midwest Preferred Decl., attached as Exhibit 5, ¶ 5.
`6 Edina Realty is a wholly owned subsidiary of Edina Financial Services, Inc., which is a wholly
`owned subsidiary of HomeServices of Minnesota, LLC. HomeServices of Minnesota, LLC is a wholly
`owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 9. Edina Realty lists on at least one Covered
`MLS. Edina Realty Decl., attached as Exhibit 6, ¶ 4.
`7 Esslinger-Wooten-Maxwell is a wholly owned subsidiary of HomeServices of Florida, Inc.,
`which is a wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 10. Esslinger-Wooten-
`Maxwell lists on at least one Covered MLS. EWM Decl., attached as Exhibit 7, ¶ 4.
`8 Florida Realty is a wholly owned subsidiary of HomeServices of Florida, Inc., which is a wholly
`owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 11. Florida Realty lists on at least one
`Covered MLS. Florida Realty Decl., attached as Exhibit 8, ¶ 4.
`
`
`
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`
`
`Citation to Arbitration Clauses
`
`Long
`Realty9
`
`Subsidiary Relevant Time Period of
`Arbitration Rights
`Entire class period for
`homes listed on a Covered
`MLS. Ex. 9 ¶¶ 5-12.
`Entire class period. Ex. 10
`¶¶ 5-15.
`
`Preferred
`Carolinas10
`
`Ex. 9 ¶¶ 9-12 (authentication); Ex. 9 at Long
`Realty Decl. Exs. A p.5 § 6; B p.6 § 6; C p.6 § 6;
`D p.6 § 6 (arbitration provisions).
`Ex. 10 ¶¶ 10-15 (authentication); Ex. 10 at
`Preferred Carolinas Decl. Exs. A p.7 § 14; B p.6
`§ 14; C p.7 § 14; D p.7 § 14; E1 pp.1-2; E2 pp.1-
`2; F pp.1-2 (arbitration provisions).
`Ex. 11 ¶¶ 9-13 (authentication); Ex. 11 at First
`July 2019 to present, for
`Weber Decl. Exs. B, C, D, E (arbitration
`those who opted in. Ex. 11
`provisions).
`¶¶ 5-13.
`Ex. 12 ¶ 10 (authentication); Ex. 12 at L&F Decl.
`July 2019 to present. Ex. 12
`Long &
`Ex. B (arbitration provisions).
`¶¶ 7-10.
`Foster12
`These arbitration provisions require arbitration of the instant dispute. See citations supra;
`
`First
`Weber11
`
`text accompanying note 15, infra. Many of the arbitration provisions also require arbitration of
`
`“gateway” arbitrability disputes. See citations supra; text accompanying note 14, infra.13
`
`C.
`
`The Complaint’s Allegations.
`
`In March 2019, Plaintiffs filed the instant suit. Doc. 1. Plaintiffs complain about the
`
`listing commission they agreed to pay in listing agreements:
`
`A seller broker’s compensation is specified in a listing agreement,
`a contract between the seller and the seller broker that details the
`terms of the listing. A listing agreement typically states that the
`seller broker has the exclusive right to market the seller’s home.
`
`9 Long Realty is a wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 12. Long
`Realty may list on a Covered MLS on occasion. Long Realty Decl., attached as Exhibit 9, ¶ 4.
`10 Preferred Carolinas is a wholly owned subsidiary of HomeServices of the Carolinas, Inc.,
`which is a wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 13. Preferred Carolinas
`lists on at least one Covered MLS. Preferred Carolinas Decl., attached as Exhibit 10, ¶ 4.
`11 First Weber is a wholly owned subsidiary of HomeServices of Wisconsin, LLC, which is a
`wholly owned subsidiary of HomeServices of America, Inc. Ex. 1 ¶ 14. First Weber lists on at least one
`Covered MLS. First Weber Decl., attached as Exhibit 11, ¶ 4.
