Arbitrator Must Determine Venue for SmileDirectClub False Advertising Class Action Lawsuit, Court Rules

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A false advertising claim against SmileDirectClub has been sent to an arbitrator who must decide whether the claim should be arbitrated or litigated after a 6th Circuit Court of Appeals ruling.

The court said in its ruling that the claim, filed by consumer Dana Johnson, was wrongly short-circuited by an American Arbitration Association administrator who refused to appoint an arbitrator, Law360 reported.

Johnson filed a class action lawsuit against the teledentistry company in a Tennessee federal court accusing it of false advertising and fraud for claiming that its aligners were as effective as traditional orthodontics.

The dispute was sent to arbitration, where the Arbitration Association administrator made the ruling.

Johnson’s claim is part of a larger class action lawsuit involving consumers and dentists who all accuse SmileDirectClub of engaging in a “deliberate, intentional, and well lawyered campaign to stifle any legitimate, publicly-stated concerns or criticisms of its product and/or business practices,” the claim reads.

At the heart of the matter is how SmileDirectClub allows consumers to order dental aligners by making their own dental impressions using an impression kit, which is then returned to SmileDirectClub. According to Law360, the dentists and consumers allege that consumers’ dental plans are then prepared by independent contractors in Costa Rica, and licensed U.S. dentists are barely involved in the process – meaning the company’s claims of providing the same level of care as traditional orthodontics are false.

The class action lawsuit also alleges that consumers never discover the identity of their doctors, meaning that no patient-doctor relationship can be established. The consumers and dentists claim that SmileDirectClub regularly threatens dentists and orthodontists who have raised concerns about the company, Law360 reports.

Johnson had agreed to dismiss his claim in favor of Class-wide arbitration before the Arbitration Association, but the association administrator informed the groups that the claim couldn’t be arbitrated under its Arbitration Association policy. The particular policy applies to some health care claims, under which health care providers and their patients must sign an arbitration agreement after a dispute arises in certain cases unless a court has ordered arbitration, Law360 reports.

However, the 6th Circuit ruled that the administrator did not have the power to decide whether Arbitration Association policy meant that the dispute had to be sent back to court.

“The procedural decisions (American Arbitration Association) administrators make … are more akin to ‘administrative aspects of the arbitration, such as the appointment of the arbitrator … preliminary decisions about where hearings might take place, and … handl[ing] the fees,'” the decision reads.

“So it generally wouldn’t make sense to require clear intent to delegate arbitrability questions to an arbitrator but then allow either arbitrators or administrators to decide that legal question.”

Michael D. Meuti, of Benesch Friedlander Coplan & Aronoff LLP, was part of the legal team representing SmileDirectClub and told Law360 that the company “is pleased that the Sixth Circuit reaffirmed the longstanding principle that arbitration is a matter of contract and that the parties’ intent, as reflected in the contract text, controls over the decision of an administrator that neither party selected.”

In May, SmileDirectClub was hit with another class action lawsuit where an employee accused the company of failing to properly pay its workers. Nichole Barkus claims the company — which manufactures and sells clear aligners — operates “an unlawful compensation system” that results in employees receiving inadequate compensation for all of their hours.

Have you ever shopped at SmileDirectClub? What do you think of these class action lawsuits against the company?

Johnson is represented by Emily J. Tidmore, Robert K. Spotswood, Michael T. Sansbury, and Joshua K. Payne of Spotswood Sansom & Sansbury LLC, and by Edward M. Yarbrough, and W. Justin Adams of Bone McAllester Norton PLLC.

SmileDirectClub is represented by Michael D. Meuti and James R. Bedell of Benesch Friedlander Coplan & Aronoff LLP.

The SmileDirectClub False Advertising Class Action Lawsuit is Joseph Ciccio et al. v. SmileDirectClub LLC, Case No. 20-5833 in the U.S. Court of Appeals for the Sixth Circuit.

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