1:18-cv-03703
E.D.N.YSep 10, 2019Background
- Plaintiff Arnaud alleges Subway sent unsolicited marketing texts to his cell phone in violation of the TCPA after he entered his phone number on Subway’s website to receive a survey/offer.
- Subway’s April 2016 web sign-up required entering phone and zip, completing a CAPTCHA, and clicking an “I’m In” button; the page displayed a linked “T&Cs” and a “Privacy” link and small text noting messages may be autodialed.
- The Terms of Use (linked from the page) contained an arbitration clause requiring AAA commercial-rule arbitration in Connecticut.
- Subway contends Arnaud clicked “I’m In” and then replied “Y” to a confirmation text that said “Reply Y as ur sig 2agree 2 SUBWAY offers…”; Arnaud denies replying “Y” and says he never manifested assent to contract terms.
- Subway moved to compel arbitration and stay proceedings; the court applied New York law and denied the motion, finding no binding arbitration agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Formation via website click | Arnaud: webpage did not give clear notice or prompt that clicking “I’m In” bound him to T&Cs/arbitration | Subway: link to T&Cs on same page plus spatial/temporal proximity to button sufficed to give inquiry notice | Court: web design lacked clear, conspicuous notice or explicit prompt; links alone insufficient — no assent via click |
| Assent via confirmation text | Arnaud: he never replied “Y”; even if he did, the text did not reference the Terms/arbitration | Subway: confirmation text (and alleged “Y” reply) constituted signature/assent to offers and terms | Court: disputed factual issue whether he replied, but text content itself did not reference Terms/arbitration so it cannot alone establish assent to arbitration |
| Who decides arbitrability (delegation) | Arnaud: challenges validity/formation of arbitration agreement are for court to decide | Subway: any challenges to scope/validity are for arbitrator per clause | Held: formation is for the court; court concluded no valid arbitration agreement existed, so delegation issue unnecessary to remit to arbitrator |
| Unconscionability / effective-vindication defenses | Arnaud: clause is ambiguous, procedurally/substantively unconscionable, and may bar effective vindication of TCPA rights | Subway: clause enforceable; any defenses should be for arbitrator | Court: did not reach merits of unconscionability or effective-vindication because no agreement was formed |
Key Cases Cited
- Meyer v. Uber Techs., Inc., 868 F.3d 66 (2d Cir. 2017) (webpage design/placement of notice can supply inquiry notice when spatially/temporally coupled and language signals assent)
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir. 2016) (dense/cluttered order pages and inconspicuous notice may preclude finding assent to linked terms)
- Starke v. SquareTrade, Inc., 913 F.3d 279 (2d Cir. 2019) (party may be bound by terms of web-based contract when on inquiry notice; examine interface design and prominence of notice)
- VRG Linhas Aereas S.A. v. Matlin Patterson Global Opportunities Partners II L.P., 717 F.3d 322 (2d Cir. 2013) (court decides existence of arbitration agreement)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (distinguishes threshold questions of arbitrability for courts vs. arbitrators)
- BG Group PLC v. Republic of Argentina, 572 U.S. 25 (2014) (courts decide arbitrability unless parties clearly delegate that question to arbitrator)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA’s pro-arbitration policy and enforceability of arbitration agreements)