UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) PATRICK DANIEL, ) ) Plaintiff, ) v. ) ) EBAY, INC., et. al., ) Civil Action No. 15-1294 (EGS) ) Defendants. ) )

MEMORANDUM OPINON AND ORDER

Plaintiff Patrick Daniel (“Mr. Daniel”), an attorney

proceeding pro se, brings suit against eBay, Inc. (“eBay”) and

individual eBay seller Jack Ly (“Mr. Ly”)(also known as David

Kennedy). Mr. Daniel brings several claims against both

defendants, including “breach of contract, fraud, collusion,

conspiracy, failure to monitor business and its agents, failure

to supervise business and its sellers, agency, unjust

enrichment, redhibition, theft by deception, theft by

conversion, unfair and deceptive trade practices, and violations

of [unspecified] laws, statutes, and/or regulations designed for

the safety of consumers.” Compl., ECF No. 1 ¶ 13. Mr. Daniel’s

claims all arise from his purchase of an allegedly counterfeit

watch from Mr. Ly through eBay’s online marketplace. Arguing

that Mr. Daniel had agreed to submit to arbitration, eBay filed

a motion to compel arbitration and stay this litigation. Def.’s

1 Mot. to Arb., ECF Nos. 6, 9. 1 Pending before the Court are Mr.

Daniel’s objections to Magistrate Judge G. Michael Harvey’s

Report and Recommendation (“R&R”), which recommends that the

Court grant eBay’s motion to compel arbitration and stay

litigation. See R&R, ECF No. 15.

Upon consideration of the R&R, Mr. Daniel’s objections,

eBay’s response to those objections, eBay’s motion to compel

arbitration, the responses and replies thereto, and the relevant

law, the Court declines to adopt Magistrate Judge Harvey’s R&R

and DENIES eBay’s motion to compel arbitration and stay the

litigation pending before the Court.

I. Background

Mr. Daniel does not appear to object to Magistrate Judge

Harvey’s recitation of the facts. See Pl.’s Objections, ECF No.

17. To briefly summarize, Mr. Daniel bought what he thought was

an “authentic” Audemars Piguet Royal Offshore Watch from Mr. Ly,

a registered eBay seller, via eBay’s online marketplace on July

9, 2015. Compl., ECF No. 1 ¶¶ 4-6, 8. The watch was allegedly

worth $75,000. Id. On July 14, 2015, Mr. Daniel learned that the

watch was counterfeit, not “authentic” as marketed. Id. ¶¶ 7, 8.

Upon learning the watch was counterfeit, Mr. Daniel contacted

1 eBay’s motion to compel was filed as docket entry number 6, but eBay filed an amended memorandum in support of its motion to compel as docket entry number 9.

2 Mr. Ly and arranged a meeting to return the watch, but Mr. Ly

did not appear. Id. ¶ 10. Mr. Daniel notified eBay, but it

allegedly “refused” to provide him with Mr. Ly’s contact

information or refund his money. Id. ¶ 9. Within a month, Mr.

Daniel sued eBay and Mr. Ly for breach of contract, fraud, and

unjust enrichment, among several other charges. See id. ¶ 13.

eBay contends that Mr. Daniel is required to arbitrate his

claims against the company pursuant to various iterations of its

“User Agreements.” See Def.’s Mot. to Arb., ECF No. 9; R&R, ECF

No. 15 at 3-6. When Mr. Daniel registered as an eBay user in

March 1999, he was required to accept the 1999 User Agreement by

clicking “I accept” on an online form. Long Decl., ECF No. 6-2

¶¶ 3-12. The 1999 User Agreement did not contain an arbitration

clause, but provided that eBay may “amend this Agreement at any

time by posting the amended terms on our site.” Long Decl., ECF

No. 6-2 ¶ 13; 1999 User Agreement (“U.A.”), ECF No. 6-2 at 13.

