Spotify Payola Case to Arbitrate

Spotify was sued in federal court by a user alleging playlists and recommendations are shaped by undisclosed pay-for-play arrangements and hidden commercial incentives. The streaming service 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

11th Cir.: Arb Clickwraps Valid in Fla.

The 100 year-old Federal Arbitration Act (FAA) requires courts to enforce arbitration agreements according to their terms. But arbitration is a matter of contract, and the FAA does not allow a court to compel arbitration unless it is satisfied that the parties agreed to arbitrate. If the existence of the agreement is not genuinely disputed, the court must compel arbitration.These principles apply equally to so-called “clickwrap” agreements, in which users assent to terms by clicking a button near a disclosure referencing those terms. Under Florida law, the central question is whether the parties mutually assented to be bound. In the Eleventh Circuit's recent ruling, Lamonaco v. Experian Inform. Sols., Inc., 2025 WL 1831283 (11th Cir. July 3, 2025), because Experian submitted competent and unrebutted evidence of an agreement to arbitrate, the federal district court for the Middle District of Florida erred in denying its motion to compel arbitration. Relying heavily on Bazemore v. Jefferson Capital Systems, LLC, 837 F3d. 1325 (11th Cir. 2016), appellee argued that a declaration was insufficient to prove that she had agreed to arbitrate her claims. She also claimed that Experian had by its litigation conduct waived its right to insist on arbitration. The district court denied the motion to compel arbitration, finding that the declaration submitted in support of the motion offered only conclusory assertions and rested on business records not attached to the declaration. The district court also held that Experian had waived its right to insist on arbitration which it then appealed. The Eleventh Circuit reversed, holding that the district court erred on both issues. Because the arbitration agreement delegated to the arbitrator “all disputes over the interpretation, applicability, or enforceability of the arbitration agreement,” and an amendment to the agreement stated specifically that the delegation included questions of waiver, whether Experian waived its arbitration right was for the arbitrator to decide. See more here-- https://tinyurl.com/2u45se7k and https://media.ca11.uscourts.gov/opinions/pub/files/202411270.pdf

Rare Florida Case Addresses Arbitrability

This year, a Florida district court of appeal chose to delve into what they saw as a "rather arcane" issue in arbitration of who decides whether a dispute is subject to a contract's arbitration provision: an arbitrator or a judge? There are many recent decisions from around the country deferring to the arbitrator. However, the majority explains the contract's provision in this case did not provide clear and unmistakable evidence that only the arbitrator could decide the issue of arbitrability. Unbeknownst to the renter of an Airbnb, the host had installed hidden cameras throughout the unit. Plaintiff alleged that Defendant secretly recorded the entire stay in the unit. For this violation of privacy, a lawsuit was filed in state court. Airbnb then filed a motion to compel arbitration. Airbnb argued the claims were subject to arbitration through Airbnb's Terms of Service, under which the renter agreed to be bound to pursuant to a "clickwrap" agreement. The arbitration provision contained fairly standard language such as "You acknowledge and agree that you and Airbnb are each waiving the right to a trial by jury." The court held that the clickwrap agreement's arbitration provision and the AAA rule it referenced that addresses an arbitrator's authority to decide arbitrability did not, in themselves, arise to "clear and unmistakable" evidence that the parties intended to remove the court's presumed authority to decide such questions. The evidence on what these parties may have agreed to about the "who decides" arbitrability question was considered ambiguous. Therefore, the trial court retained its presumed authority to decide the arbitrability dispute. A conflict with decisions from other districts was certified. See full opinion here-- https://tinyurl.com/y4oyxsgv