South Carolina Cases July 07, 2022: Marshall v. Georgetown Mem'l Hosp.

Case Description

REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE

Jacquelyn D. Austin United States Magistrate Judge

This matter is before the Court on Defendant's motion to stay litigation and compel arbitration or, alternatively, to dismiss the action. [Doc. 6.] Pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(g), D.S.C., the undersigned magistrate judge is authorized to review all pretrial proceedings in this employment discrimination case and to submit findings and recommendations to the District Court.

Plaintiff filed this action on August 24, 2021, alleging Defendant discriminated against her in violation of the Americans with Disabilities Act (the “ADA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), the Rehabilitation Act of 1973, and § 510 of the Employee Retirement Income Security Act of 1974 (“ERISA”), and wrongfully discharged her in violation of public policy. [Doc. 1.] On September 16, 2021, Defendant filed a motion to stay litigation and compel arbitration or, alternatively, to dismiss the action. [Doc. 6.] On October 15, 2021, Plaintiff filed a response in opposition to Defendant's motion. [Doc. 10.] Defendant then filed a reply on November 1, 2021. [Doc. 13.]

On December 29, 2021, the undersigned filed a Report and Recommendation (the “R&R”), recommending that Defendant's motion be denied. [Doc. 15.] Thereafter, by

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Order dated February 14, 2022, the Honorable Richard M. Gergel recommitted the matter to the undersigned, noting as follows:

On January 19, 2022, Defendant filed objections to the R&R to which Plaintiff filed a reply. In its objections, Defendant did not dispute the analysis of the Magistrate Judge as it applied to the information and arguments Defendant presented in its original motion. (Dkt. No. 18.) Rather, in its objections, Defendant attached new information-specifically the supplemental declaration of Angela Traver-which appears relevant to determining whether Defendant's motion should be granted.

Considering the new information raised in Defendant[‘s] objections, and to afford both Defendant and Plaintiff a full opportunity to dispute all pertinent issues on the merits, the Court declines to adopt as moot the R&R. The Court rerefers this matter to the Magistrate Judge such that full briefing on the issues raised in Defendant's objections may be obtained and that Defendant's motion be considered in light of such briefing.

[Doc. 22 at 1.] Accordingly, by Text Order dated February 15, 2022, the undersigned entered a briefing schedule, and the parties have since filed supplemental memoranda and exhibits. [Docs. 23; 26; 27; 28; 30.] As the parties have fully briefed the issues before the Court, Defendant's motion [Doc. 6] is now ripe for review.

BACKGROUND

This matter stems from Plaintiff's claim that Defendant engaged in discrimination related to Plaintiff's application for employment with Defendant in 2020. [Doc. 1.] The undersigned previously summarized the allegations from the Complaint in the R&R and incorporates that recitation of the factual background relevant to Plaintiff's claims herein by reference. [Doc. 15 at 2-3.] The Court will summarize the prior employment relationship between the parties, Defendant's online employment application process, and Plaintiff's multiple applications for employment with Defendant from 2016 through 2020,

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as the issue presently before the Court is whether Plaintiff agreed to arbitrate any dispute with Defendant related to her 2020 employment application.

Plaintiff's Prior Employment with Defendant

Plaintiff, a Registered Nurse (“RN”), worked for Defendant from 2008 to 2011. [Doc. 10-1 ¶¶ 1-2.] Plaintiff left her employment with Defendant on good terms in March 2011 to work for other hospital systems. [ Id . ¶¶ 4-5.] Shortly after leaving her employment with Defendant, Plaintiff decided she wanted to return. [ Id . ¶ 6.] Plaintiff applied for numerous positions with Defendant from 2011 through 2020. [ Id . ¶ 7.] Defendant's allegedly discriminatory conduct occurred following Plaintiff's 2020 employment application. [ Id . ¶¶ 8-22.]

