Court Enforces Arbitration Clause in Amazon’s Terms of Service–Fagerstrom v. Amazon

2 01 2017

This lawsuit alleges that Amazon overstated the extent of discounts it offered customers (in stating the extent of the discount customer achieved when shopping at Amazon versus competing retailers). Amazon moved to compel arbitration, and the court grants the motion. The efficacy of arbitration clauses in online terms of service agreements is an evergreen topic of interest, so although it was decided in late October I thought the case was worth noting.

The court agrees with Amazon that Washington law applies. Plaintiffs argued for application of California law, but were unable to point to a fundamental conflict between the laws of the two states.

The terms are not illusory. The agreement reserved the right for Amazon to make changes at any time and without prior notice. Plaintiffs argued that this rendered the agreement illusory. The court disagrees, and says that Amazon has agreed to arbitrate disputes as to products purchased. This obligation remains unchanged and cannot be altered by a later revised term. Additionally, Amazon is bound by the duty of good faith. So even if it can alter the agreement freely, this right is subject to limitations.

The terms are not undermined by procedural unconscionability. Plaintiffs raised three main arguments in support of procedural unconscionability:

  • the text of order affirming agreement to the terms were not sufficiently prominent
  • the arbitration clause was buried because it was included in a longer document that was only linked
  • the arbitration clause incorporated a set of AAA rules but were vague about which ones were incorporated

These arguments get no traction.

The terms were not substantively unconscionable: Plaintiffs’ substantive unconscionability arguments similarly failed. The court previously addressed plaintiffs’ argument that the unilateral right to amend rendered the agreement illusory. In addition to this, plaintiffs raised two other arguments.

First, plaintiffs argued that the carveout from the arbitration clause for intellectual property claims was one-sided, and in effect allowed Amazon to litigate the claims that were most important to it, while forcing consumers to arbitrate claims that were most important to them. The court finds this unpersuasive, noting that customers include rightsowners who may litigate intellectual property disputes against Amazon. Second, even if this represented some imbalance, this wasn’t a provision that shocked the conscience. It was within the realm of the typical give-and-take in a contract.

Second, plaintiffs focused on a provision voluntarily limiting Amazon’s right to seek attorney’s fees unless the arbitrator found the claims were frivolous. The court rejects this as well. First, it re-states state law on this point. Second, Washington law has a mandatory reciprocal fee provision, so whatever the effect of this provision, plaintiffs get the benefit of it as well. Finally, the provision does not limit plaintiffs right to seek fees in any way.

Although the court finds that it is not “a paragon of consumer protection” it says the agreement is not unconscionable.


(The ruling has been appealed.)

Case citation: Fagerstrom v. Amazon, Inc., 15-cv-96 BAS (S.D. Cal. Oct. 20, 2015)


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Can YouTube ‘Remove And Relocate’ User Videos Capriciously?–Darnaa v. Google (Forbes Cross-Post)

29 12 2016

Most of us uploading YouTube videos aren’t deeply invested in their continued availability. If YouTube removed our videos or relocated them to a different URL, we might be puzzled why but otherwise would probably shrug our shoulders. However, YouTube is the birthing ground for the next generation of music stars, and there’s a lot of money to be made from a successful viral YouTube video. When YouTube removes or relocates a video that an emerging star is investing in some marketing muscle to promote, it can disrupt the musician’s economic expectations–and, in theory, their hopes and dreams. Can YouTube make these remove/relocate decisions capriciously, or could it face legal liability for the decisions?

Several pending lawsuits against YouTube allege that it made remove-and-relocate without sufficient justification or that YouTube’s public characterization of the remove-and-relocate was misleading. YouTube won the most recent court ruling, but not as decisively as it would have liked–and with a few choice words from the judge as well.


Case Citation: Darnaa LLC v. Google, Inc., 2015 WL 7753406 (N.D. Cal. Dec. 2, 2015). The initial complaint.

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“Modified Clickwrap” Upheld In Court–Moule v. UPS

13 12 2016

[Eric’s introduction: today Venkat and I are “celebrating” (?) TOS Arbitration Day here at the Technology & Marketing Law Blog. Independently, we each drafted blog posts about arbitration clauses in terms of service–covering different cases! We could have combined the blog posts into a single mega deluxe blog post, but who doesn’t like getting two yummy treats instead of one? So this is part 1 of our posts in honor of TOS Arbitration Day. Check back later today for Venkat’s part 2.]

Let’s review the state of play:

* courts say online contracts should be categorizable as “clickwraps” or “browsewraps”
* courts usually enforce clickwraps but not browsewraps
* despite the categories, courts don’t view clickwraps and browsewraps as abutting circles on a Venn diagram. Instead, the circles apparently are partially overlapping. This is resulting in analytical confusion
* because courts don’t understand the definitions of “clickwrap” or “browsewrap,” the courts are perceiving cases on their dockets as falling into the overlap zone
* because they think cases in the overlap zone must be novel, courts are proliferating variations of “-wrap” nomenclature
* the growing semantic ambiguity is compounding the analytical confusion

I’ve told you before that this situation is so much easier than the courts are treating it. Clickthrough agreements–which consist of visible notice to the user, an affirmative act by a user and a proper call-to-action saying that the affirmative act manifests assent–are enforceable. Let’s call everything else “not a contract” and never use the “-wrap” suffix again. Done.

Today’s case involves the shipment of an expensive item via UPS. The item allegedly arrived in poor condition. The sender says UPS mishandled it. UPS says the sender improperly packed it and denied compensation to the sender. The sender sued. UPS invoked an arbitration clause in its “UPS Tariff/Terms and Conditions of Service.”

Case citation: Moule v. United Parcel Service Co., 2016 WL 3648961 (E.D. Cal. July 7, 2016)

BONUS! HIDDEN TRACK: Salameno v. Gogo Inc., 2016 U.S. Dist. LEXIS 88166 (E.D.N.Y. July 7, 2016), echoing the befuddling and overlong Berkson v. Gogo ruling, endorses the term “sign-in-wrap”:


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German judges explain why Adblock Plus is legal

13 12 2016
Last month, Adblock Plus maker Eyeo GmbH won its sixth legal victory in German courts, with a panel of district court judges deciding that ad-blocking software is legal despite German newsmagazine Der Spiegel’s arguments to the contrary. Now, the reasoning of the Hamburg-based panel of judges has been made public.

According to an unofficial English-translated copy (PDF) of the judgment, Spiegel Online argued it was making a “unified offer” to online consumers. Essentially, that offer is: read the news content for free and view some ads. While Internet users have the freedom “not to access this unified offer,” neither they nor Adblock Plus have the right to “dismantle” it. Eyeo’s behavior thus amounted to unfair competition, and it could even wipe the offer out, Spiegel claimed.



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Court Upholds Airbnb’s Terms of Service–Selden v. Airbnb

19 11 2016

This lawsuit alleges that Airbnb’s “hosts” racially discriminate when accepting customers’ bookings. Airbnb sought to send the case to arbitration per its Terms of Service, which the plaintiffs challenges.



Case citation: Selden v. Airbnb, Inc., 2016 WL 6476934 (D.C.D.C. Nov. 1, 2016). Amended complaint. and was not authored by the moderators of Clicking the title link will take you to the source of the post.