Consent is generally a precondition to an enforceable contract. Some website operators have attempted to enforce arbitration clauses set forth in the terms and conditions listed on their websites just because a consumer visited the website—a practice commonly known as a “browsewrap” agreement.Continue Reading California Court of Appeal Reaffirms Disapproval of “Browsewrap” Agreements to Arbitrate
In 23-3 Coinbase, Inc. v. Suski (05/23/2024) (supremecourt.gov) (May 23, 2024), the U.S. Supreme Court once again delved into the frequently litigated arena of arbitration agreements. Specifically, the Court considered whether the Federal Arbitration Act (“FAA”) empowers courts or arbitrators to decide which contract controls when (1) parties have executed multiple contracts, and (2) at least one contract contains an arbitration agreement delegating the threshold issue of arbitrability to an arbitrator while another sends arbitrability disputes to the courts. Guided by “basic principles of contract” law, the Court unanimously held that courts—not arbitrators—must decide which contract governs the parties’ dispute.Continue Reading Supreme Court Rules That Judges – Not Arbitrators – Must Resolve Disputes Where Various Agreements May Govern a Particular Dispute and Those Agreements Conflict on the Forum for Deciding Arbitrability
On May 16, 2024, the United States Supreme Court unanimously held that, when enforcing an arbitration clause subject to the Federal Arbitration Act (FAA), if any party requests a stay, the district court lacks discretion to dismiss the underlying lawsuit. The high court’s ruling reverses the decision of the Ninth Circuit upholding dismissal, and resolves a long-simmering circuit split. Notwithstanding the FAA’s language appearing to mandate a stay, in which several circuits held that district courts have discretion to dismiss cases (without prejudice) pending arbitration. Continue Reading Supreme Court Holds that District Courts Must Stay – Not Dismiss – Actions Brought by Parties Subject to Binding Arbitration Agreements
In Oberstein v. Live Nation Ent. Inc. No. 21-56200 (9th Cir. Feb. 13, 2023), the Ninth Circuit addressed the question of whether the arbitration and class action waiver clauses on Ticketmaster’s and Live Nation’s websites effectively prevented plaintiffs from bringing suit. Plaintiffs in the case sought to bring a class action lawsuit against Ticketmaster and Live Nation alleging as the basis for antitrust claims that the companies used their market power to charge above-market prices for concert tickets. Ticketmaster and Live Nation sought to compel the named plaintiffs to individual arbitration under the binding arbitration and class action waiver clauses in the terms of use on Ticketmaster’s and Live Nation’s websites.Continue Reading Ninth Circuit Decision in Live Nation and Ticketmaster’s Favor Highlights Subtleties of Drafting Enforceable Arbitration Provisions
In Brice v. Haynes Investments LLC, No. 19-15707 (9th Cir. Sept. 16, 2021), the Ninth Circuit considered an appeal by shareholders in Native American tribe-linked online lenders of a district court order denying the shareholders’ motion to compel arbitration. The Ninth Circuit reversed the order because, under the terms of the parties’ agreement, the enforceability of the arbitration agreement was a question for the arbitrator, not the judge, to decide.
Continue Reading Class Action Waivers Redux: Ninth Circuit Upholds Arbitration Provision Delegating Enforceability Determination to Arbitrator
Arbitration clauses with class action waivers remain one of the most effective lines of defense against consumer class actions. They are also one of the most challenged. As we have discussed in prior posts, including here, here, and here, consumer arbitration clauses have come under fire in California if they prohibit plaintiffs from obtaining “public injunctive relief” in any forum. This is the so-called McGill rule, which comes from the California Supreme Court’s decision in McGill v. CitiBank, N.A., 2 Cal.5th 945 (2017).