Plaintiff's 2016 Employment Application and Arbitration Agreement

In 2016, Plaintiff completed an application for employment with Defendant (the “2016 Employment Application”) through Defendant's online application system. [Docs. 6-1 at 3 ¶ 6, 6-10; 10-1 ¶¶ 24-26.] Included in the 2016 Em ployment Application was a PRE-EMPLOYMENT STATEMENT that contained an Agreement to Arbitrate (the “2016 Arbitration Agreement”), which Plaintiff electronically signed on April 12, 2016. [Doc. 6-1 at 7-10.] The 2016 Arbitration Agreement provides in pertinent part:

You and Tidelands Health recognize that differences may arise between you during the application that cannot be resolved

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without the assistance of an outside party. Both you and Tidelands Health agree to resolve any and all claims, disputes or controversies arising out of or relating to your application for employment and application process exclusively by arbitration to be administered by the American Arbitration Association (“AAA”) pursuant to its Rules for the resolution of employment disputes. . . Some, but not all, of the types of claims covered are: discrimination or harassment on the basis of race, sex, age, national origin, religion, disability, genetic information, or any other unlawful basis; breach of contract; unlawful retaliation; employment-related tort claims such as defamation or negligence; and claims arising under any statutes or regulations applicable to applicants. . .

[ Id . at 8.] Plaintiff concedes that she signed the 2016 Arbitration Agreement as part of her 2016 Employment Application. [Doc. 10-1 ¶ 25.] Plaintiff ultimately was not hired for the RN position related to the 2016 Employment Application. [ Id . ¶ 28]

Applying for a New Position via Defendant's Online Employment Application Process

Defendant has submitted the supplemental declaration from Angela Traver, its Director of Employee Relations & HR Compliance, summarizing Defendant's online employment application process. [Doc. 26-1.] Traver explains that when an applicant wishes to apply for a position, she must do so via Defendant's online application process. [ Id. at 3 ¶ 3.] For an applicant like Plaintiff, who has previously applied for a position with Defendant, to apply for a new position, she “must access and update [her] prior application.” [ Id. at 3 ¶ 5.] Once the applicant has accessed her prior application, she can modify any area that is highlighted in yellow on that prior application. [ Id . at 3 ¶ 6, 19-21.]

According to Traver's supplemental declaration, once the applicant modifies information in the application, including her available start date, she “must scroll to the bottom of the page, passing through the arbitration and class waiver language, and view

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the yellow highlighted box that indicates [she is] reapplying and re-confirming [her] original e-signature.” [ Id . at 4 ¶ 6.] Thus, Traver avers that “by leaving the check mark in the box and hitting the ‘submit' button[,] . . . the applicant has agreed to the Agreement to Arbitrate.” [ Id. (footnote added).] However, the screenshot attached to Traver's supplemental declaration appears to contradict this assertion because on the employment application page of Defendant's online application system, a “submit” button is located at both the bottom and the top of the page. [ Id. at 19-21.] Thus, it appears that an applicant could submit the application by clicking the “submit” button on the top of the page without ever scrolling down to see the Agreement to Arbitrate language. [ Id. ]

Plaintiff's 2019 Employment Application

In 2019, Plaintiff completed additional applications for employment with Defendant (the “2019 Employment Applications”) through Defendant's online application system. [Docs. 6-1 at 3 ¶ 8; 10-1 ¶ 30; 26-1 at 4-5 ¶ 8, 22-33.] Plaintiff avers that she did not sign an arbitration agreement related to her 2019 Employment Applications. [Doc. 10-1 ¶ 31.] In her initial declaration, Traver asserted that, “[s]ubsequent to April 12, 2016, [Plaintiff's] application remained active, and she could update it at any time by accessing it online and making changes.” [Doc. 6-1 at 3 ¶ 8.] Thus, according to Traver, when Plaintiff applied for positions in 2019, she was actually updating the 2016 Employment Application, and her

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“updated application form, which included the arbitration provision containing her signature, was forwarded to the hiring manager.” [ Id. ] In her supplemental declaration, Traver avers that Plaintiff entered into additional agreements to arbitrate in 2019 by clicking “submit” on her 2019 Employment Applications without first unchecking the box labeled “I ACCEPT” that she had previously checked in 2016. [Doc. 26-1 at 4-5 ¶¶ 6, 8.]

