As we head toward the long Labor Day weekend, the past two days have been pretty quiet on the reported decision front.  As usual, the overwhelming majority of cases have dealt with the issue of arbitrability.  Two of the cases, though, are particularly useful for an arbitration notebook.  

The enforceability of a website based arbitration clause

Berman v. Freedom Fin. Network, 2020 U.S. Dist. LEXIS 160406 (N.D. Cal.) (Sept. 1, 2020) gives guidance on the requirements of valid “browsewrap” and “clickwrap” arbitration agreements, accessed through a merchant’s website.  Plaintiffs brought suit, alleging that defendant violated the Telephone Consumer Protection Act, which places limits on telemarketing campaigns. Defendant moved to compel arbitration, relying upon a mandatory arbitration clause contained in its standard Terms and Conditions. The court refused to compel arbitration, despite the presence on the website of a hyperlink connecting the site to the arbitration clause and the language “I understand that the terms and conditions [apparently a hyperlink] which includes mandatory arbitration and Privacy Policy.”   The court first rejected the claim that the consumer’s clicking of a “continue” button on the site demonstrated acceptance of the Terms.  “[W]hile there is text including a hyperlink to the terms of the agreement [which included the arbitration clause] located near a button the user must click to continue, there is no text that notifies users that they will be deemed to have agreed to these terms nor prompts them to take any affirmative action to demonstrate assent.”  Although there was a “continue” button, the court held that there was nothing to demonstrate that “continuing” constituted an assent to the Terms and Conditions.  The Court further held that text on the site, which specifically referenced the mandatory arbitration requirement, was too small and inconspicuous, “making it difficult to read on large, high-resolution monitor, much less a mobile device”. Thus, Judge Gonzalez Rogers held, there was no assent by the consumer to the arbitration term. The case also provides a good summary of other “clickwrap” cases in the First, Seventh, and Ninth Circuits.  If you are a corporate lawyer drafting or counseling clients on business to consumer websites, this case is a must read.

Who Decides Arbitrability and When the Doctrine of Estoppel Can Compel Arbitration

Alcoa Corp. v. Anheuser-Busch InBev Sa/Nv, 2020 U.S. Dist. LEXIS 160416 (Sept. 2, 2020) contains a good analysis of two issues frequently faced in arbitration disputes.   First, it addresses the question of whether the arbitrator or the court determines arbitrability.  Following Second Circuit authority, the court distinguishes between (i) agreements with broad arbitration clauses that commit “all disputes” to arbitration or incorporate rules of a tribunal such as the AAA which provide that arbitrability is for the arbitrator to decide and (ii) those which submit only certain disputes to arbitration.  In the former cases, the issue of arbitrability is for the arbitrator; in the latter, the court decides whether the issue presented is within the scope of the arbitration clause.  Second, having decided that the court should determine arbitrability, Judge Castel dealt with the issue of whether those who were not parties to the arbitration agreement could, nevertheless, be bound to arbitrate thereunder. The court first lays out five theories which can bind nonsignatories to arbitration agreements: incorporation by reference, assumption, agency, veil-piercing/alter ego, and estoppel.  After a lengthy analysis of the facts, the court determined that Alcoa Corporation assumed the obligations of Alcoa, Inc., including the obligation to arbitrate with InBev.  It rejected, however, the claim that Alcoa USA (a third “Alcoa” entity) was estopped from denying arbitration with InBev by virtue of its use of confidential information received from Alcoa, Inc.  The discussion of estoppel at page 6 of the Lexis form of the opinion is a good summary of the law.  The only way to understand the case, though, is to read it in full – there are way too many “Alcoa”s for a summary to be adequate.

Upcoming Arbitration Courses

There is some really good arbitration education on the horizon, but registration deadlines may be approaching.

The ABA Dispute Resolution Section is sponsoring two programs.  From September 14 to September 18, the Section is holding a Tech Expo for Dispute Resolution Professionals.  Registration and more information are available at ambar.org/drtechexpo.  On September 23^rd, there is a free program for law students and professionals on “pivoting” your career.  More information at the Dispute Resolution Section of the ABA’s site, americanbar.org/groups/dispute_resolution/

On October 6, the New York State Bar, together with presenters from the AAA-ICDR, are presenting a “bootcamp” on the hot and important topic of cybersecurity in arbitration and mediation.  More information and registration at the events section of the NYSBA site, nysba.org

The Chartered Institute of Arbitrators is offering their Accelerated Route to Fellowship course starting September 26, 2020.  Also on September 15, they are presenting what looks like a great webinar called “Schein”-ing a Light on Circuit Splits, which will address discovery in international arbitration, the enforcement of arbitration agreements against nonsignatories, and the standard for determining delegation.  Maybe both the cases in today’s summary will change?  Information at ciarbnab.com.

Have a great Labor Day weekend and remember – BE SAFE.

Dave Reif
Reif ADR
dreif@reifadr.com
Reifadr.com