KEVIN McNULTY, U.S.D.J.
The plaintiffs
The defendants' motion for summary judgment is denied outright to the extent it rests on the agreements signed in person by the plaintiffs when they rented their cars in the United States, and the plaintiffs' corresponding cross motion is granted to the same extent. Section II.D.1 & 2, infra.
The defendants' motion and the plaintiffs' cross motion are both denied to the extent that they rest on the agreement signed in person by the plaintiff who rented her car in Costa Rica, because factual issues remain. Section II.D.3, infra.
To the extent the motions rest on the terms of service on booking websites, I find that the record is not sufficiently developed. After appropriate discovery, the issue may be resolved on summary judgment or tried. Section II.E, infra.
The plaintiffs filed their Complaint on September 26, 2016. Defendants initially moved to dismiss the Complaint and compel arbitration. (DE 16, 17). Because the defendants' motions to dismiss presented issues of fact, I denied those motions as offered and ordered limited discovery on the issue of arbitrability. (See MTD Opinion). In that Opinion, I described how discovery was necessary to develop the record on the question of whether the parties agreed to arbitrate so that the motion to compel could be decided on a summary judgment standard pursuant to the framework outlined in Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir. 2013). (See MTD Opinion at 6-8).
Once discovery on the question of arbitrability was completed, the defendants filed the present motion for summary judgment to compel arbitration. Plaintiffs cross-moved for summary judgment on the same issue.
Six of the seven plaintiffs (the "U.S. Plaintiffs") rented cars in the United States—specifically, New Jersey, Nevada, or Florida. (DSMF ¶¶ 113, 123, 131, 146, 159, 168).
The U.S. Plaintiffs signed identical one-page rental agreements (the "U.S. Agreement") to rent Payless cars. (PSMF ¶¶ 5-7).
Each U.S. Plaintiff's signature appears immediately below the final paragraph of the U.S. Agreement. That final paragraph states, in part, as follows: "I agree the
The defendants attach copies of what they identify as the rental jackets that correspond to the U.S. Agreements (the "Rental Jackets"). (DSMF ¶ 109).
Payless rental sales associates are instructed to give a rental jacket to the customer after the customer signs the rental agreement. (DSMF ¶¶ 14, 36; PRDSMF ¶ 14; DRPR ¶ 14). They are also instructed to give a rental jacket to any customer who requests one. (DSMF ¶¶ 16, 36). However, rental sales associates are not trained to alert customers to the existence of the rental jacket or to any additional terms while the customer is reviewing the U.S. Agreement. (PRDSMF ¶ 36; DRPR ¶ 36).
After the customer signs the U.S. Agreement, the rental sales associate takes the signed agreement, folds the customer copy, inserts it into a Rental Jacket, and hands the customer the Rental Jacket with the copy of the signed U.S. Agreement inside. (DSMF ¶¶ 14, 15; PRDSMF ¶¶ 14, 15; DRPR ¶¶ 14, 15). Thus the customer routinely receives the Rental Jacket only after signing the U.S. Agreement, unless the customer has specifically asked to see the Rental Jacket at some earlier time. (DSMF ¶¶ 32, 36).
That is essentially what occurred when each of the U.S. Plaintiffs rented a car. (DSMF ¶¶ 113, 119, 121, 123, 125, 127-29, 131, 138, 140-41, 146, 151-52, 154-55, 163, 165-66, 168, 180, 182, 185). The U.S. Plaintiffs did not ask to see the Rental Jacket; the rental sales associates did not mention anything about the Rental Jacket as the U.S. Plaintiffs were reviewing their Agreements; the U.S. Plaintiffs signed their Agreements; and then the rental sales associates folded the U.S. Agreements inside the Rental Jackets and handed them back to each U.S. Plaintiff. (Id.). It is undisputed that the U.S. Plaintiffs received the Rental Jackets at the rental counter only after they signed their Rental Agreements. (PSMF ¶¶ 1, 2; DRPSMF ¶¶ 1, 2).
The Rental Jacket, so called, is not actually titled as such; the actual title at the top of the page is "Rental Terms and Conditions." (DSMF ¶ 10; PRDSMF ¶ 10;
(DSMF ¶¶ 11-13, 21; PRDSMF ¶¶ 11-13, 21; DRPR ¶¶ 11-13).
The defendants keep the Rental Jackets at the rental counter, typically near the computer terminal or printer. (DSMF ¶¶ 35, 41; PRDSMF ¶¶ 35, 41; DRPR ¶¶ 35, 41). The parties provided photos of the rental counters where the U.S. Plaintiffs rented their cars in Tampa, FL and Las Vegas, NV to illustrate the physical layout.
At the Las Vegas location, the Rental Jackets are located on a desk behind the counter where the rental associate stands. The desk on which they sit is lower than the counter, so the view of a customer who is standing more than a few feet away is obstructed. Even for a customer standing directly at the counter, only the bottom portion of the Rental Jacket page would be visible. The Rental Jackets are facing in the direction of the rental sales associate (i.e., the text is upside-down from the customer's point of view).
The photos of the Tampa location are similar, except that the Rental Jackets are somewhat less obstructed by the counter ledge, and the bottom of the rental jacket is therefore more visible.
Arcadia Lee rented a car in Costa Rica from Payless's licensee, Las Cuatro Vias, S.A. ("LCV"). (DSMF ¶¶ 186, 192-93, 203). LCV uses an agreement that is printed on
The front side of the Costa Rica Fill-In Agreement is a receipt-like agreement that bears the Payless logo as well as LCV's name and address. (DE 81-8; DSMF ¶ 195). It includes basic identification information about the customer and the rented vehicle, itemizes charges and fees, and identifies pickup and drop-off details for the rented vehicle. (DE 81-8). It also includes several provisions with blank lines next to them for the customer to initial to signify that it is accepted or declined. (Id.). These include a collision damage waiver, emergency roadside assistance, and supplemental liability insurance. (Id.). The collision damage waiver states that it is subject to capitalized "Terms and Conditions on this countract [sic]." (Id.). There is no document or paragraph entitled "Terms and Conditions," however. The front side does not explicitly refer to content on the back side of the paper. (Id.). Aside from the reference in the collision damage waiver, the front-side Costa Rica Fill-in Agreement does not refer to, let alone identify, any separate terms and conditions. It does not refer to any extrinsic "Rental Agreement."
