UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 20-60971-CIV-SINGHAL

 

ALEXIA PREDDY, individually and 

on behalf of all others similarly situated,

Plaintiffs,

v.

ADT, LLC d/b/a ADT SECURITY

SERVICES, a Delaware limited liability

company, and TELESFORO AVILES, an

individual,

Defendants.

________________________________/

ORDER

THIS CAUSE is before the Court upon Defendant ADT, LLC’s (“ADT”) Motion to 

Dismiss the Amended Complaint and Motion to Compel Arbitration (DE [38]). The matter 

has been fully briefed and the Court has heard argument of counsel. Because the Court 

finds that Plaintiff is bound by the arbitration agreement contained in the alarm services 

contract, ADT’s Motion to Compel Arbitration is granted and the Motion to Dismiss 

Amended Complaint is denied as moot.

I. BACKGROUND

According to the First Amended Complaint (DE [31]), Plaintiff Alexia Preddy

(“Plaintiff”) lived in a home in Texas with her mother who had contracted with ADT for 

its Pulse home alarm service. The Pulse system provided an internet-connected smart 

home system including camera surveillance inside and outside the home. Plaintiff’s 

mother had been an existing customer of ADT and received an offer to upgrade her 

service to include Pulse. Plaintiff expressed reservations about installing cameras in 

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the home, but her mother was assured by ADT that the service was safe and the system 

was installed.

After several years of service, ADT notified Plaintiff’s mother that an ADT 

technician had given himself remote access to her account that enabled him to 

surreptitiously open locks, disarm the system, and view and download security camera 

footage from her home. The technician accessed the home’s system 73 times and 

accessed the accounts of hundreds of other ADT customers in Texas.

Plaintiff filed this action on behalf of herself and a putative class of “[a]ll individuals 

in the United States who (1) reside in a household with an ADT Pulse security system, 

but are not the account holder; (2) where that security system was remotely accessed 

by an employee or agent of Defendant ADT without authorization from the account 

holder” and a sub-class of “[a]ll individuals in the United States who (1) reside in a 

household with an ADT Pulse security system, but are not the account holder; (2) where 

that security system was remotely accessed by Telesforo Aviles without authorization 

from the customer.”

The First Amended Complaint alleges that ADT marketed the Pulse system with 

promises of best practices in managing consumers’ privacy and data and with 

assurances of the professionalism and trustworthiness of ADT’s installers. Yet, Plaintiff 

alleges, the Pulse system contained a vulnerability that permitted third parties to grant 

themselves unauthorized access to Pulse accounts but ADT had no procedures to 

prevent or discover such unauthorized access. Plaintiff alleges that the unauthorized 

access to the cameras in her home exposed her private and intimate moments to 

strangers who had accessed the system. She seeks damages from ADT on behalf of 

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herself, the putative class, and the putative subclass for negligence, negligent hiring, 

supervision, and retention, intentional infliction of emotional distress, and intrusion upon 

seclusion. She also asks that the Court award an equitable remedy of privacy 

monitoring to protect against future harm arising from the unauthorized access to the 

Pulse system.

ADT moves to dismiss the First Amended Complaint or, alternatively, to compel 

arbitration in accordance with the alarm services contract signed by Plaintiff’s mother. 

ADT argues that the Amended Complaint should be dismissed because Plaintiff’s 

negligence claims are barred by Texas law since she has not alleged any physical 

damages, that the Amended Complaint fails to allege facts that would plausibly support 

intentional tort claims against ADT, and that the Amended Complaint fails to allege any 

basis for imposing vicarious liability upon ADT for the unauthorized actions of its 

employee. 

ADT further argues that the Amended Complaint should be dismissed because 

the contract for alarm services contained an arbitration clause and a waiver of jury trials:

ARBITRATION. ADT AND I AGREE THAT ANY AND ALL 

DISPUTES BETWEEN US SHALL BE GOVERNED BY THIS 

BINDING ARBITRATION AGREEMENT. . . .

