Clickwrap; PayPal Arbitration Agreement

In Evans v. PayPal, Inc., 2023 U.S. App. LEI 24618 (9^th Cir. September 18, 2023), a panel consisting of Circuit Judges S. R. Thomas, Forrest, and Mendoza affirms the District Court’s finding, based on a PayPal employee’s declaration, that the service’s website created a binding clickwrap agreement.  In addition, applying Delaware law, it affirms the lower court’s holding that the User Agreement is not unconscionable.

Failure to Pay Arbitration Fees; AAA Rules; Waiver

In Lee v. Citigroup Corp. Holdings, Inc., 2023 U.S. Dist. LEXIS 164786 (N.D. Cal. September 14, 2023)(Kim, M.J.), PayPal failed to make timely payment of its share of the AAA’s administrative fees. Therefore, the AAA terminated the arbitration and, under its consumer rules, issued a letter authorizing the parties to return to court.  Magistrate Judge Kim opines that, by contracting that the arbitration would be governed by the “rules and procedures” of the AAA, PayPal agreed that the institution could enforce its policies, including the one which permitted administrative termination for failure to make timely payment. (Although PayPal paid the invoice, it was after the 30-day due date).  Further, per Magistrate Judge Kim, the failure to satisfy the AAA’s requirements constituted a waiver of those rights.  Therefore, she lifts an existing stay against plaintiff’s pursuing her claims through this lawsuit.

Standard of Review of a Magistrate Judge’s Decision Compelling Arbitration: McCarren-Ferguson Act

The generally applicable holding of Dak Property Holdings, Inc. v. Independent Specialty Insurance Company, 2023 U.S. Dist. LEXIS 163864 (M.D. Fla. September 14, 2023)(Chappell, J.), is that a Magistrate Judge’s order compelling arbitration is non-dispositive.  Therefore, the District Judge reviews it under the highly constricted abuse of discretion standard. For those interested in the intricacies of insurance litigation, the court also stands for the proposition that the provisions of the McCarren-Ferguson Act do not apply to arbitrations governed by the New York Convention. Therefore, Florida’s prohibition of the enforcement of arbitration clauses in insurance contracts is inapplicable.

Bifurcation of Issues in Arbitration

In The Case Against the Bifurcation of Arbitration Proceedings,  on line at https://www.international-arbitration-attorney.com/the-case-against-the-bifurcation-of-arbitration-proceedings/ , Alexandra Koliakou and William Kirtley argue that the bifurcation of jurisdictional issues is efficient only where the panel ultimately finds that it does not have jurisdiction. Those savings may be outweighed, they contend, by the increased time and expense of the arbitration, the difficulties in separating jurisdictional and non-jurisdictional issues, and a potential appearance of partiality by the panel.  Regardless of whether one practices international or only domestic arbitration or ultimately agrees with the authors’ conclusions, the issues raised in this well-footnoted article are worth consideration whenever the parties propose a bifurcation.

I will be attending the anniversary celebrations of the New York International Arbitration Centre tomorrow, so there may be no “Highlights” until Thursday. Thanks for your patience.

David A. Reif, FCIArb
Reif ADR
Dreif@reifadr.com
Reifadr.com