Date: 06-27-2018

Case Style:

Case Number: 18-1193

Judge: Barrett

Court: United States Court of Appeals for the Seventh Circuit on appeal from the Western District of Wisconsin

Plaintiff's Attorney: Caitlin Madden and David Zoeller

Defendant's Attorney: Kurt A. Goehre and Ross William Townsend

Description: WeConnect, Inc. asks us to reverse
the district court for making a factual mistake. The district
court found that WeConnect was not a party to the arbitra-
* Of the Northern District of Illinois, sitting by designation.
2 No. 18-1193
tion agreement it sought to enforce. WeConnect says that the
district court misunderstood the nature of its relationship
with the entity named in the arbitration agreement. Because
the district court did not clearly err, we affirm its ruling.
I.
Brooks Goplin worked for WeConnect, Inc. When he began
his employment, he signed an arbitration agreement
called the “AEI Alternative Entertainment Inc. Open Door
Policy and Arbitration Program.” The agreement referred to
an entity named AEI throughout; it never mentioned We-
Connect. This error became significant several months later,
when Goplin sued WeConnect in federal court.
Goplin brought a collective action under the Fair Labor
Standards Act and a class action asserting claims under Wisconsin
law. Invoking the agreement Goplin had signed, We-
Connect filed a motion to dismiss and compel arbitration.
Fed. R. Civ. P. 12(b)(3). It attached an affidavit from its Director
of Human Resources stating, among other things, that “I
am employed by WeConnect, Inc.—formerly known as Alternative
Entertainment, Inc. or AEI—as Director of Human
Resources.”
Goplin raised several arguments in opposition, but only
one is relevant here: he claimed that WeConnect was not a
party to the agreement and therefore could not enforce it.1
1 Goplin also argued, and the district court agreed, that the “collective
action” waiver was invalid under our precedent in Lewis v. Epic Systems
Corp., 823 F.3d 1147 (7th Cir. 2016) (holding that such waivers violate
the Fair Labor Standards Act). The Supreme Court has since reversed
Epic Systems, so this argument is no longer relevant. Epic Sys.
Corp. v. Lewis, No. 16-285, 2018 WL 2292444 (U.S. May 21, 2018).
No. 18-1193 3
He directed the district court to language on WeConnect’s
website, which stated the following:
WeConnect formed when two privately held companies, Alternative
Entertainment, Inc. (AEI) and WeConnect Enterprise Solutions,
combined in September 2016… Working together, AEI and
WeConnect Enterprises could be as nimble as the next great
technological innovation required. Our founders… saw that we
were stronger together. And we officially became one company,
WeConnect.
Goplin contended that this language supported his position
that AEI and WeConnect were two distinct legal entities. His
arbitration agreement was with the now-defunct AEI, and
WeConnect could not enforce an agreement that he had entered
with another company. Under Wisconsin law, which
applies here, “[t]he general rule is that only a party to a contract
may enforce it.” Sussex Tool & Supply, Inc. v. Mainline
Sewer & Water, Inc., 605 N.W.2d 620, 622–23 (Wis. Ct. App.
1999).
In its reply, WeConnect disputed Goplin’s characterization
of its relationship with AEI.2 It asserted that WeConnect
and AEI were not two different legal entities, but rather two
names for the same legal entity—AEI was the company’s
original name and WeConnect is its new one. It emphasized
that the affidavit from the Director of Human Resources referred
to WeConnect as a company “formerly known” as
AEI. Thus, WeConnect argued, a contract with AEI was a
2 WeConnect’s reply focused primarily on enforceability of the
agreement under the National Labor Relations Act and whether the
agreement is procedurally or substantively unconscionable. Unfortunately,
it gave very little attention to the issue now on appeal.
4 No. 18-1193
contract with WeConnect. This was a name change, not a
merger.
The district court held that WeConnect failed to meet its
burden of demonstrating that it was a party to the arbitration
agreement or otherwise entitled to enforce it. It discounted
the affidavit from the Director of Human Resources
as conclusory and noted that “WeConnect’s own website indicates
that AEI ceased to exist in September 2016, when it
merged with WeConnect Enterprise Solutions to form We-
Connect, Inc.” Because the court found that “AEI isn’t just
another name for WeConnect,” it denied WeConnect’s motion
