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

Half of Uber MDL to Arbitrate

A federal judge tossed half of the lawsuits concerning Uber's data breach after finding claimants were aware they signed arbitration agreements upon registering to use the app. Uber sought to compel arbitration in consumer class actions filed over the breach, which compromised the personal information of 57 million drivers and riders. This month, the presiding U.S. District Judge, Philip Gutierrez of California, granted such motions in separate orders in seven cases while seven other cases remain. The trial court relied on the U.S. Court of Appeal for the Second Circuit’s decision last year in Meyer v. Uber, finding a “reasonable user” of a smartphone would understand the process of agreeing to Uber’s terms of service. Of course, plaintiffs disagree with that holding and its reasoning. The judge wants further hearings to address whether there is going to be an MDL after this whole process of weeding out arbitrable cases is over with, or not. He noted, however, that all the cases are nationwide class actions that could go forward as a consolidated complaint, but that plaintiffs' lawyers are debating who should lead that action. Uber announced hackers breached its app in 2016 and also admitted paying them $100,000 to destroy the information in 2017. Last spring, the U.S. Judicial Panel on Multidistrict Litigation sent the class actions to this judge, whose first action was to decide Uber’s arbitration motions. Plaintiffs lawyers argued that data breaches fell outside the scope of Uber’s agreement. The current judge was not persuaded and instead found that an arbitrator must decide that issue. He cited the U.S. Court of Appeals for the Ninth Circuit’s 2016 decision in Mohammed v. Uber, which had a “nearly identical Uber delegation provision.” Plaintiffs also cited this summer's decision by the U.S. Court of Appeals for the First Circuit in Cullinane v. Uber and U.S. District Judge Richard Seeborg’s decision last year in Metter v. Uber, both finding Uber’s arbitration agreement unconscionable because a pop-up keyboard obscured text. But Judge Gutierrez found those cases, unlike the Second Circuit’s Meyer case, involved different devices or different versions of Uber’s app, stating he agreed with defendants "that the Cullinane decision departs dramatically both from what other courts have found regarding Uber’s registration process, and from the overall legal landscape regarding assent to online agreements." The court found rather that "Clickable buttons come in all shapes and sizes.” It is clear there is a split of authority in these cases likely to continue affecting arbitrability. See full story here-- https://bit.ly/2NqLmDK

Determining Arbitrability In Middle District Florida

In a recent decision on a Motion to Compel Arbitration and Stay Proceedings here in the federal Middle District of Florida, Senior Judge John Steele found that while arbitrability is generally a question reserved for the trial court, an arbitrator may interpret the scope of the arbitration agreement if the parties agree and provide for such delegation "clearly and unmistakably" within the agreement. Authorities for this finding included Terminix Int'l Co. v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1332 (11th Cir. 2005) and Norfolk S. Ry. Co. v. Fla. E. Coast Ry., No. 3:13-cv-576-J-34JRK, 2014 WL 757942 (M.D. Fla. Feb. 26, 2014). For this holding, Judge Steele also relied on prior case law from the Supreme Court, as well as the neighboring Southern District:

"[T]he question `who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995). See also Shea v. BBVA Compass Bancshares, Inc., No. 1:12-cv-23324-KMM, 2013 WL 869526 (S.D. Fla. Mar. 7, 2013) (citing Terminix Int'l Co., 432 F.3d at 1332) ("[W]hen parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties' intent to delegate such issues to the arbitrator").

Here, the court found delegation provisions clearly and unmistakably delegated the determination of arbitrability to the arbitrator. Pursuant to the delegation clauses contained within the arbitration provisions in the instant case, the court returned the determination of whether or not a Telephone Consumer Protection (TCPA) claim is subject to the arbitration agreement to the arbitrator. Plaintiffs agreed to Defendant's request to stay the action pending the determination by the arbitrator, while reserving their right to continue to proceed in court if the arbitrator rules that their TCPA cause of action is not subject to the arbitration agreement. Harrington v. Regions Bank, No. 2:15-cv-522-Ftm-29MRM (M.D. Fla. Jan. 29, 2016) See opinion here-- bit.ly/1SInxD8