At the bottom of the front side appears the following admonition: "By signing below, you agree to the terms and conditions of this Agreement, and you acknowledge that you have been given an opportunity to read this Agreement before being asked to sign." (Id.; DSMF ¶ 197; PRDSMF ¶ 197; DRPR ¶ 197). Lee signed the front side just underneath that admonition. (DE 81-8).
The Costa Rica Terms, i.e., the back of the sheet, bears the heading "Rental Agreement." It comprises 21 paragraphs in English and 21 paragraphs in Spanish on a single page. (Id.). The writing is quite small and difficult to read, at least in the Court's copy. (Id.). The first numbered English paragraph, titled "Parties," explains that the parties include LCV and the renter, defined as the "persons whose data is detailed on the face of this document and whose signatures are affixed at the bottom, as well as any other individuals or entities in which name the car-rental invoice is issued by instructions of the signatory who shall be jointly liable for the obligations hereunder acquired." (Id.; DSMF ¶ 196; PRDSMF ¶ 196; DRPR ¶ 196).
The Costa Rica Terms include a "Dispute resolution" clause, essentially an arbitration provision, which states as follows:
(DE 81-8; DSMF ¶ 199).
The back side of the paper has its own signature line, at the bottom right corner. It is preceded by the following admonition: "By signing below, you agree to the terms and conditions of this Agreement," in English and Spanish. Lee did not sign the Costa Rica Terms on the back side of the paper. (DE 81-8; PRDSMF ¶ 207; DRPR ¶ 207; PSMF ¶ 48).
The parties attach a video of Lee's rental transaction at LCV in Costa Rica. (DE 93-5 at 138 (the "video")). This video shows Lee reviewing and signing the Costa Rica Agreement; it does not show that she ever turned over the Costa Rica Fill-in Agreement to review the Costa Rica Terms on the back. (Id.). The video shows the rental sales associate physically pointing to where Lee should sign the Costa Rica Fill-In Agreement on the front side, but it does not show the rental sales associate communicating to Lee that there is additional content on the back side of the paper. (Id.; PRDSMF ¶ 208; DRPR ¶ 208).
During the transaction, Lee can be heard asking, "do you want me to sign next to each one?" The evident reference is to the initial lines on the front requiring the customer to accept or decline the collision damage waiver, the emergency roadside assistance sentence, and the supplemental liability insurance. (Video at 34:35-34:45). The rental sales associate responds, "at the end, please", and points to the signature line at the bottom of the front side. (Id.). Later on, the rental sales associate gives the paper back to Lee and says, "sign the initials for your name; one, two, three, and at the end, alright?" (Video at 54:27-54:59). After Lee signs the front side, the rental sales associate takes back the paper. (Id.). Neither the testimony nor the video suggests that Lee asked any questions about the Costa Rica Terms or turned the sheet over during this rental transaction. (DSMF ¶ 208).
Payless has business relationships with travel booking websites such as Expedia.com, Hotwire.com, and Priceline.com (collectively, "the Booking Websites"). (DSMF ¶ 54). These Booking Websites provide online reservation services and assist users in making car rental reservations with vendors, including Payless. (Id. ¶ 56). Five of the six U.S. Plaintiffs used those websites to reserve their car rentals online.
The defendants attach the Booking Websites' Terms of Use that were in effect at the time the five U.S. Plaintiffs reserved their car rentals. (Id. ¶¶ 76, 83, 92).
The arbitration provision included in the Expedia.com Terms of Use provided the following: "Any and all Claims will be resolved by binding arbitration, rather than in court.... This includes any Claims you assert against ... travel suppliers or any companies offering products or services through us (which are beneficiaries of this arbitration agreement)." Such arbitration, it provides, "will be conducted only on an individual basis and not in a class, consolidated or representative action." (DSMF ¶¶ 61, 78; DE 81-30 at 37-47). It also states that "[y]ou agree to give us an opportunity to resolve any disputes or claims relating in any way to ... any services or products provided" and that "[i]f we are not able to resolve your Claims within 60 days, you may seek relief through arbitration or in small claims court...." (Id.; DSMF ¶ 79). The terms "we", "us", and "our" are defined to refer to Expedia, Inc., and its subsidiaries and corporate affiliates, including Travelscape, LLC. (Id.). The term "you" is defined to mean the customer visiting or booking a reservation through Expedia.com. (Id.). "Expedia Partner" is defined as "any co-branded and/or linked website through which we provide links, content or service." (Id.).
Hotwire.com's Terms of Use are identical, except of course that "we", "us", and "our" refer to Hotwire, Inc. and the term "Expedia Partner" is absent. (DSMF ¶¶ 62, 94; DE 81-30 at 81-101).
The arbitration provision in the Priceline.com Terms of Use provided the following: "ANY AND ALL CLAIMS MUST BE RESOLVED BY BINDING ARBITRATION... AND IT PREVENTS YOU FROM PURSUING A CLASS ACTION OR SIMILAR PROCEEDING IN ANY FORUM. THESE LIMITATIONS APPLY TO ANY CLAIMS AGAINST ... ANY TRAVEL SERVICE PROVIDERS OR COMPANIES OFFERING PRODUCTS OR SERVICES THROUGH THE SITE." (DSMF ¶¶ 63, 104; DE 81-30 at 48-79). It defines "third-party suppliers or providers" as including "the airlines, hotels, rental car companies and other suppliers that provide travel or other services through this Site (such third parties collectively referred to as the Travel Service Providers')." (Id.). It requires a Notice of Dispute prior to any arbitration; "If Priceline and you, or Priceline and any Third-party, do not reach an agreement to resolve the Claim within 60 days after the Notice is received, you, or the Third-party, may commence an arbitration proceeding." (Id.). It also includes a class-action waiver. (Id.).