to compel arbitration.
WeConnect filed a motion for reconsideration. This time,
it attached more substantial evidence—including some corporate-
form documents and affidavits from its lawyer and
CEO—to support its claim that AEI had undergone a name
change rather than a merger. But the district court pointed
out that new evidence cannot be introduced in a motion for
reconsideration unless the moving party shows “not only
that [the] evidence was newly discovered or unknown to it
until after the hearing, but also that it could not with reasonable
diligence have discovered and produced such evidence
[during the pendency of the motion].” Caisse Nationale de
Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir.
1996) (citations omitted). WeConnect’s evidence was neither
newly discovered nor unknown; moreover, it could easily
have produced these documents and affidavits the first time
around. The district court thus denied the motion.
No. 18-1193 5
II.
On appeal, WeConnect challenges the district court’s factual
finding that WeConnect and AEI are distinct legal entities.
This argument is an uphill battle, because we will only
reverse a district court’s finding of fact if it is clearly erroneous.
And in making that determination, we will consider only
the evidence that was properly in the record when the district
court ruled. The district court correctly declined to revisit
its decision based on the additional materials that We-
Connect attached to its motion for reconsideration; thus, we
will not consider that evidence in our review of the district
court’s finding.
WeConnect’s primary complaint is that the district court
should not have taken its website into account in ruling on
the Rule 12(b)(3) motion. According to WeConnect, the district
court violated the rules of judicial notice by relying on
information it found in the course of its own internet research.
WeConnect emphasizes our warning that “it is especially
important for parties to have the opportunity to be
heard prior to the taking of judicial notice of websites.”
Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 648 (7th Cir.
2011). WeConnect suggests that without the website, the district
court’s factual finding lacks any basis.
WeConnect is incorrect. The website was not the determinative
factor in the district court’s decision. WeConnect
bore the burden of establishing its right to enforce the arbitration
agreement. It contended that it could enforce a contract
entered by AEI, but the only evidence it introduced of
its relationship to AEI was one sentence in an affidavit from
its Director of Human Resources. The district court held that
this affidavit was insufficient proof that WeConnect and AEI
6 No. 18-1193
were different names for the same entity. To be sure, it
viewed the website as confirmation that the entities were
distinct. But the court’s opinion makes clear that it would
have reached the same result even without the website. It
thought that WeConnect simply hadn’t introduced enough
evidence to show that it had an enforceable agreement with
Goplin.
In any event, the district court did not violate the rules of
judicial notice by reviewing WeConnect’s website. Contrary
to WeConnect’s assertion, the district court did not engage in
its own internet research to find the website; Goplin cited
WeConnect’s website in his briefing. WeConnect protests
that it did not have the opportunity to put its website language
in context for the court. But it could have done so in
its reply brief; it simply failed to use that opportunity. We
note too that the statements at issue are WeConnect’s own
assertions, not potentially unfamiliar information posted on
third-party websites. Cf. Rowe v. Gibson, 798 F.3d 622 (7th Cir.
2015) (taking notice of medical reference websites); Pickett,
664 F.3d at 648 (addressing a court’s taking notice of the
Consumer Price Index and Laffey Matrix).
Had WeConnect introduced the strongest evidence of its
relationship with AEI from the get-go, it may well have convinced
the district court that the two names referred to the
same entity. But WeConnect miscalculated and relied on a
conclusory sentence in a human resources affidavit to establish
the corporate relationship between WeConnect and AEI.
Based on the evidence it had before it, the district court’s
finding was not clearly erroneous.

Outcome: The decision of the district court is AFFIRMED and the case is remanded for further proceedings.

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