[t]he term “Dispute” shall be given the broadest possible 

meaning and will apply to, without limitation, all claims and 

controversies arising from this Agreement; sales activities; 

goods and services; advertisements, promotions and other

statements; billing and collection practices; privacy; and any 

other dispute arising from my interaction or relationship with 

ADT.

As used herein, the term “Dispute” means any claim or 

controversy, including, but not limited to, initial claims, 

counterclaims, cross-claims, and third-party claims, whether 

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based in contract; tort; fraud; intentional actions; violation of 

any statute, code or regulation; or other legal theory.

* * *

IF EITHER PARTY ELECTS TO ARBITRATE A DISPUTE, 

ADT AND I WAIVE THE RIGHT TO A JURY TRIAL AND TO 

OTHERWISE LITIGATE THE DISPUTE IN COURT. BY 

AGREEING TO ARBITRATE, THE PARTIES MAY ALSO 

WAIVE OTHER RIGHTS THAT WOULD OTHERWISE BE

AVAILABLE IN COURT. . . .

(DE [38-1]). Plaintiff contends that she is not subjected to the arbitration clause because 

she was not a signatory to the alarm services contract.

II. LEGAL STANDARDS

The Federal Arbitration Act’s (“FAA”), see 9 U.S.C. §§ 1 et seq., “primary purpose 

is to ensure that private agreements to arbitrate are enforced according to their terms.” 

Spirit Airlines, Inc. v. Maizes, 2017 WL 4155476, at *2 (S.D. Fla. Sept. 19, 2017) (internal 

quotation omitted), aff’d, 899 F.3d 1230 (11th Cir. 2018). Federal policy favors 

arbitration. Moses H. Cone Memorial Hosp. v. Mercury Contr. Co., 460 U.S. 1, 24 (1983) 

(“The [Federal] Arbitration Act establishes that, as a matter of federal law, any doubts 

concerning the scope of arbitrable issues should be resolved in favor of arbitration. . . .”). 

To that end, according to the FAA, arbitration agreements “shall be valid, irrevocable, 

and enforceable.” 9 U.S.C. § 2. However, “[a]rbitration is a matter of contract,” AT&T 

Techs. v. Communs. Workers of Am., 475 U.S. 643, 648 (1986), and the federal policy 

presumption in favor of arbitration “does not apply to the determination of whether an 

arbitration agreement exists” in the first place. Rensel v. Centra Tech, Inc., 2018 WL 

4410110, at *10 (S.D. Fla. June 14, 2018).

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The parties agree that Texas law applies to the arbitrability issue.

1 Under Texas 

law, “[g]enerally only signatories to an arbitration agreement are bound by the 

agreement.” Rocha v. Marks Transport, Inc., 512 S.W.3d 529, 535 (Tex. App. 2016) 

(quotation omitted). But non-signatories may be compelled to arbitrate in certain 

circumstances under principles of contract and agency law. Id. Whether a non-signatory 

is bound by an arbitration agreement is a “gateway matter” for the court to decide. In re 

Weekley Homes LP, 180 S.W. 127, 130 (Tex. 2005). 

ADT argues that Plaintiff may be compelled to arbitrate under the doctrine of 

direct-benefits estoppel. “The doctrine of direct-benefits estoppel requires a nonsignatory to arbitrate a claim ‘if it seeks, through the claim, to derive a direct benefit from 

the contract containing the arbitration agreement.’” Rocha, 512 S.W.3d at 535 (quoting 

In re Vesta Ins. Grp., Inc., 192 S.W.3d 759, 761 (Tex. 2006) (original proceeding) (citing 

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 741 (Tex. 2005)). “While the 

boundaries of direct-benefits estoppel are not always clear, non-signatories generally 

must arbitrate claims if liability arises from a contract with an arbitration clause, but not 

if liability arises from general obligations imposed by law.” In re Weekley, 180 S.W. 3d 

at 130, 134. The Supreme Court of Texas “recognize[d] that direct-benefits estoppel has 

yet to be endorsed by the United States Supreme Court, and that its application and 