`12 Long & Foster is a wholly owned subsidiary of Long & Foster Real Estate Ventures, Inc.,
`which is a wholly owned subsidiary of The Long & Foster Companies, Inc., which is a wholly owned
`subsidiary of HomeServices MidAtlantic, LLC, which is a wholly owned subsidiary of HomeServices of
`America, Inc. Ex. 1 ¶ 15. Long & Foster lists on at least one Covered MLS. L&F Decl., attached as
`Exhibit 12, ¶ 6.
`13 Many of the Listing and Arbitration Agreements also contain class action waivers, which
`additionally bar this suit. See, e.g., Ex. 2 at Fox & Roach Decl. Ex. A at 5; Ex. 3 at Ebby Decl. Ex. A at 6;
`Ex. 4 at Lovejoy Decl. Ex. A at 1; Ex. 5 at Midwest Decl. Ex. A at 1; Ex. 6 at Edina Decl. Ex. A at 4; Ex.
`9 at Long Decl. Ex. A at 6; Ex. 11 at First Weber Decl. Ex. B at 1; Ex. 12 at L&F Decl. Ex. B at 2.
`
`
`
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`
`
`The listing agreement specifies the total commission that a home
`seller will pay to the seller broker, often with a portion of that
`amount earmarked to be paid to the buyer broker in the event the
`buyer has a broker.
`
`Doc. 1 ¶ 32; see Doc. 84 ¶ 46. These are the same Listing and Arbitration Agreements in which
`
`purported plaintiffs listing their home with a HomeServices subsidiary agreed to arbitrate
`
`disputes with that subsidiary. See text accompanying notes 2–12, supra. Despite this fact,
`
`Plaintiffs have made no effort to exclude those who agreed to arbitrate this dispute from their
`
`class definition. Cf., e.g., Doc. 84 ¶ 143.
`
`In the Corporate Defendants’ First Motion to Dismiss, to which Plaintiffs amended their
`
`complaint rather than respond, the HomeServices Defendants expressly reserved their arbitration
`
`rights. Doc. 69 at 3 n.2; Doc. 84. The HomeServices Defendants repeated this reservation in the
`
`Corporate Defendants’ Second Motion to Dismiss, which the Court denied on October 2, 2020,
`
`and in their Answer. Doc. 116 at 2 n.1; Doc. 184; Doc. 200 at 28.
`
`On November 2, 2020, the Court ordered that disputes about the scope of discovery are to
`
`be submitted to the Court by January 8, 2021. Doc. 192. Plaintiffs have declined to narrow their
`
`class allegations to remove arbitrating class members, so HomeServices now brings this Motion.
`
`D.
`
`The Class Representatives.
`
`Of the seven putative class representatives, only one, Daniel Umpa, sold his home using a
`
`HomeServices-affiliated company. Doc. 84 ¶¶ 23–31. According to the Complaint, on “October
`
`30, 2017, he sold a home located in the Washington, D.C. metropolitan area” and was
`
`“represented by Long and Fosters [sic].” Id. ¶ 30. In relation to this sale, Umpa entered a listing
`
`agreement with Long & Foster Real Estate, Inc., a subsidiary of The Long & Foster Companies,
`
`Inc. and HomeServices of America, Inc. Ex. 12 ¶ 5. Umpa’s listing agreement did not contain an
`
`arbitration clause. Ex. 12 at L&F Decl. Ex. A.
`
`
`
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`

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`
`
`
`
`ARGUMENT
`
`Federal policy “strongly favors arbitration,” as embodied in the Federal Arbitration Act
`
`(FAA). Hawkins v. Aid Ass’n for Lutherans, 338 F.3d 801, 805 (7th Cir. 2003). Any doubts with
`
`respect to arbitrability “should be resolved in favor of arbitration.” James v. McDonald’s Corp.,
`
`417 F.3d 672, 677 (7th Cir. 2005).
`
`Here, thousands of purported class members have agreed to arbitrate this dispute. These
`
`Arbitrating Class Members are improperly included in this suit. In line with the strong federal
`
`policy favoring arbitration, the Court should strike the class definition and require its amendment
`
`to exclude the Arbitrating Class Members.
