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Faegin v. Livingsocial, Inc.

United States District Court, S.D. California

October 15, 2014

TROY FAEGIN, an individual on behalf of himself, and ANA MARQUEZ, an individual on behalf of herself, Plaintiffs,
v.
LIVINGSOCIAL, INC., a Delaware corporation authorized to do business in the state of California, DEONTEE' HICKERSON, and individual, DAVID THORNTON, an individual, and TIFFANY HARRIS, and individual, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matter before the Court is the Motion for Order Compelling Arbitration, filed by Defendant LivingSocial. (ECF No. 10).

I. Procedural Background

On February 2, 2014, Plaintiffs Troy Faegin, and Ana Marquez initiated this action by filing a Complaint against Defendants LivingSocial, Inc. ("LivingSocial"), Deontee' Hickerson, and David Thornton. (ECF No. 1). On June 17, 2014, Plaintiff filed the First Amended Complaint ("FAC"), adding Defendant Tiffany Harris. (ECF No. 7). The FAC asserts the following claims for relief: (1) mark infringement in violation of California Business and Professional Code § 14200 et seq.; (2) willful mark infringement in violation of California Business and Professional Code § 14200 et seq.; (3) false advertising in violation of 15 U.S.C. § 1051 et seq.; (4) mark infringement in violation of 15 U.S.C. § 1051 et seq.; (5) false advertising in violation of California Business and Professional Code § 17500 et seq.; (6) fraud in violation of California Penal Code § 484 and California Civil Code §§ 3281, 3288, and 3294; (7) unfair business practices in violation of California Business and Professional Code § 17200 et seq. Id.

On July 9, 2014, LivingSocial filed the Motion to Compel Arbitration. (ECF No. 10). On August 25, 2014, Plaintiff filed an opposition. (ECF No. 11). On August 29, 2014, LivingSocial filed a reply. (ECF No 14.)

II. Factual Background

Plaintiffs Troy Feagin and Ana Marquez allege that they are co-owners of A.T. Your Service Cleaning and Janitorial, a California-licensed residential and commercial cleaning service located in San Diego, California. (ECF No. 7, FAC at 2). Plaintiffs allege that Defendant LivingSocial is a national online marketing company that advertises deals and discounts on behalf of merchants. (ECF No. 7, FAC at 3).

On August 23, 2012, Plaintiff Ana Marquez signed a Merchant Service Agreement ("Agreement"), authorizing LivingSocial to advertise and sell vouchers for Plaintiffs' company, A.T. Your Service Cleaning and Janitorial, in San Diego County. (ECF No. 11-1, Declaration of Ana Marquez ("Marquez Decl.") ¶ 4; Declaration of Derek Smith ("Smith Decl.") ¶ 3; ECF No. 10-2, Exh. A). Section 10(f) of the Agreement provides:

In the event of any dispute, claim, or disagreement arising from or relating to this Agreement or the breach thereof, the parties hereto shall use their best efforts to settle the dispute, claim, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties. If they do not reach such solution within a period of 30 days, then, by notice upon either Party to the other, all disputes, claims, or differences shall be finally settled by a single arbitrator in an arbitration administered by the American Arbitration Association in accordance with the provisions of its Commercial Arbitration Rules.

(ECF No. 10-2, Smith Decl., Exh. A). Section 9 of the Agreement provides "This Agreement shall commence on the effective date and continue for one (1) year. (ECF No. 10-2, Smith Decl., Exh. A).

Between October 2012 and November 2012, Defendant LivingSocial promoted A.T. Your Service Cleaning and Janitorial on its web site and through social media. (ECF No. 11-1, Marquez Decl. ¶ 5).

In April 2013, Ana Marquez contacted LivingSocial to inquire about advertising A.T. Your Service Cleaning and Janitorial with the company, but was told there was a two to three month wait time in the San Diego Market. (ECF No. 11-1, Marquez Decl. ¶ 7). A few weeks later in May 2013, Ana Marquez received an email from one of her existing customers stating that the customer had purchased a voucher for A.T. Your Service Cleaning and Janitorial through LivingSocial's web site. (ECF No. 11-1, Marquez Decl. ¶ 8). At the time, A.T. Your Service Cleaning and Janitorial was not advertising with LivingSocial. (ECF No. 11-1, Marquez Decl. ¶ 8). Ana Marquez later found out that LivingSocial was advertising another company called At Your Service Housekeeping in the San Diego area. (ECF No. 11-1, Marquez Decl. ¶ 8). Plaintiffs allege that Defendants Deontee' Hickerson, David Thornton, and Tiffany Harrison are business partners and joint owners of At Your Service Housekeeping. (ECF No. 7, FAC at 3).

LivingSocial did not include a telephone number for At Your Service Housekeeping on the vouchers it sold. (ECF No 11-1, Marquez Decl. ¶ 8). As a result, customers who searched for "At Your Service San Diego" found Plaintiffs' web site and telephone number. (ECF No 11-1, Marquez Decl. ¶ 8). Ana Marquez notified LivingSocial of the problem by email in an effort to clear up the confusion customers were experiencing. (ECF No. 11-1, Marquez Decl. ¶ 9).

On May 7, 2013, Plaintiffs decided to cancel plans for future advertising with LivingSocial. (ECF No. 11-1, Marquez Decl. ¶ 11; ECF No. 11-1, Exh. 3). Over the next few months, Plaintiffs continued to receive telephone calls from customers in San Diego who had mistakenly thought they purchased vouchers for A.T. Your Service Cleaning and Janitorial from LivingSocial. (ECF No. 11-1, Marquez Decl. ¶ 12). The FAC alleges that "AT YOUR SERVICE failed to honor their vouchers" causing confused consumers to "issue and write unwarranted negative reviews of PLAINTIFFS' services on popular ...


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