Spotify Payola Case to Arbitrate

Spotify was sued in federal court and moved to compel arbitration because it provided a conspicuous notice of its current terms of service by email and by an in app pop-up, both of which contained a hyperlink with the opportunity to review the applicable arbitration agreement. Spotify's terms of use contained a mandatory arbitration clause and class action waiver. Spotify's terms also said it may make changes and that,“[i]n some cases, we will notify you in advance, and your continued use of [Spotify] after the changes have been made will constitute your acceptance of the changes.” Terms further provided that “[i]f Spotify makes any material change to the Arbitration Agreement..., you may reject any such change by sending us a personally signed, written notice of your decision to opt out of those changes” by email within 30 days. Plaintiff continued to use Spotify after receiving both notices and did not opt out of changes to the arbitration agreement. Plaintiff then upgraded her Spotify account to the paid subscription service and began receiving downloadable receipts that contained hyperlinks to the operative Terms of Use each billing cycle. The presiding judge found that under the Federal Arbitration Act (FAA), 9 U.S.C. § 4, “a district court must enter an order to arbitrate upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue.” A court considering whether to compel arbitration pursuant to a purported arbitration agreement must decide: “(1) whether there exists a valid agreement to arbitrate at all under the contract in question and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement.” Applying ordinary contract law principles, courts routinely uphold “‘clickwrap’ (or‘clickthrough’) agreements, which require users to click an ‘I agree’ box after being presented with a list of terms and condi-tions of use” “for the principal reason that the user has affirmatively assented to the terms of agreement by clicking ‘I agree.’” Therefore, Judge John G. Koeltl of the Southern District of New York issued an order granting Spotify’s motion to compel arbitration and dismissing the class allegations with prejudice. See more here-- https://tinyurl.com/bddrkhf2 and https://tinyurl.com/m98eu8na