Fifth Circuit Reverses in Part N.D. of Texas’ Order Compelling Arbitration in Health Plan Sales Dispute
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The United States Court of Appeals for the Fifth Circuit has reversed portions of a district court’s order compelling arbitration in a contract dispute. In Sharpe v. AmeriPlan Corp., No. 13-10922, (5th Cir., October 16, 2014), four independent business owners (“IBOs”) sold health plans and recruited other IBOs through a network for AmeriPlan Corporation. Under the company’s sales plan, the IBOs became sales directors who were entitled to collect residual income for life based on the sales generated by their IBO recruits. Prior to joining the network, each IBO signed three agreements. One of the agreements incorporated the company manual and stated the manual could be amended by AmeriPlan at any time. Neither the original manual nor the sales director agreements contained an arbitration clause.
Although each agreement provided that it would be construed under the laws of Texas, several different court venues were selected by AmeriPlan. Plaintiffs Sharpe and Downward signed a sales director agreement that required non-binding mediation except for certain claims and stated any disputes would be decided by the Northern District of Texas, Dallas Division. Plaintiff Moen’s agreement was the same except that it stated any disputes must be decided in Collin County, Texas. Finally, Plaintiff Guarisco signed an earlier sales director agreement which provided only that all disputes would be heard in Dallas County, Texas.
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