`
`I.
`
`Because Umpa Cannot Adequately Represent the Arbitrating Class Members, the
`Court Should Strike the Class Definition and Require Its Amendment.
`
`The Court should address class certification “[a]t an early practicable time,” and it may
`
`“require that the pleadings be amended to eliminate allegations about representation of absent
`
`persons and that the action proceed accordingly.” Fed. R. Civ. P. 23(c)(1)(A), (d)(1)(D). The
`
`Court may take such action “even before the plaintiff files a motion requesting certification.”
`
`Kasalo v. Harris & Harris, Ltd., 656 F.3d 557, 563 (7th Cir. 2011).
`
`Courts in this District “have held that a motion to strike class allegations, made pursuant
`
`to these provisions, is an appropriate device to determine whether the case will proceed as a class
`
`action.” Cholly v. Uptain Grp., Inc., No. 15-C-5030, 2017 WL 449176, 2017 U.S. Dist. LEXIS
`
`14449, at *9 (N.D. Ill. Feb. 1, 2017) (striking class allegations where named plaintiff gave
`
`consent for telephone calls and attempted to represent class members who did not give consent);
`
`see, e.g., Buonomo v. Optimum Outcomes, Inc., 301 F.R.D. 292, 296-97 (N.D. Ill. 2014) (finding
`
`proposed class overbroad and requiring amendment); Hill v. Wells Fargo Bank, N.A., 946 F.
`
`Supp. 2d 817, 829 (N.D. Ill. 2013) (“The rule’s text plainly indicates that the court may decide to
`
`
`
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`
`
`reject a plaintiff’s attempt to represent a class as soon as it becomes obvious that the plaintiff will
`
`be unable to satisfy Rule 23.”); Wright v. Family Dollar, Inc., No. 10-C-4410, 2010 WL
`
`4962838, 2010 U.S. Dist. LEXIS 126643, at *6-10 (N.D. Ill. Nov. 30, 2010) (conflicts and
`
`unique defenses prevented plaintiff from showing adequacy or typicality).
`
`Such a motion to strike is particularly appropriate where a named plaintiff who is not
`
`subject to an arbitration agreement attempts to represent a class containing members who are
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`obligated to arbitrate their claims. Santangelo v. Comcast Corp., No. 15-cv-0293, 2017 WL
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`6039903, 2017 U.S. Dist. LEXIS 200935, at *6 (N.D. Ill. Dec. 6, 2017) (“[T]here are
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`circumstances when a motion to strike can provide a valuable vehicle to narrow the disputed
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`issues in the case . . . . This is just such an instance.”); see also id. at *6 & n.5 (disagreeing with
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`case requiring delay of motion to strike, because Rule 23(d)’s drafters “clearly intended the rule
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`to confer on courts broad discretion in managing class actions”).
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`In Santangelo, a court in this district decided whether a non-arbitrating plaintiff can
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`adequately represent arbitrating putative class members. Id. at *8-12. In that case, named
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`plaintiff brought a putative class action against Comcast, alleging that Comcast ran unauthorized
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`credit inquires. Id. at *1-2. Comcast’s subscriber agreement contained an arbitration provision
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`with an opt-out provision. Id. at *2-3. Plaintiff timely opted out, but many putative class
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`members did not. Id. at *2-4. His broad proposed class definition contained no exclusion for
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`arbitrating putative class members, and his proposed class “therefore include[d] subscribers who
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`[were] bound by the arbitration provision.” Id. at *4. Before plaintiff filed a motion to certify his
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`class, Comcast brought a motion to strike plaintiff’s class allegations or to require him to amend
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`the proposed class definition to exclude those who were subject to arbitration. Id.
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`The court conducted an adequacy analysis under Rule 23(a)(4). Id. at *8-10. In
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`determining whether plaintiff provided adequate representation for the putative class by
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`“protecting the different, separate, and distinct interest of the class members,” the court
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`determined that under Seventh Circuit law, the “presence of even an arguable defense peculiar to
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`the named plaintiff or a small subset of the plaintiff class may make the named plaintiff an
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`inadequate representative of the class.” Id. (citations omitted).
