Fredy Sosa v. Onfido, Inc. provided an Illinois District Court with the obligation to opine whether a company engaged by an online marketplace to verify users’ identities could compel arbitration of claims brought by marketplace customers that their biometric data was being unlawfully stored. The court’s answer was “no.”

In this putative class action, users of the online marketplace Offerup, Inc. agreed by way of the marketplace’s terms and conditions to arbitrate disputes with the marketplace. Users provided photographs to enable verification of their identities. The marketplace outsourced the verification to defendant Onfido, Inc. which allegedly retained and/or used the information in violation of the Illinois Biometric Information Privacy Act.

In response to the users’ claims of statutory violation, Onfido sought to compel arbitration by leveraging Offerup’s terms and conditions to which the users agreed. The court rejected this attempt, finding that Onfido failed to satisfy any of the recognized theories whereby a non-party to the arbitration agreement could invoke its terms.

Retired federal judge and current JAMS neutral Diane Welsh has this article in The Legal Intelligencer discussing her experiences with virtual mediation during COVID-19 and offering her view that “the advantages of virtual mediation suggest that it will be deeply embedded in the ADR landscape long after the pandemic is over.”

The New Jersey Law Journal‘s Editorial Board has this article, discussing the New Jersey Appellate Division’s decision in Knight v. Vivint Solar, __ N.J. Super. __, 2020 N.J. Super. LEXIS 240 (N.J. Super. Ct. App. Div. Dec. 2, 2020), offering the following takeaways to contract draftspersons: “(a) When drafting, say it once and say it well, but do not over-commit to tech. (b) When entering a contract, all parties should have and maintain fully executed copies.”

The Southern District of New York has held that a purported class action against a health club by a member whose access was precluded due to Covid is subject to arbitration. In Jampol v. Blink Holdings, Inc, the court held that even though the Membership Agreement did not provide for arbitration, the Terms of Use to which the member assented did contain a broad arbitration provision and were controlling.

“The question presented to Chief Judge Colleen McMahon was, essentially, whether the pre-filing investigations by an attorney for a patent owner worked to compel arbitration?” This was the issue facing the court, as explained by Gene Quinn of IPWatchdog, Inc., in this article discussing the Southern District’s decision in Perry Street Software, Inc. v. Jedi Technologies, Inc., Case 1:20-cv-04539-CM.

As Mr. Quinn explains, “an attorney for patent owner Jedi Technologies, accessed the defendant’s website in order to engage in pre-filing due diligence, as is both prudent and legally required pursuant to FRCP Rule 11…signed up and viewed [the defendant’s app] as a part of this investigation. The …Terms of Service (TOS) included a boilerplate arbitration clause that purported to prevent users from filing claims in any court of competent jurisdiction, and instead compelling arbitration.”

Spoiler alert…. Judge McMahon held this action by plaintiff’s counsel was insufficient to constitute an agreement to arbitrate.

Quincy Bird of Carlton Fields has authored this article, available through JD Supra, discussing the Arkansas District Court’s decision in Patterson v. American Income Life Ins. Co. Attorney Bird asks at the outset “Has the judicial preference for presuming the survivability of arbitration clauses governing workplace disputes reached canonical status?” He suggests that perhaps it has.

Kevin Brodehl of Patton Sullivan Brodehl LLP discusses the California Appellate Court’s decision in Yao v. Pro-Management Consulting, finding that a California statute providing that a  “person that becomes a member of a limited liability company is deemed to assent to the operating agreement,” does not serve to constitute an agreement to the operating agreement’s arbitration provision in the absence of the member’s execution of the operating agreement. The article is available at JD Supra.

David Reif offers this cautionary tale in his blog post discussing the Third Circuit’s decision in Pennsylvania National Mutual Casualty Insurance Group v. New England Reinsurance Corporation, 2020 U. S. App. LEXIS 40342 (3^rd Cir. Dec. 24, 2020):

“When you move to confirm an award, if you believe that the case might settle while the application is pending, consider whether you want to or need to attach the award itself and, thus, expose it to the world and unnecessarily destroy the presumed confidentiality of arbitration proceedings.”

Heather Perlberg of Bloomberg has this article, which begins with this tag line: “As it buys up medical practices, private equity is popularizing a favored Wall Street cost-cutting tactic—and stripping patients of rights.”

The New Jersey Chancery Court has issued a decision that extends the New Jersey Supreme Court’s recent decision in Flanzman v. Jenny Craig Inc. Flanzman held enforceable an arbitration provision that failed to provide certain specifics regarding the arbitration provision to be followed because the contract language made abundantly clear that “final and binding arbitration will take the place of a jury or other civil trial.”

In Gramkow, Carnevale, Seifert & Co. v. CPAs4MDs, the Chancery Court addressed the converse. The arbitration provision provided clear guidance as to the protocol for arbitration:

“Any controversy or dispute arising out of or relating to a breach or alleged breach of any provision of this Agreement shall be settled by arbitration in Hackensack, New Jersey, in accordance with the rules of the American Arbitration Association by one arbitrator (either jointly selected by the parties, or if no agreement, then as appointed by the AAA) and judgement upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.”

The contract, however, did not include language disavowing the parties’ rights to sue in court. According to the Chancery Court, this omission is “dispositive” and “runs afoul of Flanzman,” rendering the agreement to arbitrate unenforceable.

As many, many agreements in New Jersey and elsewhere provide for arbitration without specifically stating that arbitration “would be very different from a court proceeding,” it will be exceedingly interesting to monitor this decision as it works its way through the appellate courts. Especially because this is a dispute between commercial parties, appellate affirmation would substantially change the arbitration landscape.