Daniel v. eBay, Inc.
Daniel v. eBay, Inc.
Opinion of the Court
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 *508deceptive 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 Mot. to Arb., ECF Nos. 6, 9.
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 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;
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 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 ,
B. Motion to Compel Arbitration
The Federal Arbitration Act ("FAA"),
The FAA reflects "a liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract."
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. ,
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 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
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 ,
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 ,
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. ,
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.
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 *512to 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. 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. ,
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 ,
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 , --- U.S. ----,
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.
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" mailing to affected customers was insufficient to demonstrate consent. See McCoy ,
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 *514Agreement. 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 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 ,
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.
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.
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.
Paragraph 14 of the Long Declaration appears to be incomplete and paragraph 15 is missing. See Long Decl., ECF No. 6-2.
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.
Reference
- Full Case Name
- Patrick DANIEL v. EBAY, INC.
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- Published