Continue Reading More on McGill: Ninth Circuit Affirms Order Enforcing Arbitration of Public Injunctive Relief Claims
In prior posts (here and here), we raised questions that companies may want to ask when evaluating their arbitration clauses and making changes to them. In this third installment, we look at what companies should be doing to ensure that they can present proof of their arbitration agreements if ever required to do so in court. Your company may have a perfect arbitration clause, but if a customer claims never to have signed the arbitration agreement or not to have seen the website providing notice of the terms and conditions, you will have to present evidence that the customer is wrong.
Continue Reading Avoiding Formation Challenges To Your Arbitration Clause With Consumers
In a prior post (here), we highlighted some questions that companies may want to ask when evaluating whether their arbitration clauses are enforceable. If changes need to be made to those clauses, then companies should consider how to implement those changes so as to ensure those are enforceable too. The following is what you should be thinking about and asking.
Continue Reading Questions To Ask When Changing Your Arbitration Clause
Arbitration clauses with class action waivers remain one of the most effective tools that consumer-facing companies can employ to fend off consumer class action litigation. Yet many companies stumble both in getting their customers to agree to the arbitration clause and in drafting a clause that captures all claims that they might face. As we continue to work, shop, and engage with the world from home, companies should perform a quick “health-check” of their arbitration clause, asking themselves at least the following questions:
Continue Reading An Arbitration Clause Health Check
When it comes to compelling arbitration in California, courts often put the moving party to the test. The most recent example is the Fourth Appellate District’s decision in Fabian v. Renovate America. Affirming a lower court’s decision, the Court of Appeal held that the defendant failed to meet its burden of proof that an electronically signed contract – one containing a 15-digit alphanumeric verification from DocuSign and the words “Identify Verification Code: ID Verification Complete” – was in fact signed by the plaintiff. Stating that the “burden of authenticating an electronic signature is not great,” the Court of Appeal went on to hold that the defendant had not met its burden as it had failed to submit evidence explaining the DocuSign verification process. The court of appeal acknowledged the acceptance of a DocuSign verified signature in Newton v. Am. Debt Servs (N.D. Cal. 2012) 854 F.Supp.2d 712, but distinguished that case finding that Renovate had not submitted “evidence about the process used to verify Fabian’s electronic signature via DocuSign, including who sent Fabian the Contract, how the Contract was sent to her, how Fabian’s electronic signature was placed on the Contract, who received the signed the [sic] Contract, how the signed Contract was returned to Renovate, and how Fabian’s identification was verified as the person who actually signed the Contract.”
Continue Reading Is Hate Too Strong A Word (When It Comes To Compelling Arbitration In California)?
The U.S. Supreme Court’s ruling in AT&T Mobility v. Concepcion, 563 U.S. 333 (2011) caused a shockwave in California’s class action bar when it held that the Federal Arbitration Act (“FAA”) preempted California’s former Discover Bank rule prohibiting arbitration clauses in consumer contracts from including a pre-dispute waiver of a plaintiff’s right to seek class action relief. After the decision in Concepcion, mandatory arbitration and corresponding class action waivers became the norm in consumer contracts. Many of the arbitration clauses in these consumer agreements, however, also included language prohibiting the plaintiff from obtaining relief for anyone other than the plaintiff. Courts interpreted this language as a pre-dispute waiver of a plaintiff’s right to seek “public injunctive relief” (i.e. injunctive relief that has the primary purpose and effect of prohibiting acts that threaten future injury to the general public) under California’s consumer protection statutes. Recent decisions by the California Supreme Court and the Ninth Circuit, however, confirm that a plaintiff cannot waive his or her right to seek public injunctive relief under California’s consumer statutes. Consumer-focused businesses that include arbitration clauses in their account agreements should reevaluate their arbitration clauses in light of California’s prohibition on the waiver of a plaintiff’s right to seek public injunctive relief.
Continue Reading Choose Your Forum Wisely: Save Your Arbitration Clause From California’s Prohibition on Pre-Dispute Waivers of a Plaintiff’s Right to Seek Public Injunctive Relief