319 F. Supp. 3d 505
D.C. Cir.2018Background
- Plaintiff Patrick Daniel purchased an allegedly counterfeit Audemars Piguet watch from an eBay seller in July 2015 and sued eBay and the seller for fraud, breach of contract, unjust enrichment, and related claims shortly thereafter.
- Daniel registered on eBay in 1999, accepting a User Agreement that contained a change-in-terms clause allowing eBay to amend terms by posting them on its site.
- eBay posted amended User Agreements in 2012 and 2015 that added an arbitration clause and an opt-out mechanism; eBay contends Daniel did not opt out.
- Daniel denies receiving notice of the 2012 and 2015 amendments and argues he never agreed to arbitrate; he alternatively argued the arbitration clause was unconscionable or did not cover his claims.
- Magistrate Judge Harvey recommended granting eBay’s motion to compel arbitration; the district court conducted de novo review of Daniel’s objections and denied eBay’s motion because eBay failed to show personal notice of the later-added arbitration clauses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parties formed a valid arbitration agreement | Daniel: He never agreed to the 2012/2015 arbitration clauses because he received no notice of those amendments. | eBay: Change-in-terms in the 1999 agreement allowed eBay to add arbitration later; Daniel didn’t opt out. | Held: No—eBay failed to prove Daniel was personally notified and thus did not establish mutual assent. |
| Whether posting amended terms on site or sending form notices suffices as notice | Daniel: Posting or generic notices are insufficient; personal notice required for substantive change. | eBay: Posting and form communications (Message Center/email) provided notice. | Held: Posting and eBay’s form exhibits did not demonstrate personal notice; eBay’s proof was inadequate. |
| Burden of proof on motions to compel arbitration | Daniel: eBay must show specific efforts to notify him of new arbitration provisions. | eBay: Relied on its general procedures and the opt-out mechanism to show assent. | Held: eBay bears the initial burden to show an agreement; it failed to show individualized notice or mailing to Daniel. |
| Whether court must reach unconscionability or scope defenses | Daniel: Arbitration clause is unconscionable/illusory and doesn’t cover his claims. | eBay: Arbitration clause is enforceable and covers disputes arising from use of eBay. | Held: Court did not reach these defenses because it resolved lack of mutual assent first. |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (superseding FAA precedent favoring enforcement of arbitration agreements)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (courts should direct parties to arbitration when an agreement has been signed)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (reaffirming strong federal policy favoring enforcement of arbitration agreements)
- McCoy v. Blue Cross & Blue Shield, 20 P.3d 901 (Utah Supreme Court decision requiring evidence of personal notice for later-added arbitration terms)
- FIA Card Servs. v. Weaver, 62 So.3d 709 (La. Supreme Court: later-added arbitration clauses require proof of mailed notice to consumers)