1 A federal court sitting in diversity under 28 U.S.C. § 1132(d)(2) applies the choice of law rule of the state 

in which it is located, in this case Florida. U.S. Fidelity & Guar. Co. v. Liberty Surplus Ins. Corp., 550 F.3d 

1031, 1033 (11th Cir. 2008). The applicable test varies depending on the cause of action. This case 

involves both contract and tort claims. Florida applies the “most significant relationship test” as outlined 

in the Restatement (Second) of Torts to determine choice of law for tort actions. Melton v. Century Arms, 

Inc., 243 F. Supp. 3d 1290, 1299 (S.D. Fla. 2017); Bishop v. Fla. Specialty Paint Co., 389 So.2d 999, 1001 

(Fla. 1980)). For contract actions, Florida applies the doctrine of lex loci contractus and considers where 

the contract was executed. State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160, 1163 (Fla. 2006). 

In this case, the making of the contract, the installation of the Pulse alarm system, and the unauthorized 

access all occurred in Texas.

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boundaries are not entirely clear.” Id. at 134. The court further noted that “the equitable 

nature of the doctrine may render firm standards inappropriate, requiring trial courts to 

exercise some discretion based on the facts of each case.” Id. at 135 (emphasis added).

“There are two ways direct-benefits estoppel can bind a non-signatory to an 

arbitration agreement.” SIG-TX Assets, LLC v. Serrato, 2019 WL 1771301, at *3 (Tex. 

App. Apr. 23, 2019).

The first way the doctrine may apply is when the nonsignatory’s claims (and thus the defendant’s liability) arise 

solely from the contract or must be determined by 

reference to it. The second way is when the non-signatory 

deliberately seeks and obtains direct and substantial 

benefits from the contract containing the arbitration clause, 

irrespective of whether the non-signatory’s claims are 

based on the contract.

Id. ADT argues both grounds for applying direct-benefits estoppel. First, it argues that 

Plaintiff’s claims cannot be determined without reference to the contract. Second, it 

argues that, as an authorized user of the Pulse system, Plaintiff sought and obtained 

direct and substantial benefits from the contract containing the arbitration clause and 

cannot now disavow the terms of the contract. Plaintiff responds that her claims are 

founded in tort, not contract, and therefore the first ground does not apply. Secondly, 

she argues that obtaining incidental benefits from the contract are not sufficient to bind 

her to the contract’s arbitration clause. Based upon the facts of this case as alleged in 

the First Amended Complaint, the Court concludes that Plaintiff – even though a nonsignatory -- is bound by the arbitration clause.

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 First, the Court concludes that Plaintiff’s claims seek to enforce a benefit arising 

directly from the contract. The Supreme Court of Texas explains:

We conclude that, under “direct benefits estoppel,” 

although a non-signatory's claim may relate to a contract 

containing an arbitration provision, that relationship does 

not, in itself, bind the non-signatory to the arbitration 

provision. Instead, a non-signatory should be compelled to 

arbitrate a claim only if it seeks, through the claim, to 

derive a direct benefit from the contract containing the 

arbitration provision. 

In re Kellogg Brown & Root, 166 S.W.3d at 741 (citing MAG Portfolio Consult., GMBH v. 

Merlin Biomed Group LLC, 268 F.3d 58, 61 (2d Cir. 2001) (“The benefits must be direct—

which is to say, flowing directly from the agreement.”)). In Kellogg, the Texas court 

rejected a contractor’s attempt to bind a second-tier subcontractor to an arbitration 

agreement signed by the contractor and the first-tier subcontractor. The second-tier 

contractor provided materials and services contemplated by the original subcontract that 

contained the arbitration clause and sued the contractor under a quantum meruit theory 

for services rendered. The court noted that nothing in the first-tier contract contemplated

payment to the second-tier subcontractor. The court held, therefore, that the quantum 

meruit claim did not arise directly from the contract containing the arbitration clause. 

