Justia Arbitration & Mediation Opinion Summaries

An online business, Interactive Life Forms, LLC, was sued by a customer, Brinan Weeks, who alleged that the company falsely advertised a product he purchased. In response, the company invoked an arbitration clause found in the terms of use on its website, claiming that these terms bound customers irrespective of whether they clicked on the link or provided any affirmative assent. The company argued that by using the website and making a purchase, Weeks had agreed to the terms of use, which included a provision mandating arbitration for any disputes.The trial court denied the motion to compel arbitration, finding that the company failed to show the parties agreed to arbitrate their dispute. The court held that the link to the terms of use was insufficient to put a reasonable user on notice of the terms of use and the arbitration agreement.On appeal, the Appellate Court of the State of California, Second Appellate District Division One, affirmed the trial court’s decision. It held that the company failed to establish that a reasonably prudent user would be on notice of the terms of use. The court rejected the company's argument that it should depart from precedent, which generally considers browsewrap provisions unenforceable, and also dismissed the company's claim that Federal Arbitration Act preempts California law adverse to browsewrap provisions. The court concluded there were no grounds to deviate from this precedent, and that the Federal Arbitration Act did not preempt California law concerning browsewrap agreements. The court emphasized that the company had the onus to put users on notice of the terms to which it wished to bind consumers. View "Weeks v. Interactive Life Forms, LLC" on Justia Law

The United States Court of Appeals for the Ninth Circuit affirmed the lower court's order to compel arbitration and dismiss without prejudice a series of lawsuits against several sports goods e-commerce companies (the defendants). The lawsuits were brought by several plaintiffs, who were consumers that purchased goods online from the defendants and had their personal information stolen during a data breach on the defendants' websites. The defendants moved to compel arbitration based on the arbitration provision in their terms of use. The appellate court held that the plaintiffs had sufficient notice of the arbitration provision and that the arbitration clause was not invalid under California law, was not unconscionable, and did not prohibit public injunctive relief. Furthermore, the parties agreed to delegate the question of arbitrability to an arbitrator according to the commercial rules and procedures of JAMS, a private alternative dispute resolution provider. View "PATRICK V. RUNNING WAREHOUSE, LLC" on Justia Law

PayPal users can transfer money to businesses and people; they can donate to charities through the Giving Fund, its 501(c)(3) charitable organization. Kass created a PayPal account and accepted PayPal’s 2004 User Agreement, including a non-mandatory arbitration clause and allowing PayPal to amend the Agreement at any time by posting the amended terms on its website. In 2012 PayPal amended the Agreement, adding a mandatory arbitration provision. Users could opt out until December 2012. In 2016, PayPal sent emails to Kass encouraging her to make year-end donations. Kass donated $3,250 to 13 charities through the Giving Fund website. Kass alleges she later learned that only three of those charities actually received her gifts; none knew that Kass had made the donations. Kass claims that, although Giving Fund created profile pages for these charities, it would transfer donated funds only to charities that created a PayPal “business” account; otherwise PayPal would “redistribute” the funds to similar charities.Kass and a charity to which she had donated filed a purported class action. The district court granted a motion to compel arbitration, then affirmed the arbitrator’s decision in favor of the defendants. The Seventh Circuit vacated. In concluding that Kass had consented to the amended Agreement, the district court erred by deciding a disputed issue of fact that must be decided by a trier of fact: whether Kass received notice of the amended Agreement and implicitly agreed to the new arbitration clause. View "Kass v. PayPal Inc." on Justia Law

Skillz provides a mobile platform that hosts games in which players compete for cash prizes. To participate in paid-entry competitions, a user must save the player account; after entering a date of birth, the user must tap a box with the word “Next.” Below the “Next” box is the advisory statement: “By tapping ‘Next,’ I agree to the Terms of Service and the Privacy Policy.” A hyperlink, if tapped, takes the user to Skillz’s terms of service. Gostev saved a Skillz player account in 2019. The Terms of Service then had 15 pages.Gostev sued Skillz, alleging that its games constituted illegal gambling, predatory and unlawful practices, and violated the Unfair Competition Law and the Consumers Legal Remedies Act, Gostev alleged the arbitration agreement was unenforceable. Skillz argued that Gostev’s challenges to the enforceability of the arbitration provision had to be submitted to an arbitrator.The court of appeal affirmed a finding that the arbitration agreement was procedurally and substantively unconscionable. The court noted provisions that a plaintiff’s damages are limited, the arbitration must occur in San Francisco, a plaintiff only has one year to bring his claim, the parties must split the arbitration fees and costs, and the defendant can obtain equitable relief without posting a bond or security. Unconscionability ”permeates the agreement such that severance is unavailable,” View "Gostev v. Skillz Platform, Inc." on Justia Law