None of the plaintiffs who reserved their rentals with the Booking Websites suggest that they had any problems with the reservation process. The basis for those plaintiffs' claims against defendants involve the alleged unauthorized charges for ancillary services after the plaintiffs returned their cars.
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000). In deciding a motion for summary judgment, a court must construe all facts and inferences in the light most favorable to the nonmoving party. See Boyle v. Cty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears the burden of establishing that no genuine issue
Once the moving party has met that threshold burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The opposing party must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; see also Fed. R. Civ. P. 56(c) (setting forth the types of evidence on which a nonmoving party must rely to support its assertion that genuine issues of material fact exist). "[U]nsupported allegations ... and pleadings are insufficient to repel summary judgment." Schoch v. First Fid. Bancorp., 912 F.2d 654, 657 (3d Cir. 1990); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001) ("A nonmoving party has created a genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at trial."). If the nonmoving party has failed "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ... there can be `no genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 n.5 (3d Cir. 1992) (quoting Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548).
When the parties file cross-motions for summary judgment, the governing standard "does not change." Auto-Owners Ins. Co. v. Stevens & Ricci, Inc., 835 F.3d 388, 401 (3d Cir. 2016) (citing Appelmans v. City of Phila., 826 F.2d 214, 216 (3d Cir. 1987)). The court must consider the motions independently, in accordance with the principles outlined above. Goldwell of N.J., Inc. v. KPSS, Inc., 622 F.Supp.2d 168, 184 (D.N.J. 2009); Williams v. Philadelphia Housing Auth., 834 F.Supp. 794, 797 (E.D. Pa. 1993), aff'd, 27 F.3d 560 (3d Cir. 1994). That one of the cross-motions is denied does not imply that the other must be granted. For each motion, "the court construes facts and draws inferences in favor of the party against whom the motion under consideration is made" but does not "weigh the evidence or make credibility determinations" because "these tasks are left for the fact-finder." Pichler v. UNITE, 542 F.3d 380, 386 (3d Cir. 2008) (internal quotation and citations omitted); see also Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
Because arbitration is a "matter of contract" between two parties, "a judicial mandate to arbitrate must be predicated upon the parties' consent." Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 771 (3d Cir. 2013) (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., Ltd., 636 F.2d 51, 54 (3d Cir. 1980)). Pursuant to the Federal Arbitration Act ("FAA"), a court may enforce a contract to arbitrate, but only if the court is satisfied that the "making of the agreement" to arbitrate is not "in issue." Id.; ACE Am. Ins. Co. v. Guerriero, 738 F. App'x 72, 77 (3d Cir. 2018) ("Before compelling arbitration, ... courts must be satisfied that the parties have an agreement
A motion to compel arbitration is evaluated under the summary judgment standards outlined above. Id. at 77. Thus arbitration will be compelled if the arbitrability issue presents no genuine, material issues of fact, with "[t]he party opposing arbitration ... given the benefit of all reasonable doubts and inferences that may arise." Id. (quoting Kaneff v. Del. Title Loans, 587 F.3d 616, 620 (3d Cir. 2009)). If, on the other hand, there are material factual disputes regarding arbitrability, the court should proceed to trial "regarding the making of the arbitration agreement or the failure, neglect, or refusal to perform the same,' as Section 4 of the FAA envisions." Id. (quoting Somerset Consulting, LLC v. United Capital Lenders, LLC, 832 F.Supp.2d 474, 482 (E.D. Pa. 2011)).
Federal law is decidedly pro-arbitration. The FAA's purpose is "to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). Thus, the statute makes agreements to arbitrate "valid, irrevocable, and enforceable," 9 U.S.C. § 2, subject only to traditional principles of contract formation and interpretation. The FAA provides that contract provisions manifesting the intent of the parties to settle disputes in arbitration shall be binding, allows for the stay of federal court proceedings in any matter that is referrable to arbitration, and permits both federal and state courts to compel arbitration if one party has failed to comply with an agreement to arbitrate. 9 U.S.C. §§ 2-4. Cumulatively, those provisions "manifest a liberal federal policy favoring arbitration agreements." Gilmer, 500 U.S. at 24, 111 S.Ct. 1647 (quotations omitted).
The relevant inquiry encompasses two questions: (1) whether the parties agreed to arbitrate; and (2) whether the dispute is within the scope of the agreement. Sarbak v. Citigroup Global Markets, Inc., 354 F.Supp.2d 531, 536-37 (D.N.J. 2004); see also Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003); ACE Am. Ins. Co. v. Guerriero, 738 F. App'x 72, 77 (3d Cir. 2018).
To decide the first question, whether the parties have agreed to arbitrate, the courts apply state contract law. "Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocal agreement to that effect." Griswold v. Coventry First LLC, 762 F.3d 264, 270 (3d Cir. 2014) (quoting Par-Knit Mills, 636 F.2d at 54). But even facially neutral state laws, the Supreme Court has recently held, will be set aside if they discriminate against agreements to arbitrate vis-a-vis other contracts:
Kindred Nursing Centers Ltd. P'ship v. Clark, ___ U.S. ___, 137 S.Ct. 1421, 1426, 197 L.Ed.2d 806 (2017) (quoting AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 341, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011)) (sarcasm in original). So the court, in applying contract law, must keep in mind not only the general "strong federal policy in favor of arbitration," John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998), but also the Kindred preemption principle.
The second question, whether the dispute falls within the scope of the arbitration agreement, is decided under federal law. Century Indem. Co. v. Certain Underwriters at Lloyd's, London, subscribing to Retrocessional Agreement. Nos. 950548, 950549, 950646, 584 F.3d 513, 524 (3d Cir. 2009). "When the parties have a valid arbitration agreement, `any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Guerriero, 738 F. App'x at 77-78 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). Accord Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).