Plaintiff's 2020 Employment Application

In 2020, Plaintiff again completed an application for employment with Defendant (the “2020 Employment Application”) through Defendant's online application system. [Docs. 6-1 at 3 ¶ 8; 10-1 ¶ 30; 26-1 at 4-5 ¶ 8, 34-39.] Plaintiff avers that she did not sign an arbitration agreement related to her 2020 Employment Application. [Doc. 10-1 ¶ 31.] On the other hand, Traver again initially asserted that Plaintiff's application remained active, that she merely updated it in 2020, and that her “updated application form, which included the arbitration provision containing her signature, was forwarded to the hiring manager.” [Doc. 6-1 at 3 ¶ 8.] Additionally, Traver again contends in her supplemental declaration that Plaintiff entered into another agreement to arbitrate in 2020 (the “2020 Arbitration Agreement”) by clicking “submit” on her 2020 Employment Application without first unchecking the box labeled “I ACCEPT.” [Doc. 26-1 at 4 ¶¶ 6, 8.]

APPLICABLE LAW

Defendant moves to compel arbitration under the Federal Arbitration Act (“FAA”), which establishes a “strong federal public policy in favor of enforcing arbitration agreements” and is designed to “ensure judicial enforcement of privately made agreements to arbitrate.” Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 217, 219 (1985). The FAA

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was enacted “in 1925 in order ‘to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements on the same footing as other contracts.'” Snowden v. CheckPoint Check Cashing , 290 F.3d 631, 639 (4th Cir. 2002) (quoting Gilmer v. Interstate/Johnson Lane Corp. , 500 U.S. 20, 24 (1991)). “Underlying this policy is Congress's view that arbitration constitutes a more efficient dispute resolution process than litigation.” Adkins v. Labor Ready, Inc. , 303 F.3d 496, 500 (4th Cir. 2002).

The FAA provides that arbitration clauses in contracts involving interstate commerce “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Under the FAA, a district court must compel arbitration and stay court proceedings if the parties have agreed to arbitrate their dispute. Id. §§ 2, 3. But, if the validity of the arbitration agreement is in issue, a district court must first decide if the arbitration clause is enforceable against the parties. Id. § 4; see also Berkeley Cnty. Sch. Dist. v. Hub Int'l Ltd. , 944 F.3d 225, 234 (4th Cir. 2019) (“Section 4 thus requires that the district court . . . decide whether the parties have formed an agreement to arbitrate.”).

A party seeking to compel arbitration must establish the following four elements: (1) the existence of a dispute between the parties; (2) a written agreement that includes an arbitration provision purporting to cover the dispute; (3) the relationship of the transaction, as evidenced by the agreement, to interstate or foreign commerce; and (4) the failure, neglect, or refusal of a party to arbitrate the dispute. Am. Gen. Life & Accident Ins. Co. v. Wood,

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429 F.3d 83, 87 (4th Cir. 2005). When ruling on a motion to compel arbitration, courts employ the summary judgment standard. Rowland v. Sandy Morris Fin. & Est. Plan. Servs., LLC , 993 F.3d 253, 258 (4th Cir. 2021). When applying that standard, “the burden is on the defendant to establish[] the existence of a binding contract to arbitrate the dispute.” Id. (alteration in original) (internal quotation marks omitted). Further, “the court is entitled to consider materials other than the complaint and its supporting documents.” Berkeley Cnty. Sch. Dist. , 944 F.3d at 234. “[E]ven though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate.” Adkins , 303 F.3d at 501 (internal quotation marks and citation omitted).

Whether an arbitration agreement has been formed is an issue of state contract law. Minnieland Private Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co. , 913 F.3d 409, 415 (4th Cir. 2019). Under South Carolina law, “for there to be a binding contract between parties, there must be a mutual manifestation of assent” to “all of the terms of the contract.” Edens v. Laurel Hill, Inc. , 247 S.E.2d 434, 436 (S.C. 1978) (internal quotation marks omitted). “Although the existence of a contract is ordinarily a question of fact for the jury, where the undisputed facts do not establish a contract, the question becomes one of law.” Stevens & Wilkinson of S.C., Inc. v. City of Columbia , 762 S.E.2d 696, 701 (S.C. 2014).

