In re Zappos.com, Inc.
893 F. Supp. 2d 1058
| D. Nev. | 2012Background
- MDL proceedings arising from a January 2012 security breach of Zappos/Zappos.com servers; plaintiffs are customers who provided personal information to Zappos.com and 6PM.com.
- Zappos moved to compel arbitration and stay the action under the FAA (#3).
- MDL Panel transferred nine related actions to the District of Nevada for pretrial proceedings; additional related case later joined.
- Plaintiffs allege data breach harmed them and seek relief under various state and federal statutes and theories.
- Arbitration provision is in the Disputes section of Zappos.com Terms of Use, which mandates arbitration in Las Vegas, NV, and includes a one-year limitations period and a non-joinder clause.
- Court analyzes whether a valid agreement to arbitrate exists, applying Nevada contract law to determine assent and mutuality of obligation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement existed between the parties. | Stevens/Priera plaintiffs lack knowledge or assent to Terms. | Zappos contends Terms bound users via browsewrap notice. | No valid agreement; lack of assent under Nevada law. |
| Whether the Terms of Use/arbitration clause is illusory. | Terms reserve unilateral modification rights to Zappos. | Arbitration clause remains binding despite unilateral modification. | Illusory contract; unenforceable. |
| Whether equitable estoppel applies to bind plaintiffs to arbitration. | Claims do not rely on the Terms of Use they allegedly avoided. | Equitable estoppel could apply because claims relate to contract. | Declined to apply equitable estoppel; not controlling here. |
Key Cases Cited
- Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir. 2002) (browsewrap enforceability depends on notice to user)
- Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009) (no notice undermines enforceability of terms)
- Van Tassell v. United Marketing Group, 795 F. Supp. 2d 770 (N.D. Ill. 2011) (reasonableness of notice governs browsewrap validity)
- Cvent, Inc. v. Eventbrite, Inc., 739 F. Supp. 2d 927 (E.D. Va. 2010) (Terms of Use not enforceable when not reasonably noticed)
- Trumbull v. Century Mktg. Corp., 12 F. Supp. 2d 683 (N.D. Ohio 1998) (mutuality/consideration issues in contract arbitration)
- Harris v. Blockbuster, Inc., 622 F. Supp. 2d 396 (N.D. Tex. 2009) (arbitration clause illusory if unilateral modification without notice)