Duane Morris Class Action Review - 2023 - Report - Page 77
Classmates.com account and purchased a subscription and, in doing so, agreed to the
website’s Terms of Use, including an arbitration provision. When the defendant moved
to compel arbitration, the plaintiff countered that she was not a Classmates.com
customer and had not assented to arbitration and that her counsel had merely engaged
in these actions to satisfy his Rule 11 obligations. The Ninth Circuit held that the
defendant was entitled to discovery concerning when the attorney-client relationship
had been formed and whether counsel had acted on his client’s behalf in agreeing to
the Terms of Service. It charged the district court on remand with determining whether
there had been a waiver of the attorney-client privilege. While the plaintiff disclaimed
that her attorney was acting as her agent regarding the arbitration agreement, she at
the same time asserted that her communications with counsel on that topic were
privileged thereby, as the Ninth Circuit noted, impermissibly using the privilege as both
sword and shield. As to the Terms of Service, the Ninth Circuit also highlighted that the
plaintiff had employed materials that her counsel obtained in his perusal of the website
in her complaint, and that the defendant was entitled to explore in discovery whether the
plaintiff had ratified her counsel’s agreement to the Terms of Service. As to the plaintiff’s
assertions that Rule 11 explained her counsel’s actions, the Ninth Circuit questioned
why counsel had not opted out of the arbitration agreement then, as the website
permitted him to do and that, regardless, Rule 11 did not alter the application of agency
law central to the issue of assent.
In cases in 2022 where plaintiffs have challenged assent to arbitration, many rulings
tackled fact-intensive questions.
In Ackies, et al. v. Scopely, Inc., 2022 U.S. Dist. LEXIS 13086 (D.N.J. Jan. 25, 2022),
the plaintiff filed a class action lawsuit alleging violation of consumer fraud laws relating
to the smartphone video game Star Trek Fleet Command. He alleged that players may
purchase upgrades to enhance their ability to win, but that the defendants would later
downgrade the effectiveness of the upgrades in an illegal effort to induce additional
upgrade purchases from players. The defendant moved to compel arbitration on the
ground that a popup appearing on the screens of consumers’ smartphones upon
downloading the game for the first time provided a hyperlink to the terms of service that
contain an arbitration agreement with a class action waiver. The popup also stated that
“by continuing to play, you agree to our Terms of Service.” Id. at *11. The plaintiff
argued the agreement was invalid because he was not put on proper notice of the
agreement to arbitrate. The court found the notice to be reasonably conspicuous
because it included in part a blue hyperlink in a box with a black background. As a
result, it placed the plaintiff on constructive notice that by playing, he was assenting to
the Terms of Service that included an agreement to arbitrate any claims arising from
playing the game. The court also found the agreement to be unambiguous and not
unconscionable, and that questions relating to fraud in the inducement were by the
terms of the agreement to be resolved by the arbitrator. Accordingly, the court granted
the motion to compel arbitration.
Another decision in 2022 involving assent to arbitration through electronic means was in
the context of labor laws, specifically the Fair Labor Standards Act (FLSA). In
Bazemore, et al. v. Papa John’s U.S.A., Inc., 2022 U.S. Dist. LEXIS 216614 (W.D. Ky.
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Duane Morris Class Action Review – 2023