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DISCUSSION

Defendant seeks to compel arbitration of the claims raised in Plaintiff's Complaint and also asks the Court to stay this action or, alternatively, to dismiss Plaintiff's claims. [Docs. 6; 13; 26; 28.] Plaintiff, on the other hand, argues that she did not enter into any agreement to arbitrate her dispute with Defendant related to her 2020 Employment Application and, to the extent any such agreement exists, her claims are not covered by that agreement. [Docs. 10 at 13-26; 27 at 13-17.]

Arbitration Based on the 2016 Arbitration Agreement

As noted, the undersigned previously recommended that Defendant's motion be denied. [Doc. 15.] At that point, Defendant argued only that the claims presented in the Complaint are subject to binding arbitration based on the 2016 Arbitration Agreement. [Doc. 6-2 at 1-3.] Defendant maintained that the 2016 Arbitration Agreement is valid and that Plaintiff merely updated the 2016 Employment Application, which included the 2016 Arbitration Agreement, when she submitted the 2020 Employment Application. [ Id. ] However, the undersigned concluded that, to the extent Defendant relies on Plaintiff's signed 2016 Arbitration Agreement as a basis for compelling arbitration related to the 2020 Employment Application, “there is no evidence in the record showing that the 2016 [Arbitration] Agreement would apply to all future job applications submitted by Plaintiff.” [Doc. 15 at 10.] The undersigned noted that “[n]owhere in the [2016 Arbitration] Agreement does it state that, by signing it, the applicant agrees to these terms for all future applications”; that “[n]otably absent from Traver's affidavit is any indication that Plaintiff was informed that Defendant treated every time she applied for a job as a continuation of her

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2016 [Employment A]pplication and [2016 Arbitration] Agreement”; and that there was no “indication that Plaintiff ever agreed to those terms.” [ Id. at 10-11.] Nothing in the memoranda and exhibits submitted since the undersigned filed the R&R changes this conclusion. Accordingly, the undersigned concludes that, as a matter of law, Defendant has failed to establish the existence of an arbitration agreement between Plaintiff and Defendant that would cover the disputes raised in the present action based solely on the parties' entering into the 2016 Arbitration Agreement. Cf. Juarez v. Soc. Fin., Inc. , No. 20-cv-03386-HSG, 2021 WL 1375868, at *5 (N.D. Cal. Apr. 12, 2021)

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(rejecting the argument that a plaintiff's attempts to apply for student loan refinancing in 2017, 2018, and 2019 were continuations of his 2016 application where “the complaint assert[ed] that these were standalone attempted transactions”); Stevens v. GFC Lending, LLC , 138 F.Supp.3d 1345, 1349-51 (N.D. Ala. 2015) (finding “no basis for stretching the scope of [an] arbitration agreement that [a plaintiff] signed in 2012 to cover [her] unrelated application for credit in 2014” where the 2012 agreement referenced “the contract” and “the vehicle,” but did not reference future claims, agreements, or relationships and noting that the defendant “essentially argue[d] that the 2012 agreement constituted a lifelong commitment” by the plaintiff “to arbitrate any disputes she might have with” the defendant where the agreement “never mentions future transactions”); Anderson v. Waffle House, Inc. , 920 F.Supp.2d 685, 694 (E.D. La. 2013) (“[A]n independent Arbitration Agreement signed by an employee during one employment period may not apply to claims that arise during subsequent periods of employment if . . . the arbitration agreement does not clearly encompass all future periods of employment following termination .” (emphasis added)).

