3d Cir. Refuses to Compel Arbitration

Last week, the Third Circuit was presented with an arbitration issue that dealt with, as the court put it, “an unusual hybrid of technology.”  The defendant had offered services through an interactive telephone system.  But the contract that purportedly bound plaintiffs to arbitration was located exclusively on defendant’s website.

Because of the disconnect between the phone-based interaction between the parties, on the one hand, and the web-located terms of service, on the other, the court declined to compel arbitration.  James v. Global TelLink Corp., — F.3d —, 2017 WL 1160893 (3d Cir. 2017).

The court emphasized that while defendant informed telephone users their service was governed by website terms, users were not required to visit the website or otherwise demonstrate acceptance of the website’s terms.

The Third Circuit then distinguished various lines of cases.  It distinguished cases where plaintiffs had “manifested assent through the affirmative act of signing contracts”; where the contractual terms had been “immediately accessible to online users”; where plaintiffs had “received a copy of the contract with their [purchase] and conceded that they had notice of the [relevant] clause”; and where the plaintiffs “received physical copies of the terms and conditions upon opening the products, and their subsequent use of the products manifested assent.”

The court concluded by emphasizing that while arbitration is a favored remedy where the parties assent to its use, arbitration cannot be compelled where one party did not agree to arbitrate:

Congress has made clear that arbitration is an important federal policy and the Supreme Court has vindicated that policy many times. Yet it remains axiomatic that a party cannot be required to arbitrate without its assent. On the facts as pleaded in this case, Appellees did not, through their words or deeds, agree to arbitrate their dispute with GTL. For that reason, we will affirm the order of the District Court denying GTL’s motion to compel arbitration.