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`Under this test, the court found that “the enforceability of the arbitration provision . . .
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`[was] sufficiently ‘arguable’ to challenge the ability of [named plaintiff], who [was] not bound
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`by the arbitration provision, to adequately represent the interests of the individuals in the four
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`classes who [were].” Id. at *10. Named plaintiff “would be unable to assert, in any credible
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`fashion, a number of arguments that would potentially undermine the [arbitration] provision’s
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`enforceability.” Id. Further, named plaintiff had “a structural incentive to trade upon the rights of
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`[the non-arbitrating] absent class members to his own advantage in any potential settlement
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`between himself and Comcast,” because the strength of his own claims would “not be impacted
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`by a judicial determination as to the [arbitration] provision’s enforceability.” Id. at *11-12. Such
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`conflict remained intact even despite named plaintiff’s pledge to “go to the mat for all putative
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`class members.” Id. at *12. Accordingly, the court required the amendment of the class definition
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`before a motion for class certification could be filed. Id. at *13-14.
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`This reasoning is consistent with caselaw from across the country. See, e.g., Avilez v.
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`Pinkerton Gov. Servs., Inc., 596 F. App’x 579, 579 (9th Cir. 2015) (vacating certification order
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`where named plaintiff’s arbitration agreement did not contain class action waiver and some
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`putative class members’ agreements did, finding named plaintiff was “not an adequate
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`representative”); Hobon v. Pizza Hut of S. Wis., Inc., No. 17-cv-947, 2018 WL 4781147, 2018
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`U.S. Dist. LEXIS 171179, at *3, 9-10 (W.D. Wis. Oct. 3, 2018) (where many putative plaintiffs
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`executed arbitration agreements, requiring amended complaint “which redefines the class to
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`include only those [putative class members] who did not sign arbitration agreements”); Tan v.
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`Grubhub, Inc., No. 15-cv-05128-JSC, 2016 WL 4721439, 2016 U.S. Dist. LEXIS 186342, at *8
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`(N.D. Cal. July 19, 2016) (finding that non-arbitrating class representative could not adequately
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`represent the interests of arbitrating putative class members because he would not be able to
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`credibly challenge arbitration agreements); In re H&R Block IRS Form 8863 Litig., No. 4:13-md-
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`02474, 2015 WL 13344628, 2015 U.S. Dist. LEXIS 193088, at *16-17 (W.D. Mo. Jan. 7, 2015)
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`(striking class allegations as to those putative class members “bound to individually arbitrate
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`their claims”); Zieger v. Advance Am., No. 13-1614, 2014 WL 7388365, 2014 U.S. Dist. LEXIS
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`177524, at *19-20 (D. Del. Dec. 29, 2014) (striking class allegations and granting leave to amend
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`class definition); In re Online Travel Co. Hotel Booking Antitrust Litig., 953 F. Supp. 2d 713,
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`725 (N.D. Tex. 2013) (striking portion of class allegations, as “claims by absent class members
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`bound by the User Agreement would be impertinent, as those class members would be bound to
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`individually arbitrate their claims”); King v. Capital One Bank (USA), N.A., No. 3:11-cv-68,
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`2012 WL 5570624, 2012 U.S. Dist. LEXIS 163562, at *42-43 (W.D. Va. Nov. 15, 2012) (“If
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`Plaintiff did not sign the Client Agreement containing the arbitration clause, surely she cannot
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`represent anyone who did sign it . . . . Plaintiff could not fairly and adequately represent in this
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`Court the interests of individuals who are bound to pursue their claims in arbitration.”).
