A California-based marijuana delivery company, Eaze Technologies, Inc. formerly known as Eaze Solutions, Inc. (“Eaze”), is seeking to have Telephone Consumer Protection Act (“TCPA”) violation claims against it sent from federal district court to arbitration. If Eaze obtains a ruling in its favor, it would follow a nationwide trend in TCPA law involving courts enforcing arbitration agreements contained in website and mobile application terms and conditions.
How does Eaze’s motion to compel arbitration compare with recent TCPA law trends?
In Eaze’s motion, it described the process by which consumers become users of its service, which connects authorized marijuana dispensaries with verified users to facilitate delivery of products to the users. In order for a user to request and receive a delivery, s/he is required to register through either the Eaze website or mobile application using certain personal identifying information prior to creating an account. On the account set up page, users are required to affirm their consent to Eaze’s Terms of Service, which are accessible for review by the user via hyperlink above the “Next” button. These Terms of Service purportedly include an arbitration agreement that requires any and all disputes between users and Eaze to be submitted to mandatory arbitration, on an individual (as opposed to class wide) basis.
While agreements to arbitrate that are presented to website and/or mobile application users in the foregoing manner are routinely enforced by courts of law, the decision as to whether this plaintiff was provided sufficient notice of the subject arbitration agreement in order to properly have her claim transferred from court to an arbitral forum will be made by the United States District Court in the Northern District of California.
Defending Lawsuits Amid Changes in TCPA Law
As the briefing and eventual decision on Eaze’s motion will bear out in time, enforcement of any given arbitration agreement oftentimes is a fact-specific exercise. This decision depends on a myriad of factors that courts examine to determine whether a user was sufficiently notified that s/he was agreeing to arbitrate a claim (including claims for alleged violations of TCPA law) and waiving the right to go to court. It is vital that registration flows be designed in a way to provide adequate notice to users of any agreement to arbitrate, otherwise businesses run the risk of a court deeming the agreement invalid. In order to ensure that your website’s terms and conditions are enforceable, any webpage on which hyperlinks to the terms are located should be reviewed by knowledgeable counsel.