In broad strokes, the defendants argue that the arbitration provisions in the Rental Jackets and the Costa Rica Terms are enforceable and that the plaintiffs' claims fall within the scope of those arbitration provisions. Further, they argue that the class-action waivers in the arbitration provisions require the plaintiffs to bring their claims on an individual rather than a class-wide basis. Although Avis is not a signatory to the Rental Jackets, and neither defendant is a signatory to the Costa Rica Terms, they say they may enforce the arbitration provisions under principles of agency law and equitable estoppel. Furthermore, defendants argue, the plaintiffs who reserved their car rentals through the Booking Websites can be compelled to arbitrate their claims based on the arbitration provisions found in the Booking Websites' Terms of Use. According to defendants, then, all of the plaintiffs must submit their claims against Avis and Payless to arbitration, and on an individual basis—the U.S. Plaintiffs in the United States, and Lee in Costa Rica.
As plaintiffs see it, arbitration cannot be compelled here. The U.S. Agreements and the Costa Rica Fill-In Agreement do not effectively incorporate by reference the Rental Jackets or the Costa Rica Terms, including the arbitration clauses therein. Assuming arguendo that the Rental Jackets and Costa Rica Terms are effective, plaintiffs make additional arguments that these disputes are beyond the scope of the arbitration agreements.
Particularly for the Rental Jackets, I agree with the plaintiffs that the incorporation-by-reference issue precedes all others. If plaintiffs are correct, there is no agreement to arbitrate at all, so issues of interpretation and scope become moot.
Additionally, Plaintiffs argue that they cannot be compelled to arbitrate their claims pursuant to the arbitration provisions in the Booking Websites' Terms of Use. The evidence of those terms, they say, is not competent or admissible. And
As noted above, courts apply state contract law to determine whether parties have agreed to arbitrate. ACE Am. Ins. Co. v. Guerriero, 738 F. App'x 72, 78 (3d Cir. 2018). Plaintiffs rented the cars in New Jersey, Nevada, Florida, and Costa Rica. Thus a threshold choice-of-law question is presented.
In its Opinion denying the defendants' motions to dismiss, the Court conducted a choice-of-law of analysis with respect to the incorporation-by-reference issue. (MTD Opinion at 11-16). The analysis of the MTD Opinion should be consulted, but for convenience I briefly summarize it here. Id., available as Bacon v. Avis Budget Grp., Inc., No. 16-5939, 2017 WL 2525009, at *6-*10 (D.N.J. June 9, 2017).
In diversity actions a district court must apply the choice-of-law rules of the forum state—here, New Jersey—to determine which state's law will govern. Id. New Jersey uses the most-significant-relationship test. Initially, the court must determine whether a conflict actually exists between the potentially applicable laws. Id. If no conflict exists, the law of New Jersey, the forum state, applies. Id. If a conflict does exist, the court must determine which state has the most significant relationship to the claim. Id.
Upon conducting this analysis in my earlier opinion, I initially determined that there is no relevant distinction between the laws of New Jersey and Nevada, but that there is a distinction between New Jersey and Florida law. I held that the threshold incorporation-by-reference issue —i.e., whether the U.S. and Costa Rica arbitration provisions are effectively incorporated by reference from an extrinsic document—is governed by New Jersey contract law as to plaintiffs Bacon, Alexander, DeVries, Davidson, and Lee. The same issue, however, is governed by Florida contract law as to plaintiffs Geary and Wheeler. Id.
"Because choice of law analysis is issue-specific, different states' laws may apply to different issues in a single case, a principle known as `depecage.'" Berg Chilling Sys., Inc. v. Hull Corp., 435 F.3d 455, 462 (3d Cir. 2006). As to arbitrability under the Booking Websites' Terms of Use, however, I have not yet determined which state's law applies. Still, I find that I do not have to reach that issue in this Opinion. See Subsection III.D.4, infra.
The main thrust of the defendants' position is that the plaintiffs, at the time they picked up their rental cars, signed rental agreements that contained or incorporated agreements to arbitrate.
I first discuss the U.S. Agreements. As I say, New Jersey and Florida law govern the issue of whether the Agreements signed by the U.S. Plaintiffs effectively incorporated the arbitration clauses in the Rental Jackets. Ordinary principles of New Jersey and Florida contract law determine the validity of an agreement containing an arbitration clause. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).
As to the issue of mutual assent for the U.S. Plaintiffs, I essentially hold as follows:
With respect to the Costa Rica Fill-In Agreement, my resolution is different. I hold that there is a question of fact whether Lee was given reasonable notice of the Costa Rica Terms, and I therefore deny both parties' motions for summary judgment on this issue.
The agreements signed by Bacon, Alexander, DeVries, and Davidson in the United States are governed by New Jersey law. Because they are substantially identical, I discuss them together.
Under New Jersey law, "`[a]n agreement to arbitrate, like any other contract, must be the product of mutual assent, as determined under customary principles of contract law.'" James v. Glob. TelLink Corp, 852 F.3d 262, 265 (3d Cir. 2017) (quoting Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 99 A.3d 306, 312-13 (2014)). "Mutual assent requires that the parties have an understanding of the terms to which they have agreed." Atalese, 219 N.J. at 442, 99 A.3d 306. As the New Jersey Supreme Court explained, this principle is especially important in arbitration cases, "because arbitration involves a waiver of the right to pursue a case in a judicial forum"; courts will therefore "take particular care in assuring the knowing assent of both parties to arbitrate, and a clear mutual understanding of the ramifications of that assent." Id. (internal quotations omitted).
