California Mediation and Arbitration

Miscellaneous: We Just Exceeded 1000 Posts On This Blog

Blogging About California Mediation And Arbitration Since 2012.

        I started this  blog on California Mediation And Arbitration in 2012. I just noticed that the number of  posts recently passed 1000. That's about 100 per year.

        Readers may have noticed that the formatting of this blog is similar to that of  California Attorneys Fees. That's a blog started by my colleague Mike Hensley and me in 2008. Both blogs share in common that they are "hard law" no-frills blogs, and that  we have not included advertising.

Arbitration, Internet Commerce: Ninth Circuit Agrees Website Did Not Provide Sufficient Notice Of Agreement To Arbitrate

Clickwrap? Browserwrap? Scrollwrap? Sign-in Wrap?

        When does one's use of a website result in an agreement to arbitrate? Concurring with the majority, Judge M. Miller Baker candidly observes that this is an "evolving and fact-bound area." Here, Judge Paul J. Watford, writing for the majority, and Judge Baker, concurring, agreed that the facts didn't add up to a binding agreement to arbitrate. Berman et al v. Freedom Financial Network, LLC, et al, No. 20-16900 (9th Cir.  4/5/22) (Watford, Hurwitz; Baker, International Trade Judge). The notice "in fine print stating, 'I understand and agree to the Terms & Conditions which includes mandatory arbitration'" wasn't conspicuous. And one could browse through the website without having to click and clearly manifest that one had read and understood the arbitration agreement. 

        Judge Baker's concurring opinion provides an analysis of choice-of-law and concludes that California law applies. The majority did not spend time on a choice-of-law analysis, concluding instead that the parties agreed California or New York law applied, and that the result would be the same regardless of which state's law was chosen.

      The concurring opinion is also useful because it reviews the evolving typology of internet commerce agreements: clickwrap (presumptively enforceable); browser wrap (per se unenforceable); scrollwrap (presumptively enforceable) and sign-in wrap¹ (falling in a  gray area). Here, the agreement best fit into the "sign-in wrap" gray zone, requiring conspicuous textual notice that completing a transaction or registration signifies consent to the site’s terms and condition in order to be enforceable. And Baker agreed that the notice here was insufficient. 

        COMMENT: Two of the leading California cases on the typology of internet agreements, and formation, as applied to arbitration, are Sellers v. JustAnswer LLC (2021) and Long v. Provide Commerce, Inc. (2016). We previously posted about the Sellers case on 1/13/22, and posted about the Long case on 3/26/16.

^{1  "'Sign-in wrap' agreements are those in which a user signs up to use an internet product or service, and the sign-up screen states that acceptance of a separate agreement is required before the user can access the service. While a link to the separate agreement is provided, users are not required to indicate that they have read the agreement’s terms before signing up."}

Arbitration, Jurisdiction: SCOTUS Holds That Federal Courts Do Not Get To Look Through To Underlying Dispute To Determine Jurisdiction When A Motion To Vacate An Award Is Brought

The Rule SCOTUS Applies To Petitions To Confirm Or Vacate Is Different Than The Rule It Applies To Motions To Compel Arbitration.

        In an 8-1 decision, Justice Elena Kagan, writing for the court majority, explains that federal courts, when determining whether federal jurisdiction exists to decide a petition to vacate an arbitration award, should not look to the underlying dispute. Badgerow v. Walters et al,  No. 20-1143 (S.Ct. 3/31/22). This is different from the jurisdictional approach taken by SCOTUS when a motion to compel arbitration is brought in federal court under the Federal Arbitration Act, 9 USC § 4. Vaden v. Discover Bank, 556 U. S. 49 (2009).

        In Vaden, the court explained that a motion to compel arbitration was brought under a statutory provision that required the court to look at the underlying dispute, based on the statutory language of § 4. The first sentence of that section provides: "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement." (italics added). The court interpreted the "save for" language to mean that the court analyzed jurisdiction as if an arbitration agreement did not exist, and therefore looked instead at whether there was a basis for  federal jurisdiction, e.g., diversity jurisdiction or a federal question. Merely because the FAA is invoked does not mean there is a basis for jurisdiction.

        Badgerow v. Walters was a wrongful employment case in which the employee Badgerow brought a lawsuit for unlawful termination against her employer in state court. She received an adverse award and moved in state court to vacate the award. The employer removed the case, which had included federal claims in the arbitration, to federal court, Badgerow sought to remand. Assessing its jurisdiction under the Vaden analysis, the district court held on to jurisdiction, and it was affirmed by the court of appeals. However, Justice Kagan saw the matter differently, because the provisions of the FAA governing motions to confirm and vacate an award (§§ 9 & 10) do not include "save for" language and do not necessitate looking at the underlying dispute to determine whether jurisdiction exists. On its face, the application to the district court did not establish federal jurisdiction. 

        COMMENT: This is an 8-1 decision, with only Justice Stephen Breyer dissenting. There  is a  boring slab of business-as-usual cases in which the Supreme Court does its work without brouhaha. This case is one example.