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`The instant case compels the same result. Umpa, the named plaintiff allegedly
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`representing the putative class members who listed their homes with a HomeServices subsidiary,
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`did not sign a Listing and Arbitration Agreement. Ex. 12 at L&F Decl. Ex. A. Thousands of
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`those purported class members did. See text accompanying notes 2–12, supra. Umpa is not an
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`adequate class representative of the Arbitrating Class Members, as he cannot protect their
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`interests. For instance, he cannot bring any challenge to the Listing and Arbitration Agreements,
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`because—as described below—he lacks constitutional standing to do so. And in any potential
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`class settlement, Umpa possesses a structural incentive to trade on the rights of the Arbitrating
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`Class Members to his own advantage, because the strength of his claims would not be impacted
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`by any determination of the Court as to the arbitration provisions’ enforceability or scope—he
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`did not sign one. Just as in Santangelo and numerous cases from across the country, this Court
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`should not permit Umpa to inadequately represent these Arbitrating Class Members. It should
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`instead excise them from the class definition.
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`II.
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`Any Argument Against the Listing and Arbitration Agreements Is Not Justiciable.
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`The Arbitrating Class Members are not before the Court. Rather, only the named
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`plaintiffs—none of whom signed a Listing and Arbitration Agreement—are presently part of this
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`suit. These plaintiffs have no justiciable case or controversy with respect to the enforceability of
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`the Listing and Arbitration Agreements. This fact, combined with the fact that arbitration clauses
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`are “presumed to be enforceable,” only further reinforces the HomeServices Defendants’
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`argument that the Court should partially strike the class allegations to exclude those subject to
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`Listing and Arbitration Agreements. See, e.g., Ziegler, 2014 U.S. Dist. LEXIS 177524, at *19.
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`“Standing and ripeness are jurisdictional prerequisites.” Smith v. Wis. Dept. of Agric.,
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`Trade, & Consumer Prot., 23 F.3d 1134, 1142 (7th Cir. 1994). A non-arbitrating class
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`representative lacks standing to challenge the enforceability of arbitration agreements signed by
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`putative class members. Zieger, 2014 U.S. Dist. LEXIS 177524, at *9 (“[B]ecause Zieger did in
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`fact opt out of this clause, he lacks standing to challenge it at all. In other words, Zieger cannot
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`allege any individualized, concrete injury resulting from the Dispute Resolution clause because
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`he is not subject to it.”); see also In re Checking Account Overdraft Litig., 780 F.3d 1031, 1039
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`(11th Cir. 2015) (“[T]he named plaintiffs lack standing to assert any rights the unnamed putative
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`class members might have to preclude Wells Fargo from moving to compel arbitration because
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`the named plaintiffs have no cognizable stake in the outcome of that question.”). Such a dispute
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`is unripe until a party attempts to compel arbitration. See Falconer v. Gibsons Rest. Grp., LLC,
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`No. 10-C-1013, 2011 WL 43023, 2011 U.S. Dist. LEXIS 1348, at *8 (N.D. Ill. Jan. 6, 2011).
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`Here, none of the named plaintiffs presently before the Court signed a Listing and
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`Arbitration Agreement. Ex. 12 at L&F Decl. Ex. A. Accordingly, there is no justiciable case or
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`controversy with respect to the enforceability of the Listing and Arbitration Agreements.
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`III. Even if This Court Proceeds With Its Analysis, The Court Should Find That the
`Instant Allegations Must Be Resolved by the Arbitrator for Those Putative Class
`Members Who Signed a Listing and Arbitration Agreement.
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`Any complaint that Umpa or any other named plaintiff has about the Listing and
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`Arbitration Agreements is not justiciable and should be rejected for that reason. Even if this
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`Court were to examine such complaints, however, the Court will see that the instant disputes
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`must be resolved by the arbitrator for the Arbitrating Class Members.
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`First, most of the Listing and Arbitration Agreements delegate “gateway” disputes—such
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`as questions about the scope of the arbitration clauses and about which entity may enforce the
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`arbitration clauses—to the arbitrator directly and/or through the incorporation of the AAA or
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`JAMS rules.14 See, e.g., i3 Brands, Inc. v. CDK Global, LLC, No. 18-cv-864, 20