Arbitration Based on the 2020 Arbitration Agreement

Defendant's supplemental memorandum asserts an additional argument : that Plaintiff's 2020 Employment Application includes a binding agreement to arbitrate, just as her 2016 Employment Application did. [Doc. 26 at 2.] Specifically, Defendant contends,

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Plaintiff may argue that the 2016 application “signed” by Plaintiff had “aged” out and could not support a contract to arbitrate in 2020. But that is the whole point of Traver's Supplemental Declaration. In it, Traver points out that on June 26, 2020, Plaintiff signed a new “Agreement to Arbitrate” in the same manner and with the same import and consequences as she had in 2016. She had to review the language of the Agreement to Arbitrate, she had to review the “I Accept” information and then take the affirmative step to submit the 2020 application by hitting the “Submit” button. The process in 2020 was the same as it as in 2016, which Plaintiff admits resulted in a binding agreement to arbitrate in 2016.

[Doc. 26 at 7.] Additionally, Defendant has submitted a copy of the 2020 Employment Application, which includes the 2020 Arbitration Agreement and Plaintiff's electronic signature next to a checked box labeled “I ACCEPT” at 5:23 am on June 26, 2020. [Doc. 26-1 at 35-39.] As noted, Plaintiff avers that she never signed an arbitration agreement in connection with her 2020 Employment Application. [Doc. 10-1 ¶¶ 30-31.] Thus, the Court must determine whether the parties entered into an arbitration agreement related to the 2020 Employment Application.

As noted, the 2020 Arbitration Agreement, the purported contract at issue in this case, was formed through an online employment application process. The Fourth Circuit has recently explained,

There is no question that the digital age has changed the nature of contract formation. Long gone are the days when two parties might sit down across a wooden table and sign with their own pens the same sheet of paper.... A casual Internet browser might enter a contract with a company merely by using its website. In some cases, an “electronic ‘click' can suffice to signify the acceptance of a contract.” For the unwary, this can be treacherous.

Although “new commerce on the Internet has exposed courts to many new situations”-and opened up useful new tools through which contracting parties can communicate-”it has

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not fundamentally changed the principles of contract.” Courts are not licensed to ignore the old chestnuts-cases that remind us that (1) certain formalities are required for a contract to be formed, and (2) when the formalities are met, a contract it does make.

. . . The electronic age has not made the formalities of contract less crucial, but more so .... All we are left to rest on are the formalities.

Rowland , 993 F.3d at 260 (internal citations omitted).

Upon review of the evidence and applicable law, the undersigned concludes, as a matter of law, that Defendant has not met its burden of showing the existence of a binding contract to arbitrate the disputes in this case because Defendant has not established that Plaintiff manifested her assent to the 2020 Arbitration Agreement. As already noted, the online application provides a “submit” button at the top of the page as well as at the bottom of the page but the Agreement to Arbitrate language and the “I ACCEPT” box are only at the bottom of the page. Thus, an applicant could click the “submit” button at the top of the page with no notice that she was purportedly agreeing to arbitration because the applicant would have to scroll down a lengthy page to find the Agreement to Arbitrate language and the “I ACCEPT” button. See Sgouros v. TransUnion Corp. , 817 F.3d 1029, 1035 (7th Cir. 2016) (holding that no agreement arose between the parties where the website did not make clear to a user that purchasing a consumer credit score meant agreeing to a service agreement and noting that “we cannot presume that a person who clicks on a box that appears on a computer screen has notice of all contents not only of that page but of other content that requires further action (scrolling, following a link, etc.)”) ; Specht v. Netscape Commc'ns Corp. , 306 F.3d 17, 23 (2d Cir. 2002) (refusing to enforce terms of use “that would have become visible to plaintiffs only if they had scrolled down to the next screen”).

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Further, the label “submit” suggests that by clicking the button, the applicant is submitting her employment application for review, but the word “submit” does not, in its ordinary meaning, manifest assent to an agreement or acceptance of any terms and conditions. Merriam-Webster, https://www.merriam-webster.com/dictionary/submit (last visited July 5, 2022) (defining “submit” as “to present or propose to another for review, consideration, or decision”). Nor is there any notice or explanation adjacent to or near the “submit” button explaining that by clicking “submit,” the applicant is agreeing to any terms and conditions or that she would be bound to an arbitration agreement. See Sgouros , 817 F.3d at 1035 (holding that no agreement arose between the parties where the text above a button labeled, “I Accept & Continue to Step 3,” “told the user that clicking on the box constituted his authorization for TransUnion to obtain his personal information” but said “nothing about contractual terms”).