Before a separate document will be deemed to be incorporated by reference into a contract, New Jersey requires a high degree of certainty:
Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J.Super. 510, 533, 983 A.2d 604, 617 (App. Div. 2009) (quoting 4 Williston on Contracts § 30:25 (Lord ed. 1999)); James, 852 F.3d at 266. That principle implies that the Court can find an agreement to arbitrate only if
(a) the Agreements describe the Rental Jackets in such a way that it is clear beyond doubt that they were incorporated in the Agreements (the "description factor"); and
(b) that the plaintiffs knew of, and assented to, the terms within the Rental Jackets (the "knowledge and assent factor").
Those two factors overlap. The more detailed the description, for example, the more likely it is that the signer of the
The plaintiffs contend that they never agreed to arbitrate because the U.S. Agreements do not validly incorporate the Rental Jackets. That argument relies heavily on Quinn, supra, which I discussed in detail in my earlier Opinion. (See MTD Opinion at 17-19). As to the description factor, the Quinn court reasoned that the extrinsic document sought to be incorporated was not clearly identified because the agreement's general reference to policies and procedures "contained no document dates or an identifiable publication number," for example, and was "in no way specific or identifiable such that the [law firm's] practices and policies [could] be ascertained beyond doubt." Quinn, 410 N.J. Super. at 535, 983 A.2d 604 (internal quotation marks omitted). As to the knowledge and assent element, "there [was] no indication that the terms of the proposed incorporated document were known or assented to by defendants" because the "defendants were not shown and did not see the [proposed incorporated] document until" after signing the main contract. Id. at 535, 983 A.2d 604, 617.
Like the contract in Quinn, the U.S. Agreement here failed to define the Rental Jacket with sufficient specificity. It purports to bind the rent-a-car customers "to all notices & terms here and in the rental jacket." "Rental jacket," a bit of industry jargon, is not highlighted or emphasized, and it does not have a self-evident meaning. It is not defined in the Rental Agreement, by words or ostension. The Agreement's reference to the "rental jacket," like the cross-reference in the Quinn contract, "contained no document dates or an identifiable publication number." 410 N.J. Super. at 535, 983 A.2d 604. By design, the rental sales associate did not hand the customer the Rental Jacket until after the customer had signed the U.S. Agreement. Thus the customer could not readily infer what document was referred to, as he or she might have done if presented with the two simultaneously.
To add to the confusion, the document referred to as the "rental jacket" is not titled "Rental Jacket." Instead it bears the title "Rental Terms and Conditions." Indeed, the so-called Rental Jacket does not even contain that term as a highlighted header anywhere in the document; only in the middle of the second numbered paragraph does it use the similar (but not identical) term "Rental Document Jacket."
Together, these undisputed facts compel a conclusion that the Rental Jacket is not "described in such terms that its identity may be ascertained beyond doubt." Quinn, 410 N.J. Super. at 533, 983 A.2d 604. A reasonable customer could very well have been—indeed, probably was—in the dark as to the meaning of the undefined cross-reference to the "rental jacket." This is not a close case; it falls far short of the clarity required by the "description factor." See Alpert, supra; James, supra. See also Atalese, 219 N.J. at 444, 99 A.3d 306 ("Arbitration clauses—and other contractual clauses—will pass muster when phrased in plain language that is understandable to the reasonable consumer."); NAACP of Camden Cty. E. v. Foulke Mgmt. Corp., 421 N.J.Super. 404, 425, 24 A.3d 777, 790 (App. Div. 2011) ("[T]he clarity and internal consistency of a contract's arbitration provisions are important factors in determining whether a party reasonably understood those provisions and agreed to be bound by them.").
I move to the "knowledge and assent" factor. Here, we may even indulge the assumption that a reasonable customer could piece together the meaning of "rental jacket" when he or she was handed the Rental Agreement, folded inside the
As I noted in the MTD Opinion, the Quinn contract was an attorney retainer agreement. (See MTD Opinion at 17-19). That, to be sure, is different from a one-shot commercial transaction between a car rental company and a customer, which does not involve a relationship of trust or confidence. Nevertheless, courts have repeatedly applied Quinn outside the attorney-client context, rejecting attempts to distinguish it on that basis,
I am confirmed in that conclusion by persuasive authority that deals more specifically with vehicle rental contracts. In the MTD Opinion, I summarized a comparable case from the Supreme Court of Appeals of West Virginia that addresses the incorporation-by-reference issue. (MTD Opinion at 19-21, discussing State ex rel. U-Haul Co. of W. Virginia v. Zakaib, 232 W.Va. 432, 443, 752 S.E.2d 586 (2013)). I here review Zakaib again, this time with the factual context of the parties' summary judgment submissions.
The Zakaib plaintiffs were renters of U-Haul equipment. Some signed a one-page rental contract that stated "I acknowledge that I have received and agree to the terms and conditions of this Rental Contract and the Rental Contract Addendum." Others, after viewing a rental contract on
The Addendum in Zakaib was a cardstock pamphlet that held documents. It displayed advertisements and instructions for returning rented equipment. Id. The Addendum bore the title "Rental Contract Addendum." (Unlike "Retail Jacket," this was at least the same name used in the incorporation language of the contract.). The text of the Addendum included the following guidance: "Additional Terms and Conditions for EQUIPMENT Rental, Place Rental Contract documents in this folder & keep available throughout your move." Id.
When the Zakaib plaintiffs sued U-Haul for assessing hidden charges, U-Haul moved to compel arbitration, based on an arbitration clause in the Addendum. The trial court denied the motion. The West Virginia Supreme Court announced a standard for incorporation by reference ("unmistakable... beyond doubt") akin to that of New Jersey.
Id. at 444, 752 S.E.2d 586 (italic emphasis added).
The Zakaib analysis is persuasive, and the undisputed facts of this case lead to
Defendants do not attempt to distinguish Zakaib, but instead argue that West Virginia's rule disfavors arbitration provisions and therefore violates the Kindred preemption principle. (Def. Br. at 15, n. 3). I disagree. The Kindred preemption principle forbids states from imposing rules of contract law that either facially or covertly disfavor arbitration agreements vis-à-vis other contracts. See Kindred, 137 S.Ct. at 1426. The rule of contract law in Zakaib, however, pertains to incorporation-by-reference generally; it does not facially or covertly disfavor arbitration in general, or arbitration of any particular type of claim.