Pursuant to that “change-in-terms” provision, eBay amended

its User Agreement to include an arbitration clause in August

2012. Long Decl., ECF No. 6-2 ¶ 14; 2 2012 U.A., ECF No. 6-2 at

22-29. The 2012 User Agreement stated that users and eBay agree

that “any and all disputes or claims that have arisen or may

arise between [the user] and eBay shall be resolved exclusively

2 Paragraph 14 of the Long Declaration appears to be incomplete and paragraph 15 is missing. See Long Decl., ECF No. 6-2.

3 through final and binding arbitration, rather than in court.”

2012 U.A., ECF No. 6-2 at 27. The User Agreement allowed users

to “opt out” of the arbitration provision by mailing eBay a

written opt-out notice within a certain amount of time. Id. at

28. According to eBay, Mr. Daniel did not “opt out.” Long Decl.,

ECF No. 6-2 ¶ 17.

In June 2015, eBay amended its User Agreement again. Id. ¶

18; 2015 U.A., ECF No. 6-2 at 31-40. This version of the User

Agreement was in effect when Mr. Daniel purchased the

counterfeit watch in July 2015. Long Decl., ECF No. 6-2 ¶ 18.

The 2015 User Agreement contained an arbitration provision

practically identical to the 2012 version:

[The user] and eBay each agree that any and all disputes or claims that have arisen or may arise between [the user] and eBay relating in any way to or arising out of this or previous versions of the User Agreement, [the user’s] use of or access to eBay’s Services shall be resolved exclusively through final and binding arbitration, rather than in court . . . . The Federal Arbitration Act governs the interpretation and enforcement of this Agreement to Arbitrate.

2015 U.A., ECF No. 6-2 at 37.

Mr. Daniel denies receiving notification of either amended

User Agreements. Daniel Aff., ECF No. 17 at Ex. 2 ¶¶ 2, 3 (“At

no time have I received an email [or message] from eBay

notifying me of a proposed compulsory arbitration provision.”).

eBay responds, stating that Mr. Daniel was notified of the 2015

4 User Agreement via an email sent to his registered email

address. Long Decl., ECF No. 6-2 ¶ 19; see also Form Email with

2015 U.A., ECF No. 6-2 at 42-43.

II. Standards of Review

A. Objections to a Magistrate Judge’s Report and Recommendation

Pursuant to Federal Rule of Civil Procedure 72(b), once a

magistrate judge has entered a recommended disposition, a party

may file specific written objections. The district court “must

determine de novo any part of the magistrate judge’s disposition

that has been properly objected to,” and “may accept, reject or

modify the recommended disposition.” Fed. R. Civ. P. 72(b)(3).

Proper objections “shall specifically identify the portions of

the proposed findings and recommendations to which objection is

made and the basis for objection.” Local Civ. R. 72.3(b). “As

numerous courts have held, objections which merely rehash an

argument presented to and considered by the magistrate judge are

not ‘properly objected to’ and are therefore not entitled to de

novo review.” Shurtleff v. U.S. Envtl. Prot. Agency,

(D.D.C. 2013) (quoting Morgan v. Astrue, Case No.

08–2133,

, at *3 (E.D. Pa. Oct. 30, 2009)

(collecting cases)). Likewise, a court need not consider cursory

objections made only in a footnote. Hutchins v. District of

Columbia,

, 539 n.3 (D.C. Cir. 1999); see also

5 Potter v. District of Columbia,

(D.C. Cir.

2009) (Williams, J. concurring) (internal citations omitted).

B. Motion to Compel Arbitration

The Federal Arbitration Act (“FAA”),

, et seq.,

“governs the enforcement of contractual arbitration provisions”

related to matters of interstate commerce. Aneke v. Am. Express

Travel Related Servs., Inc.,

(D.D.C.

2012). It provides that written agreements to arbitrate “shall

be valid, irrevocable, and enforceable, save upon such grounds

as exist at law or in equity for the revocation of any

contract.”

. The “saving clause” in this section

“permits agreements to arbitrate to be invalidated by generally

applicable contract defenses, such as fraud, duress, or

unconscionability, but not by defenses that apply only to

arbitration or that derive their meaning from the fact that an

agreement to arbitrate is at issue.” AT&T Mobility LLC v.

Concepcion,

, 339 (2011) (internal quotations and

citations omitted).