Additionally, even if Plaintiff, as a returning applicant, scrolled to the bottom of the page past the Agreement to Arbitrate language, the box beside “I ACCEPT”-where Plaintiff would have needed to apply her e-signature to manifest her assent-was already

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checked and beside it was Plaintiff's e-signature and the date and time stamp from when she executed the 2016 Arbitration Agreement: “LORETTA MARSHALL 4/12/2016 9:35 AM.” [Doc. 27-1 at 4.] Nothing on the page indicates that, by submitting a new employment application, the 2016 Arbitration Agreement would be revived and converted into a new agreement to arbitrate applicable to the 2020 Employment Application. Nor does it appear to be a new agreement that could be executed, but instead it seems to be a copy of the 2016 Arbitration Agreement. That the “I ACCEPT” box was accompanied by a date and time stamp from four years earlier suggests that it was not clear to an applicant that by submitting the application, she was accepting those same terms again and creating a new agreement. And nothing on the page informs an applicant that if she does not uncheck the “I ACCEPT” box, she has consented to arbitration. “In sum, attributing to [Plaintiff] knowledge of and assent to [Defendant's Agreement to Arbitrate] based on such

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a thin factual predicate would amount to rank speculation.” Watkins v. Carr , No. CV PX-17-0819, 2018 WL 10741730, at *4 (D. Md. Jan. 12, 2018).

Moreover, Plaintiff has submitted evidence demonstrating that Defendant's online employment application system generates a signed, time- and date-stamped employment application even when an applicant clicks the “save & return later” button rather than the “submit” button. On September 29, 2021, Plaintiff and her counsel logged into Plaintiff's profile using her username and password on Defendant's online employment application system. [Doc. 27-1 at 1 ¶ 2.] They went through the process of selecting a position to apply for, which pulled up a screen with Plaintiff's 2016 Employment Application. [ Id. at 1-2 ¶¶ 6-7.] At both the top and bottom of the online application page were the options to click a “save & return later” button or a “submit” button. [ Id. at 4 ¶ 14.] “Not wanting to submit a job application,” Plaintiff's counsel “clicked on ‘Save and Return Later'” and “did not submit or revise the job application.” [ Id. at 4 ¶ 15.] The following day, Defendant's counsel notified Plaintiff's counsel that Plaintiff had “‘signed' and submitted a revised application (with the arbitration and class waiver language) just this week.” [Doc. 27-1 at 6-7.] Indeed, Defendant's counsel attached a copy of Plaintiff's “revised application” that was submitted on September 29, 2021, with the “I ACCEPT” box checked and beside it was Plaintiff's e-signature and the date and time stamp from when Plaintiff and her counsel had clicked the “save & return later” button: “LORETTA MARSHALL 9/29/2021 9:48 AM.” [ Id. at 6-7, 27-31.] The Court cannot rely on Defendant's argument that because it has produced a signed, time- and date-stamped agreement with respect to the 2020 Arbitration

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Agreement, it has established the existence of a binding contract to arbitrate when its online employment application system also generates signed, time- and date-stamped agreements without an applicant ever clicking the “submit” button. In the instance where an applicant clicks the “save & return later” button, she is not manifesting her assent to anything. Accordingly, the Court concludes, as a matter of law, that Defendant has not met its burden “to establish[] the existence of a binding contract to arbitrate the dispute,”

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Rowland , 993 F.3d at 258 (alteration in original) (internal quotation marks omitted), and therefore its motion to compel arbitration should be denied.

CONCLUSION AND RECOMMENDATION

Accordingly, for the reasons explained above, it is recommended that Defendant's motion to stay litigation and compel arbitration or, alternatively, to dismiss [Doc. 6] be DENIED.

IT IS SO RECOMMENDED.

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