Plaintiffs used the defendants’ websites but did not see a notice stating, “I understand and agree to the Terms & Conditions, which includes mandatory arbitration.” When a dispute arose, defendants moved to compel arbitration, arguing that plaintiffs’ use of the website signified their agreement to the mandatory arbitration provision found in the hyperlinked terms.The Ninth Circuit held that plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating through the websites. As a result, they never entered into a binding agreement to arbitrate their dispute, as required under the Federal Arbitration Act. The panel explained that the courts have routinely enforced “clickwrap” agreements, which present users with specified contractual terms on a pop-up screen requiring users to check a box explicitly stating “I agree” to proceed. However, courts are more reluctant to enforce browsewrap agreements, which provides notice only after users click a hyperlink.Finally, the panel held that the district court properly exercised its discretion in denying the defendants’ motion for reconsideration based on deposition testimony taken two months prior to the district court’s ruling on the motion to compel arbitration. Plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating the website. Thus, they never entered into a binding agreement to arbitrate. The court affirmed the district court’s order denying the defendants’ motion to compel arbitration. View "DANIEL BERMAN V. FREEDOM FINANCIAL NETWORK LLC" on Justia Law

Blizzard Entertainment, Inc. (Blizzard) appealed an order denying its motion to compel arbitration. B.D., a minor, played Blizzard’s online videogame “Overwatch,” and used “real money” to make in-game purchases of “Loot Boxes” - items that offer “randomized chances . . . to obtain desirable or helpful ‘loot’ in the game.” B.D. and his father (together, Plaintiffs) sued Blizzard, alleging the sale of loot boxes with randomized values constituted unlawful gambling, and, thus, violated the California Unfair Competition Law (UCL). Plaintiffs sought only prospective injunctive relief, plus attorney fees and costs. Blizzard moved to compel arbitration based on the dispute resolution policy incorporated into various iterations of the online license agreement that Blizzard presented to users when they signed up for, downloaded, and used Blizzard’s service. The trial court denied the motion, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements. The Court of Appeal disagreed: the operative version of Blizzard’s license agreement was presented to users in an online pop-up window that contained the entire agreement within a scrollable text box. View "B.D. v. Blizzard Entertainment" on Justia Law

JustAnswer LLC (JustAnswer) appealed an order denying its petition to compel arbitration. Tina Sellers and Erin O’Grady (together, Plaintiffs) used the JustAnswer website to submit a single question to an “expert” for what they believed would be a one-time fee of $5, but JustAnswer automatically enrolled them in a costlier monthly membership. After discovering additional charges to their credit cards, Plaintiffs filed a class action lawsuit against JustAnswer, alleging it routinely enrolled online consumers like them in automatic renewal membership programs without providing “clear and conspicuous” disclosures and obtaining their “affirmative consent” as mandated by the California Automatic Renewal Law. Seeking to avoid the class action litigation, JustAnswer filed a petition to compel individual arbitration, claiming Plaintiffs agreed to their “Terms of Service,” which included a class action waiver and a binding arbitration clause, when they entered their payment information on the website and clicked a button that read, “Start my trial.” In a case of first impression under California law, the Court of Appeal considered whether, and under what circumstances, a “sign-in wrap” agreement was valid and enforceable. The Court concluded the notices on the “Start my trial” screens of the JustAnswer website were not sufficiently conspicuous to bind Plaintiffs, because they were less conspicuous than the statutory notice requirements, and they were not sufficiently conspicuous under other criteria courts have considered in determining whether a hyperlinked notice to terms of services was sufficient to put a user on inquiry notice of an arbitration agreement. The Court therefore affirmed the trial court’s order denying JustAnswer’s petition to compel arbitration. View "Sellers v. JustAnswer LLC" on Justia Law