What the Zakaib rule does disfavor is incorporation of an external document that is not properly assented to or is insufficiently described in the main contract. Zakaib, 232 W. Va. at 443-44, 752 S.E.2d 586. That rule applies to any contract that incorporates an external document by reference. See id. Just as New Jersey applied the Quinn rule not only to retention agreements but to contracts generally, courts applying Zakaib have applied it not just to arbitration agreements but to contracts generally. See also SWN Prod. Co., LLC v. Edge, No. 5:15-cv-108, 2015 WL 5786739, at *5 (N.D.W. Va. Sept. 30, 2015) (applying Zakaib incorporation by reference framework to contract dispute that did not involve a question of whether to compel arbitration); Covol Fuels No. 4, LLC v. Pinnacle Min. Co., LLC, 785 F.3d 104, 114 (4th Cir. 2015) (same); Mazzella Lifting Techs., Inc. v. Farmer, No. 1:16-cv-395, 2017 WL 4883238, at *4 (N.D. Ohio Jan. 20, 2017) (same). This rule does not discriminate against agreements to arbitrate, but places them "on the same footing as other contracts," consistent with the design of the FAA. Century Indem. Co., 584 F.3d at 522.
I conclude that the incorporation-by-reference analysis of Quinn and Zakaib is not some idiosyncratic doctrine designed to obstruct arbitration; it is part of those states' general law of contracts. Thus it stays on the good side of the Kindred preemption principle, because it does not disfavor arbitration in particular, but disfavors vague incorporation-by-reference across the board.
The defendants cite the settled principle of contract law that parties are bound to provisions they assented to but did not read. (E.g., Def. Br. at 1-2) ("Plaintiffs' position that they are not at all bound by any of the provisions in the Rental Jacket simply because they did not read them is wholly without merit."). In doing so, they set up a straw man. The plaintiffs did not sign or assent to a Rental Jacket without reading it. They were not even presented with the Rental Jackets until after they signed the Agreements. Because the only reference to the Rental Jacket was the incorporation language in the Agreement, the law of incorporation applies.
It is true, of course, that notice of contractual terms may be sufficient even if a party declines to take advantage of the opportunity to read them. Defendants repeatedly
Noble itself, however, goes on to note that "`when the writing does not appear to be a contract and the terms are not called to the attention of the recipient,' there is no reasonable notice and the terms cannot be binding.'" Id. (quoting Specht v. Netscape Communications Corp., 306 F.3d 17, 30 (2d. Cir. 2002)). "Therefore, contractual terms, including an arbitration clause, will only be binding when they are `reasonably conspicuous,' rather than `proffered unfairly, or with a design to conceal or de-emphasize its provisions.'" Id. (quoting Caspi v. Microsoft Network, L.L.C., 323 N.J.Super. 118, 732 A.2d 528, 532 (App. Div. 1999)). Noble therefore affirmed the district court's denial of a motion to compel arbitration, reasoning that although the extrinsic arbitration provision was "readily available," its "terms were buried in a manner that gave no hint to a consumer that an arbitration provision was within." 682 F. App'x at 116. Noble does not stand for the proposition that theoretical access to a document is sufficient to constitute "reasonable notice" of its terms.
Neither the holding of Noble nor New Jersey's general incorporation-by-reference rule runs afoul of the well-established principle that "a party accepting an offer has an absolute duty to read and understand the terms of an offer, and failure to do so will not diminish the force and effect of the resulting contract." 66 VMD Assocs., LLC v. Melick-Tully & Assocs., P.C., No. A-4008-09T3, 2011 WL 3503160, at *6 (N.J. Super. Ct. App. Div. Aug. 11, 2011). Under New Jersey law, for example, a defendant has no obligation to alert a plaintiff to an arbitration provision (or any other provision) that is contained
At most, however, this principle suggests that knowledge may be imputed under limited circumstances not present here. For knowledge to be imputed, the contracting party must have been given the incorporated document or specifically directed to it in such a way that there was a real opportunity to read its terms. That did not happen here. I would not impute knowledge where a plaintiff has merely been told that there exists some other item (a "rental jacket"), location and contents unknown, which will be furnished after the contract is signed, and bears a title other than "rental jacket."
This is just another way of saying that effective incorporation by reference requires that, before giving assent by signing the contract, the renter must have been able to identify beyond doubt
As noted above, the incorporation-by-reference issue as to plaintiffs Geary and Wheeler is governed by Florida law. Florida's incorporation-by-reference standard is not as exacting as New Jersey's "beyond doubt" standard. Florida law requires only that the incorporated document be "sufficiently described or referred to in the incorporating agreement." BGT Grp., Inc. v. Tradewinds Engine Servs., LLC, 62 So.3d 1192, 1194 (Fla. Dist. Ct. App. 2011). Based on the undisputed facts of this case, and applying the summary judgment standard, I find that Florida law nevertheless does not require a different result. I therefore will likewise deny the motion to compel arbitration as to Geary and Wheeler.
Here is the standard under Florida law:
Spicer v. Tenet Florida Physician Servs., LLC, 149 So.3d 163, 166 (Fla. Dist. Ct. App. 2014).
In Spicer, the plaintiff's employment agreement with the defendant contained the following incorporation language: "you agree that any and all disputes regarding your employment with [the defendant], including disputes relating to the termination of your employment, are subject to
A Florida appeals court held that the employment agreement did not effectively incorporate the FTP:
Id. at 167-68 (emphasis added).
