The global pandemic has brought about countless changes, including, for many households, increased reliance on online retail and delivery services, such as
When consumers sign up for these services or place their orders, they are likely to see a notice regarding terms and conditions, which may include an arbitration agreement pursuant to which the consumer agrees to arbitrate disputes arising from the use of the service, rather than pursue their claims in court. Recent decisions underscore the importance of the terms of these agreements and the challenges consumers may face if they wish to avoid arbitration of disputes with service providers, especially when they continue to rely on those services.
In Nicosia v.
On remand, the district court compelled arbitration under a combination of agency and estoppel doctrines, including a doctrine called "direct benefits" estoppel, under which a non-signatory who knowingly accepts the benefit of an agreement with an arbitration clause may be bound to arbitrate.
Interestingly, when the case came back to the Second Circuit for decision on appeal, the Second Circuit affirmed the district court, but not on agency or estoppel grounds. Instead, it affirmed on ordinary contract principles of notice and assent. As the Court explained, plaintiff had received notice of the arbitration clause when
Notably, this was a non-precedential summary order, and in reaching its decision, the Court assumed without deciding that the arbitration clause invoked by
The case thus leaves open the applicability of direct benefits estoppel to online delivery service use, as well as the extent to which plaintiffs can avoid the consequences of broad terms of service arbitration provisions when they continue to utilize a service after bringing suit, something plaintiffs may find more and more challenging during a time when households are increasingly dependent on these services.
The Second Circuit's affirmance may also have particular resonance in light of other recent decisions raising question about the limits of direct benefits estoppel. In
Following the Tice decision, the district court in BF agreed to stay the case pending
How the direct benefits test evolves and whether notice and assent from post-litigation use gains traction will no doubt be an area worth following in the coming months and years as these cases and more make their way through the courts.
Recent Decisions Spotlight Arbitration Agreements In Online Delivery Service Terms And Conditions
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