The FAA reflects “a liberal federal policy favoring

arbitration and the fundamental principle that arbitration is a

matter of contract.” Id. (internal quotations and citations

omitted). It “strongly favors the enforcement of agreements to

arbitrate as a means of securing prompt, economical and adequate

solution of controversies.” Rodriguez de Quijas v.

6 Shearson/Am. Express, Inc.,

, 479–80 (1989).

Therefore, “district courts shall direct the parties to proceed

to arbitration on issues as to which an arbitration agreement

has been signed.” Dean Witter Reynolds, Inc. v. Byrd,

(1985) (citing

, 4)(emphasis in original).

When adjudicating a motion to compel arbitration, district

courts apply the summary judgment standard of Federal Rule of

Civil Procedure 56(c). Aliron Int'l, Inc. v. Cherokee Nation

Indus., Inc.,

(D.C. Cir. 2008). Under Rule 56,

summary judgment is appropriate only if “there is no genuine

dispute as to any material fact and the movant is entitled to a

judgment as a matter of law.” Fed. R. Civ. P. 56. To that end,

“the party seeking to stay the case in favor of arbitration

bears an initial burden of demonstrating that an agreement to

arbitrate was made . . . . [while] the party resisting

arbitration bears the burden of proving that the claims at issue

are unsuitable for arbitration.” Saki v. Estee Lauder Cos., --

F. Supp. 3d --,

at *4-5 (D.D.C. April 25,

2018)(citing Green Tree Fin. Corp.-Ala. V. Randolph,

(2000)).

III. Analysis

In its motion to compel arbitration, eBay argues that Mr.

Daniel is required to submit to arbitration because he agreed to

the 1999 User Agreement, which contained the change-in-terms

7 clause. See Def.’s Mot. to Arb., ECF No. 9. Because eBay amended

its User Agreement to require arbitration pursuant to that

clause, eBay argues that Mr. Daniel agreed to the changes. See

eBay points to the fact that Mr. Daniel did not opt out of

the arbitration provision even though he had the option to do

so. See id. at 3. In response, Mr. Daniel argues that he never

agreed to the 2012 and 2015 arbitration clauses because he never

received notification of the amended terms. See Pl.’s Opp’n, ECF

No. 11. Alternatively, he argues that the arbitration agreement,

if any, is unenforceable and does not encompass his claims

against eBay. See id.

The R&R recommends that the Court grant eBay’s motion to

compel because: (1) the parties entered into a valid arbitration

agreement, see R&R, ECF No. 15 at 12-14; (2) the arbitration

agreement is enforceable, see id. at 14-16, 19-27; and (3) the

arbitration clause encompasses Mr. Daniel’s claims, see id. at

16-18. In recommending this outcome, the R&R did not resolve the

choice of law dispute between the parties. See R&R, ECF No. 15

at 9-11 (“When determining whether an arbitration agreement is

valid, ‘courts apply ordinary state-law principles that govern

the formation of contracts.’”) (quoting First Options of Chi.,

Inc. v. Kaplan,

(1995)). Mr. Daniel argues

that Louisiana law applies, see Pl.’s Opp’n, ECF No. 11 at 2, 6-

10, while eBay asserts that “either Utah or Texas law applies,”

8 see Def.’s Reply, ECF No. 14 at 5, 7. The R&R does not resolve

the issue because it concludes that eBay’s motion to compel

arbitration should be granted pursuant to the law of each

jurisdiction. See R&R, ECF No. 15 at 9-11. While the Court

disagrees that eBay’s motion should be granted, it agrees that

it need not resolve the choice of law issue as the laws of these

jurisdictions produce identical results. See Nat’l R.R.

Passenger Corp. v. Lexington Ins. Co.,

(D.C.

Cir. 2004)(“we need not delve into choice of law issues, as

there is no conflict of law for this Court to resolve”).

Consequently, the Court looks to Utah, Louisiana, and Texas law.

In his objections, Mr. Daniel seems to argue that the Court

should apply California law. See Pl.’s Objection, ECF No. 17 at

5-6. Not only does California not appear to have a significant

interest in the application of its law to this dispute, see

Geico v. Fetisoff,

(D.C. Cir. 1992), but Mr.