On the undisputed facts before me, the standard applied in Spicer yields the same result as the New Jersey standard. The plaintiff must receive an incorporated document, or else be given clear direction on how to access it, before signing the agreement that allegedly incorporates that extrinsic document. Defendants Avis and Payless failed to provide Geary and Wheeler with the necessary access to the Rental Jackets here. They were not given the Rental Jackets until after they signed their Rental Agreements. The Rental Agreements did not describe the Rental Jacket or state where it could be found. Nor did the Rental Agreements, like the one found not adequate in Spicer, alert Geary and Wheeler even generally to the contents of the Rental Jacket or the fact that it contained an arbitration clause.
Contrary to defendants' assertion, these Rental Jackets were not accessible or plainly noticeable. Much ink is spilled on the issue of the jackets' visibility during the rental transaction. I cannot find that any version of the standard requires the consumer to officiously take it upon herself to read a fine print document on the agent's desk upside-down. What is critical is that the Rental Agreement did not define the meaning of a "rental jacket," the customers were not directed to it in any way, and the document did not actually even bear that title.
Spicer relied on BGT Group, Inc. v. Tradewinds Engine Services, LLC, 62 So.3d 1192, 1193 (Fla. Dist. Ct. App. 2011), a case upholding the denial of a motion to compel arbitration. There, the plaintiff executed a purchase order that incorporated by reference certain terms and conditions that contained an arbitration clause. The purchase order stated: "ALL QUOTATIONS, INVOICES AND ORDERS ARE SUBJECT TO THE ATTACHED BGT TERMS AND CONDITIONS." Id. at 1194. (Apparently they were not "attached," however; the plaintiff did not actually receive the terms and conditions until a contract dispute had arisen.) The court reasoned that "cases finding sufficient description of a collateral document to create an incorporation by reference
Id. at 1195. The BGT Group, Inc. court found it problematic that the purchase order did not provide any information "about where the `terms and conditions' might be located." Id. (Indeed, the purchase order misleadingly stated that any such terms and conditions were "attached."). Again, Florida law, as described in BGT Group, Inc., appears to embody a standard less stringent than that of New Jersey, but it nevertheless would compel a similar result as to plaintiffs Geary and Wheeler.
Geary and Wheeler did not receive their Rental Jackets before signing their copies of the U.S. Agreements. The Agreements did not provide any information about where the Rental Jackets were located or how the customer could get access to them. The Rental Jackets were not otherwise meaningfully available for inspection; they were located on the desk underneath the rental counter, partially out of view; the text was upside-down from the customer's perspective; and the Rental Jackets did not actually bear the title "Rental Jacket."
The U.S. Agreement, here as before, makes no more than a bare reference to the existence of the Rental Jacket: "I have reviewed & agreed to all notices & terms here and in the rental jacket." That is insufficient under the Florida law of incorporation by reference, which "requires more than simply making reference to another document in a contract." Jenkins v. Eckerd Corp., 913 So.2d 43, 51 (Fla. Dist. Ct. App. 2005). Such a document is effectively incorporated only "if the contract specifically describes the document and expresses the parties' intent to be bound by its terms." Id. (quoting Management Computer Controls, Inc. v. Charles Perry Construction, Inc., 743 So.2d 627, 631 (Fla. 1st DCA 1999) ("The contract must contain more than a mere reference
Therefore, under Florida law, plaintiffs Geary and Wheeler will not be deemed to have assented to the arbitration provisions found in the Rental Jackets, which were not properly incorporated by reference into the Rental Agreements. As to Geary and Wheeler, the motion to compel arbitration is denied.
As outlined above, the incorporation-by-reference issue for the Costa Rica Fill-in Agreement is also governed by New Jersey law. See supra at 415-16; MTD Opinion at 11-16 (choice of law analysis). The facts of plaintiff Arcadia Lee's rental transaction, however, differ from the others, so I discuss it separately. See pp. 409-12, supra (factual overview).
Preliminarily, there is a skirmish over whether the incorporation-by-reference analysis applies to the Costa Rica transaction at all. The Costa Rica Terms and the Costa Rica Fill-In Agreement, recall, are printed on two sides of the same sheet of paper. Defendants argue that they therefore constitute a single, integrated document. (Def. Br. at 36-37; Def. Reply at 39-40). True, the single-sheet scenario may ease the defendants' burden of proof. Either way, however, it is fundamental that for Lee to be bound by the arbitration provision, she must have had reasonable notice of the Costa Rica Terms. See Atalese, 219 N.J. at 444-47, 99 A.3d 306; Noble, 682 Fed.Appx. at 116 (discussing New Jersey Appellate Division cases and noting that under New Jersey law mutual assent "necessarily requires reasonable notice to each contracting party of the contractual terms," including an arbitration clause).
The issue of whether Lee received reasonable notice requires the court to find facts and weigh their significance. Because some of those material facts are in dispute and because weighing them is the province of a fact finder, the issue is inappropriate for disposition on summary judgment. Therefore, I deny both parties' motions for summary judgment on the question of whether Lee agreed to arbitrate her claims.
The Costa Rica Fill-In Agreement is a receipt-like document. That Agreement, on the face of the sheet, is similar to the U.S. Agreement. The Costa Rica Fill-In Agreement does not refer even generally to the existence of any other agreement, extrinsic terms, or rental jacket. A fortiori it does not direct the reader's attention to any arbitration clause. Near the bottom of the page, above the signature line, it states, "By signing below, you agree to the terms and conditions of this Agreement, and you acknowledge that you have been given an opportunity to read this Agreement before being asked to sign." (DE 81-8). Lee signed the Costa Rica Fill-In Agreement on the face of the sheet.
