Shepherd v. Belkin International, Inc.
1:21-cv-05862
| E.D.N.Y | Jul 25, 2023Background
- Plaintiff bought a Belkin wireless router from Walmart; installing required downloading Belkin software and accepting a clickwrap End User License Agreement (EULA).
- The EULA (conspicuously presented) contained a binding arbitration clause and class-action waiver on its first page and covered disputes arising from use of the software and/or product(s); it was governed by California law.
- Plaintiff alleges the router did not perform at advertised "up to 1,000 Mbps" speeds and brought a putative nationwide class action for fraud and related consumer claims against both Belkin (manufacturer) and Walmart (retailer).
- Belkin moved to compel arbitration under the EULA; Walmart (a non-signatory to the EULA) also sought to invoke arbitration.
- The district court held the clickwrap arbitration clause enforceable as to Belkin and, applying equitable-estoppel principles, allowed non-signatory Walmart to compel arbitration; the action was stayed pending arbitration with a 60-day deadline to commence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the clickwrap EULA arbitration clause is enforceable as to Belkin | Plaintiff contends he did not validly assent; EULA governs only software (not hardware); clause buried/too long; fraud exception | Belkin argues the clickwrap was conspicuous and required affirmative assent; clause explicitly covers software and products | Court: Clickwrap arbitration clause is enforceable; plaintiff must arbitrate claims against Belkin |
| Whether non-signatory Walmart can compel arbitration under Belkin's EULA | Walmart is not a party to the EULA; retail misrepresentations at point of sale are independent of the EULA | Walmart argues equitable estoppel/intertwined claims because plaintiff treated defendants interchangeably and Walmart merely passed through Belkin's representations | Court: Walmart may invoke arbitration via equitable estoppel; claims are identical/intertwined, so arbitration applies to Walmart |
Key Cases Cited
- In re Holl, 925 F.3d 1076 (9th Cir. 2019) (upholding clickwrap arbitration clauses)
- Zachman v. Hudson Valley Fed. Credit Union, 49 F.4th 95 (2d Cir. 2022) (affirming enforceability of clickwrap agreements and emphasizing conspicuous presentation)
- Meyer v. Uber Techs., Inc., 868 F.3d 66 (2d Cir. 2017) (routinely upholding clickwrap arbitration for affirmative assent)
- Doe v. Trump Corp., 6 F.4th 400 (2d Cir. 2021) (articulating framework for non-signatory enforcement and equitable estoppel)
- Ragone v. Atlantic Video at Manhattan Ctr., 595 F.3d 115 (2d Cir. 2010) (allowing non-signatory to enforce arbitration where parties treated as co-employers)
- Ross v. American Express Co., 478 F.3d 96 (2d Cir. 2007) (recognizing common-law bases for non-signatory enforcement)
- Choctaw Generation Ltd. v. American Home Assurance Co., 271 F.3d 403 (2d Cir. 2001) (equitable estoppel where claims are intertwined with contract)
- Murphy v. DirecTV, Inc., 724 F.3d 1218 (9th Cir. 2013) (refusing to apply arbitration to retailer when claims were independent of the customer agreement)
- Franklin v. Community Regional Medical Center, 998 F.3d 867 (9th Cir. 2021) (permitting non-signatory enforcement via staffing/agency relationship)