Daniel also did not argue that California law should apply when

opposing eBay’s motion to compel arbitration, see Pl.’s Opp’n,

ECF No. 11. Mr. Daniel is entitled to a de novo review of

Magistrate Judge Harvey’s findings; he is “not, however,

entitled to a de novo review of an argument never raised.”

Aikens v. Shalala,

(D.D.C. 1997).

9 A. Mr. Daniel Did Not Consent to Arbitration

In adjudicating motions to compel arbitration, the Court must

determine (1) whether the parties entered into a valid and

enforceable arbitration agreement; and, if so, (2) whether the

arbitration agreement encompasses the parties’ claims. See

Courville v. Allied Prof’ls Ins. Co.,

(La.

Ct. App. 2015) (“In ruling on a motion to compel arbitration,

the court must first determine whether the parties agreed to

arbitrate the type of claim that is at issue.”); Bybee v.

Abdulla,

(Utah 2008)(“ For a dispute to be

subject to arbitration, an agreement to arbitrate must exist

that binds the party whose submission to arbitration is sought

and the dispute to be arbitrated must fall within the scope of

the agreement.”) (internal citations omitted); In re Conseco

Fin. Serv. Corp.,

(Tex. App. 2000)(same).

The R&R finds that eBay and Mr. Daniel had agreed to

arbitrate because Mr. Daniel accepted the 1999 User Agreement,

which contained the change-in-terms provision that allowed eBay

to amend future User Agreements. See R&R, ECF No. 15 at 12-14.

Therefore, the R&R concludes that the 2012 and 2015 User

Agreements—which contained arbitration clauses—are enforceable

by virtue of the 1999 User Agreement.

By failing to opt out

of the arbitration provision, Mr. Daniel “manifested his assent

to the terms of eBay’s User Agreement and the arbitration clause

10 therein.” Id. at 14. The R&R did not consider whether Mr. Daniel

could consent to the later-added arbitration provisions without

personal notice of the changes or whether posting the amended

User Agreements on eBay’s website was sufficient notice. See id.

Although the R&R assumes that Mr. Daniel was entitled to notice

of the arbitration provisions, it does not address whether the

record establishes that eBay sent such notice. See id.

Mr. Daniel objects to the R&R by arguing that he never

consented to arbitration. Pl.’s Objections, ECF No. 17 at 2-3,

7-9. Mr. Daniel does not dispute that he consented to the 1999

User Agreement by clicking “I accept” when he registered for an

eBay account. See generally Pl.’s Opp’n, ECF No. 11; Pl.’s

Objections, ECF No. 17. He also does not dispute that the 1999

User Agreement allows eBay to amend its contract by “posting the

amended terms on [eBay’s] site.” See id.; 1999 U.A., ECF No. 6-2

at 13. Instead, Mr. Daniel argues that he never received

notification of the amended User Agreements and thus, eBay

“cannot offer credible evidence of [his] intent to be bound to

arbitration.” Id. at 1, 3; Pl.’s Aff., ECF No. 17 at 22 ¶¶ 2-4.

Mr. Daniel contends that he had no intent to be bound to

arbitrate when he accepted a contract that did not contain an

arbitration provision thirteen years earlier. See Pl.’s

Objections, ECF No. 17 at 3-4, 8-9 (“eBay has no proof of [Mr.

Daniel’s] consent to arbitrate”). At issue, then, is whether Mr.

11 Daniel consented to the later-added arbitration clause by virtue

of the change-in-terms provision and whether Mr. Daniel could

consent to the arbitration clauses without notice of them.

As a matter of “basic contract formation principles, an

agreement to arbitrate is not created by a unilateral offer from

one party”; it requires “mutual assent” to be enforceable.

Morgan v. Bronze Queen Mgmt. Co.,

(Tex. App.

2014). Indeed, “the general rule of arbitration agreements is

that one who has not manifested assent to an agreement to

arbitrate cannot be required to submit to arbitration.”

Ellsworth v. Am. Arb. Ass’n,

, 989 ¶ 19 (Utah 2006).