Unlike the claims in Kellogg, Plaintiff’s claims in this case arise directly from ADT’s 

obligations under the contract. ADT agreed to install a security system to protect 

Plaintiff’s home, but left the home and its occupants vulnerable to intrusion; Plaintiff’s 

claims cannot be resolved without reference to ADT’s duties under the contract. Plaintiff

relies on Rocha v. Marks Transport, Inc., 512 S.W.3d 529 (Tex. App. 2016), but the 

contract in that case had no bearing on the plaintiff’s personal injury claims. In Rocha, 

the plaintiff’s husband purchased an extended warranty containing an arbitration clause. 

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The plaintiff brought her vehicle in for service under the extended warranty and sustained 

injuries when she fell on the premises. The court held that the plaintiff’s presence on the 

premises may have been motivated by the extended warranty, but the defendant’s duty 

to maintain safe premises existed independently from the warranty. 

By contrast, ADT’s duty to reasonably prevent unauthorized access to the security 

system it installed arises directly from the contract to install the security system; the duty 

does not exist independently from the contract. Plaintiff’s reliance on SIG-TX Assets, 

LLC v. Serrato, 2019 WL 1771301 (Tex. App. Apr. 23, 2019), is misplaced for that 

reason. In SIG-TX, one family member signed a services contract with a funeral home 

for the interment of the family’s matriarch. After the funeral home switched corpses and 

buried the matriarch in a funeral service attended by another family, the plaintiffs (but not 

the contracting party) sued the funeral home. The court rejected the funeral home’s 

attempt to bind the non-signators to the contract’s arbitration clause because the funeral 

home had an independent duty under common law not to mishandle the corpse. Id. at 

*4. Thus, although the plaintiffs’ claims touched upon the contract, they did not rely upon 

the terms of the contract and, therefore, the non-signatory plaintiffs could not be bound 

by the contract’s arbitration clause. In this case, however, Plaintiff’s claims relate directly 

to the contract to install a home security system and Plaintiff is bound by its terms.

Second, Plaintiff is also required to arbitrate her claims because she deliberately 

sought and obtained benefits from the contract: she was an authorized user of the Pulse 

security system that was installed in the home where she lived. “[D]irect-benefits 

estoppel looks at the actions of the parties after the contract was executed.” In re Lloyd's 

Register N. Am., Inc., 780 F.3d 283, 293 (5th Cir. 2015). Although her mother signed 

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the service agreement contract, once the system was installed Plaintiff became an 

authorized user who had the ability to set and use the system. (DE [45-1]). She directly 

benefited from the service agreement and installation of the Pulse system; she is, 

therefore, bound by the service agreement’s arbitration clause.

In light of the Court’s decision that this case is subject to arbitration, the Court will 

not consider the substantive grounds for dismissal raised by ADT. The Court will stay 

the case pending arbitration. See Valiente v. Holiday CVS, LLC, 2020 WL 2404701, at 

* 3 (S.D. Fla. May 12, 2020) (discussing Federal Arbitration Act and Eleventh Circuit 

precedent holding claims subject to arbitration should be stayed, rather than dismissed). 

Accordingly, for the foregoing reasons, it is hereby

ORDERED AND ADJUDGED that Defendant ADT LLC’s Motion to Dismiss the 

Amended Complaint and Motion to Compel Arbitration (DE [38]) is GRANTED IN PART 

AND DENIED IN PART AS MOOT. The Clerk of Court is directed to STAY this case 

pending arbitration. The case shall remain CLOSED for administrative purposes only, 

and without prejudice to the parties to move to reopen once arbitration has been 

completed. All other pending motions are DENIED AS MOOT.

DONE AND ORDERED in Chambers, Fort Lauderdale, Florida, this 30th day of 

December 2020.

Copies furnished counsel via CM/ECF

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