Case of the Missing Clause: Magistrate Judge Refuses to Recommend Arbitration of TCPA Claim Where Plaintiff Signed Up For Services Indirectly, Bypassing Defendant’s Arbitration Clause
A Magistrate Judge in the Southern District of Florida recommended Monday that a defendant’s motion to compel arbitration of a plaintiff’s TCPA claim brought on behalf of a putative class be denied. Fantis v. Flywheel Sports, Case No. 18-24934-CIV-UNGARO/O’SULLIVAN, 2019 U.S. Dist. LEXIS 39589 (S.D. Fla. Mar. 11, 2019). While the parties still have time to object to the Magistrate’s recommendation, the lesson here seems clear: if you want to arbitrate disputes, consumers need to at least be told the arbitration agreement exists. Now, if the report and recommendation is adopted, the defendant will be faced with a putative class action in federal court rather than an individual consumer arbitration.
The plaintiff alleged that Flywheel Sports sent telemarketing text messages to her cellphone in violation of the TCPA. She signed up for a cycling class at Flywheel via a third-party membership service called ClassPass. Flywheel argued that the plaintiff had agreed to the arbitration provision in its terms of service, even though she never actually saw Flywheel’s terms of service and was not provided with them. Instead, she agreed to ClassPass’ terms, which stated that:
Your participation in any class or service may be subject to addition [sic] policies, rules or conditions of the applicable Venueand you understand and agree that you may not be permitted to reserve or attend classes or services if you do not comply with these Terms or the policies of the Venues. If you have questions about a Venue’s waiver or other terms, please see the applicable Venue’s website or contact the Venue directly.
The plaintiff argued that she never went to Flywheel’s website to look at its terms of service, and was never provided with a copy of the terms or a hyperlink to them. Signing up through ClassPass allowed her to bypass Flywheel’s sign-up process and terms of service. The Magistrate Judge found, applying Florida law, there was insufficient evidence that the plaintiff agreed to the arbitration provision. The evidence demonstrated that the plaintiff was not presented an opportunity to view the terms (directly or through a link). Perhaps most importantly, the ClassPass terms did not sufficiently incorporate the Flywheel arbitration clause by reference, because they did not sufficiently describe the “policies, rules or conditions” to incorporate them and were too indefinite in stating that there “may” be other terms. According to the Magistrate, the plaintiff had no obligation to go looking for which of the possible venues may have additional policies, rules or conditions.
In a world where arbitration clauses are prevalent but scrutinized, a good first step is making sure users will at least stumble across your clause. Otherwise, you could be stuck in federal court faced with the long and expensive prospect of a class action.