In this dispute over internet names, DotConnect appealed to ICANN's internal dispute resolution program and told the arbitrators they should grant it seven procedural advantages during the arbitration—advantages like interim relief and an independent standard of review. The arbitrators accepted DotConnect's arguments and gave DotConnect the advantages it sought, but the arbitrators did not award the .africa name to DotConnect. ICANN ultimately rejected DotConnect and awarded ZA the rights to .africa. DotConnect then filed suit against ICANN in Los Angeles Superior Court, where the trial court ruled against DotConnect on grounds of judicial estoppel.The Court of Appeal affirmed the trial court's application of judicial estoppel and concluded that DotConnect has estopped itself from suing in court by convincing ICANN's arbitrators DotConnect could not sue in court. In this case, DotConnect took two contrary positions; DotConnect took these positions in quasi-judicial and judicial settings; DotConnect used its initial position—"we cannot sue in court"—to persuade the panel to award DotConnect seven legal victories; DotConnect's positions are totally inconsistent; DotConnect did not take its initial position as the result of fraud, ignorance, or mistake; and the trial court had an ample basis to decide, in its discretion, to apply the doctrine of judicial estoppel to this case. The court rejected DotConnect's arguments to the contrary. Accordingly, the court affirmed the judgment in all respects and awarded costs to respondents. View "DotConnectAfrica Trust v. Internet Corporation for Assigned Names & Numbers" on Justia Law

Onfido provides biometric identification software that is incorporated into its customers’ products and mobile apps for verifying users’ identities. Onfido partnered with OfferUp—an online consumer marketplace—to verify users’ identities. Sosa verified his identity with OfferUp using the technology provided by Onfido—the app’s TruYou feature. To complete the verification process, Sosa uploaded a photograph of his driver’s license and a photograph of his face. Sosa alleges that Onfido then used biometric identification technology without his consent to extract his biometric identifiers and compare the two photographs.Sosa brought class action claims against Onfido under the Illinois Biometric Information Privacy Act. Onfido moved to stay the case and to compel individual arbitration based on an arbitration provision in OfferUp’s Terms of Service. The district court rejected each of Onfido’s nonparty contract enforcement theories and denied Onfido’s motion. The Seventh Circuit affirmed. Onfido failed to establish that there was an outcome-determinative difference between Illinois and Washington law, and the district court properly applied Illinois law—the law of the forum state—to determine that Onfido failed to establish that it was a third-party beneficiary of the Terms of Service or that it could otherwise enforce the contract’s arbitration provision either as an agent of OfferUp or on equitable estoppel grounds. View "Sosa v. Onfido, Inc." on Justia Law

When Selden signed up for Airbnb, an online home rental platform, he was presented with a sign-in webpage that informs the user he is agreeing to certain terms by signing up. Airbnb’s Terms of Service required that all disputes be resolved by arbitration. After Selden signed up for Airbnb, he attempted to rent a listed room and suspected that the host denied his request because of his race, which the host could see from Selden’s profile picture. Selden created two fake Airbnb accounts with profile pictures of white individuals and used his fake accounts to request renting the same property for the same dates. According to Selden, the host accepted both requests. Selden posted his claims on social media where they went viral.Selden sued, citing Title II of the Civil Rights Act of 1964, 42 U.S.C. 2000a), the Civil Rights Act of 1866, 42 U.S.C. 1981, and the Fair Housing Act, 42 U.S.C. 3604. The district court compelled arbitration of his claims. The arbitrator ruled in favor of Airbnb. The court refused to vacate the arbitration award. The D.C. Circuit affirmed, rejecting Selden’s arguments that he did not agree to arbitrate because Airbnb’s sign-up screen failed to put him on notice of the arbitration clause in its Terms of Service, that his discrimination claims were not arbitrable, and that the arbitrator committed misconduct by failing to provide for sufficient discovery and by refusing to consider his expert report. View "Selden v. Airbnb, Inc." on Justia Law