Therefore, the “minimum threshold” for enforcement of an

arbitration provision is “direct and specific evidence of an

agreement [to arbitrate] between the parties.”

at 987 ¶ 14

(quotations and citations omitted). A plaintiff is “not bound by

the terms of [] later-added arbitration clauses unless he

consented to them, as a ‘substantive change in the terms of a

contract requires the consent of parties.’” FIA Card Servs. v.

Weaver,

(La. 2011)(quoting Lanier v. Alenco,

(5th Cir. 1972)). Therefore, the Court rejects

the R&R’s finding that eBay and Mr. Daniel agreed to arbitrate

solely because Mr. Daniel accepted the 1999 User Agreement,

which contained the change-in-terms provision that allowed eBay

to amend future User Agreements.

12 A party may consent to a later-added arbitration clause if

the party: (1) is notified about the arbitration clause; and (2)

assents via continued use of the product or service. See FIA,

(“it is black letter law that, if a credit card

company sends a notice of change in terms of the agreement, the

customer assents to the new terms by his continued use of the

card”); Koontz v. Citibank, Civ. No. 01-08-495,

at *2 (Tex. App. 2010)(finding that the consumer consented to a

later-added arbitration clause, despite not signing a new

contract, because she received a notice explaining the change,

did not opt out of the provision, and continued using the

product). Therefore, while a party need not necessarily sign a

contract with a later-added arbitration clause in order to

assent, the party cannot agree to a newly-added arbitration

clause without personal notice of that provision. See McCoy v.

Blue Cross & Blue Shield,

, 904 ¶ 13 (Utah).

Notice of a later-added arbitration provision is essential

because “when parties agree to arbitrate, they waive the

substantial right to judicial resolution of their disputes.” Id.

¶ 15. While the FAA “requires courts [to] rigorously . . .

enforce arbitration agreements,” Epic Sys. Corp. v. Lewis, -- S.

Ct. --,

at *5 (May 21, 2018)(quotations and

citations omitted), “the policy of liberally construing

agreements in favor of arbitration is conditioned upon the prior

13 determination that arbitration is a ‘remedy freely bargained for

by the parties and [which] provides a means of giving effect to

the intention of the parties,’” McCoy,

¶ 15. This

is not to say that eBay must prove that Mr. Daniel actually

received notice. FIA,

n.7 (“There is no

requirement that FIA prove Weaver, specifically, received the

notice.”). However, eBay must show and the record must reflect

that it undertook specific efforts to send notice of the new

arbitration provisions to Mr. Daniel on a certain date. See

(citing Nolan v. Mabray,

(La. 2010)(not enforcing a

later-added arbitration clause because the record did not

contain evidence “showing when or if the notices were mailed to

customers”)); see also Marsh v. First USA Bank, N.A.,

, 918–19 (N.D. Tex. 2000)(enforcing a valid

arbitration provision because the record established, via

depositions and affidavits, that the company had quality

assurance controls to ensure that every customer received notice

of the later-added arbitration provision).

In McCoy v. Blue Cross & Blue Shield, the Utah Supreme

Court applying Utah law—eBay’s preferred forum—denied a motion

to compel arbitration for failure to demonstrate notice and

assent.

¶¶ 17, 18. Relying on a change-in-terms

clause, Blue Cross argued that the plaintiff had agreed to

arbitrate because the parties had agreed that Blue Cross “had

14 the absolute right to modify or amend [its] agreement from time

to time.” Id. ¶ 16. Notwithstanding that provision, the Utah

Supreme Court found that the plaintiff had not agreed to

arbitrate by merely agreeing that Blue Cross could amend the

contract terms at a later time. Id. ¶ 17. Instead, the company

was required to establish that it had notified the plaintiff

“personally” about the newly-added arbitration provision. Id. ¶

18. Blue Cross’ statement that it had mailed a notice to all

subscribers was not sufficient: “its evidence described general

procedures but did not establish any actual mailing, or even

attempt to mail, that was directed to [the plaintiff]

personally.” Id. So here too.

