The Ninth Circuit recently issued an opinion that could shape how companies draft and revise two oft-encountered types of contracts: terms of service agreements ("TOS") and arbitration clauses.
In Jackson v.
The complaint alleged Amazon violated the drivers' privacy under state and federal laws by monitoring and wiretapping the drivers' off-hours conversations in closed
The Ninth Circuit agreed that the district court correctly concluded that the 2016 TOS applied and that the parties' dispute was outside the scope of the 2016 TOS's arbitration clause. The Court held that Amazon, as the party seeking arbitration, had the burden to show that it provided adequate notice of the 2019 TOS and that there was mutual assent to the arbitration agreement contained therein, consistent with
Amazon argued that it circulated the 2019 TOS to its Flex drivers via email and that, even if it had not, by accepting the 2016 TOS its drivers had agreed to be bound by new terms so long as they continued to perform delivery services for Amazon or access the Flex app after receiving notice of the updated terms. Specifically, the 2016 TOS stated: "Amazon may modify this Agreement, including the Program Policies, at any time by providing notice to you through the Amazon Flex app or otherwise providing notice to you." Because of this language, the Court reasoned that the key question to ask when considering which TOS applied was whether Amazon provided notice of the new terms, noting that the Supreme Court has emphasized the need for consent in the arbitration context to ensure parties are not coerced into arbitrating claims when they never assented to doing so. Amazon did not provide the court with a copy or description of the notice it claimed it delivered, nor did it make any showing that the driver had received such notice, leading the Court to conclude there was no mutual assent to the 2019 TOS and only the 2016 TOS could apply.
The 2016 TOS arbitration clause provided that it applied to "any dispute or claim ... arising out of or relating in any way to this Agreement, including ... participation in the program or ... performance of services." The Court interpreted this language as requiring that a dispute must relate to the contract in order for it to be arbitrable. Looking at the facts as laid out in the drivers' complaint, the Court observed that there were no allegations that Amazon had violated any provision of the 2016 TOS, and none of the drivers' claims depended upon the terms of the contract that contained the arbitration clause. The Court acknowledged that the plaintiff likely joined the
This case provides a good reminder that companies that wish to keep all disputes with contractors, customers, and other counterparties in arbitration, rather than allow some to be adjudicated in court, should (i) revisit their arbitration provisions to ensure that they are broad enough to cover all disputes, and (ii) provide notice of updates to applicable TOS and keep records of how they have provided such notice.
Amazon Drivers Avoid Arbitration Claiming Non-delivery of Updated TOS
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