eBay has not established that it notified Mr. Daniel about

the 2012 and 2015 amended User Agreements containing the

arbitration clauses. First, eBay contends that Mr. Daniels

received notice when it posted the amended User Agreements on

its website. See 2012 U.A., ECF No. 6-2 at 22 (posted on eBay’s

website); 2015 U.A., ECF No. 6-2 at 31 (posted on eBay’s

website); Long Decl., ECF No. 6-2 ¶¶ 14, 19. eBay does not

provide any authority from any of the three jurisdictions for

the proposition that such posts constituted notice sufficient to

demonstrate an agreement to arbitrate. See generally Def.’s Mot.

to Arb., ECF No. 9. Indeed, in eBay’s preferred forum claims of

“general” notice without evidence of “personal[]” and “actual”

15 mailing to affected customers was insufficient to demonstrate

consent. See McCoy,

¶ 18.

Next, eBay asserts that it sent the 2012 User Agreement to

Mr. Daniel “through his My eBay Message Center.” Def.’s Mot. to

Arb., ECF No. 9 at 3 (citing Long Decl., ECF No. 6-2 ¶ 18); see

also Def.’s Reply, ECF No. 14 at 2 (citing Long. Decl., ECF No.

6-2 ¶¶ 18-20). The record does not support this assertion.

Paragraphs 18 and 19 of the Long Declaration do not state that

Mr. Daniel was sent a message regarding the 2012 User Agreement

via the “Message Center” and paragraph 20 does not exist. See

Long Decl., ECF No. 6-2. Moreover, eBay does not provide a copy

of any message sent to Mr. Daniel.

Finally, eBay asserts that its “records show that Daniel

was notified of the [2015] revisions via an email sent to his

registered email address.” Def.’s Mot. to Arb., ECF No. 9 at 3-4

(citing Long Decl., ECF No. 6-2 ¶ 20; Form Email with 2015 U.A.,

ECF No. 6-2 at 42-43). Again, the record does not support this

assertion. Not only is there no paragraph 20 in the Long

Declaration, but the email attached as an exhibit to the

Declaration was not addressed to Mr. Daniel. Instead, eBay

relies on a form email that it states was sent to eBay users to

notify them of updates to the 2015 User Agreement. See Long.

Decl., ECF No. 6-2 ¶ 19; Form Email with 2015 U.A., ECF No. 6-2

at 42-43(form email is addressed to “[USER]” without any email

16 address or date sent). eBay has therefore failed to demonstrate

that it sent Mr. Daniel an email notifying him of the 2015 User

Agreement. See McCoy,

¶ 18 (requiring evidence of

personal notification to establish consent to arbitration); FIA,

(vacating arbitration award because the

company failed to provide evidence that notice of the

arbitration clause was mailed to customers and as such, the

court was “unable to conclude that [the consumer] ever consented

to resolve his credit card disputes via arbitration”); Koontz,

at *2-3 (finding that the consumer had consented

to arbitration because it was undisputed that the company had

sent the consumer the agreement to arbitrate). In sum, eBay has

failed to establish mutual assent to arbitrate because it failed

to meet its burden of demonstrating that Mr. Daniel was

personally notified of the 2012 or 2015 User Agreements

containing the arbitration provisions. 3

IV. Conclusion and Order

For the aforementioned reasons, the Court declines to adopt

Magistrate Judge Harvey’s R&R. Accordingly, the Court DENIES

eBay’s motion to compel arbitration and stay the litigation.

3 Mr. Daniel also argues that the arbitration agreement is unenforceable because it is unconscionable and illusory. Pl.’s Objections, ECF No. 17 at 5-6, 10-12. He also contends that any arbitration agreement does not fully encompass his claim. Id. at 9-10. Because the Court finds that eBay did not establish mutual assent to arbitrate, it need not reach these arguments.

17 Pursuant to the Court’s September 30, 2015 Minute Order, eBay

is directed to file its answer to Mr. Daniel’s complaint by no

later than August 27, 2018. Within thirty days after eBay has

filed it answer, the parties shall meet and confer as required

by Federal Rule of Civil Procedure 26(f). See Court’s Standing

Order ¶ 9.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge July 26, 2018

18