On the reverse side of the Costa Rica Fill-In Agreement is a preprinted set of terms (the "Costa Rica Terms"), entitled "Rental Agreement." The Costa Rica Terms are similar to those contained in the U.S. Rental Jackets, discussed above, and they include an arbitration provision. The Costa Rica Terms page has its own, separate
Defendants contend that Lee was placed on constructive notice of the Costa Rica Terms when she was handed the sheet of paper, even if she did not actually turn over the paper and read the Terms. Defendants also point to the collision damage waiver on the front-side Costa Rica Agreement, which states that it is "Subject to the Terms and Conditions, stated on this countract [sic]." The prefatory admonition to the signature line states that the signer assents to "the terms and conditions of this Agreement." (Id.). Defendants say that these references were enough to put Lee on constructive or actual notice that there were additional terms on the back of the paper. The language, however, is ambiguous at best. It does not direct the reader to "terms and conditions" that appear elsewhere; if anything, it tends to suggest that the "terms and conditions" consist of what appears on the front side of the form—i.e., that to which the customer agrees by signing the front side. And of course they do not specifically refer to arbitration at all.
Plaintiffs emphasize the following facts: The rental sales associate never directed Lee to the Costa Rica Terms on the reverse side of the Costa Rica Fill-In Agreement; the rental sales associate never discussed with Lee the existence or substance of the additional terms; the Costa Rica Fill-in Agreement does not explicitly state anywhere that there are additional contract terms on the reverse side of the paper; the reverse side, although it could be described as containing terms and conditions, does not bear that title; the back-side Costa Rica Terms have their own signature line, which Lee never signed; and the video does not show that Lee was directed to turn over the sheet to review the Costa Rica Terms, or that she actually did so.
Under the New Jersey incorporation-by-reference standard, the language of the contract must permit a reasonable consumer to "ascertain[] beyond doubt" the additional, extrinsic terms. Quinn, 410 N.J. Super. at 533, 983 A.2d 604. Neither party presents any case law on the specific question of whether terms on the reverse side of an agreement (as opposed to a separate document) are subject to the incorporation-by-reference analysis. Even in a unitary written contract, however, New Jersey courts have looked to the conspicuousness of an arbitration clause when determining whether a party was put on reasonable notice of it. Noble, 682 Fed. Appx. at 116-17; Kuhn v. Terminix Int'l Co., L.P., No. A-1518-07T3, 2008 WL 1987432, at *2 (N.J. Super. Ct. App. Div. May 9, 2008) ("[T]he subject contract does not provide the consumer with reasonable notice of the arbitration provision" because the arbitration clause was "obscured in appearance and location in the contract; it is one of twelve general conditions undistinguishable from all the other boiler-plate provisions."); Rockel v. Cherry Hill Dodge, 368 N.J.Super. 577, 585, 847 A.2d 621, 627 (App. Div. 2004) ("The size of the print and the location of the arbitration provision in a contract has great relevance to any determination to compel arbitration, particularly when, like here, the provision is contained
Some cases, most of them decades old or from other jurisdictions, have addressed the question of whether language on the reverse side of a document has been assented-to. The common lesson to be drawn from those cases is that the issue is a factual one. Faced by conflicting evidence as to whether the reverse side was properly called to the signer's attention, they generally have denied summary judgment. "A party should not be bound by clauses printed on the reverse side of a document unless it be established that such matter was properly called to its attention and that it assented to the provisions there stated.... In view of the conflicting claims and the nature of the writings in issue, a question of fact exists as to whether the [party] became aware or could reasonably be expected to observe the contents of the printed material before he signed his name." Tri-City Renta-Car & Leasing Corp. v. Vaillancourt, 33 A.D.2d 613, 614, 304 N.Y.S.2d 682, 684 (1969) (affirming denial of summary judgment) (internal quotations omitted); Arthur Philip Exp. Corp. v. Leathertone, Inc., 275 A.D. 102, 105, 87 N.Y.S.2d 665, 667 (App. Div. 1949) (same).
Here too, a question of fact exists as to whether the reverse side of the document, containing, inter alia, the arbitration provision, was reasonably called to Lee's attention. If Lee had executed both the front and back signature lines, this would be an easier case for summary judgment. But she executed, and apparently was asked to execute, only the front. An additional factual issue arises, then, as to the possible lulling effect of the signature line on the front of the document, which could have left (and here, possibly did leave) the impression that there was nothing more to be read or done. The sales associate only confirmed that impression by instructing Lee to sign in only one place.
The parties dispute whether the rental sales associate actually displayed the paper in a manner that would have shown, at least generally, that there was something
These disputed facts are genuine and material to the issues in suit. A fact finder must determine whether Lee was on reasonable notice of the arbitration provision found within the Costa Rica Terms. Summary judgment on the question of arbitrability is therefore denied as to the Costa Rica rental transaction of plaintiff Lee.
As noted above, the defendants have another, alternative argument in relation to those plaintiffs who booked their reservations through third-party Booking Websites, such as Expedia.com. Those websites' Terms of Use, they say, contain their own arbitration provisions that would cover these overcharge claims. The plaintiffs respond initially that much of the evidence relating to the booking of such reservations and the websites' terms of use is not proffered in admissible form. Assuming there was evidence of contractual assent, the plaintiffs say, these add-on charges, imposed by the rent-a-car companies at the end of the rental, are nevertheless beyond the scope of the arbitration provisions in the third-party Booking Websites' terms of use. (Def. Br. at 25-34).
The issue regarding admissibility of the evidence of assent breaks down further into two components. The first concerns the layout and details of the Booking Websites at the time the plaintiffs used them. The second concerns the contemporaneous content of the Booking Websites' Terms of Use (which allegedly contain the arbitration clauses). For the reasons stated below, my decision process stalls at the first step. The certification purporting to describe the layout and details of the Booking Websites is not sufficiently based on personal knowledge. I will therefore permit additional discovery on this issue pursuant to Federal Rule of Civil Procedure 56(e). Because additional arguments regarding the Terms of Use are likely to be altered or even mooted by such additional discovery, I do not reach them.
Defendants attach a certification from Matt Enderle, an Avis employee who has worked on Payless relationships and accounts with travel booking websites since April 2014, including the Booking Websites at issue in this case. (DE 81-14). Mr. Enderle is "generally familiar with the terms and conditions" on the booking websites, which he "review[s] and reference[s] from time to time as part of [his] job." (Id. ¶ 7).
Mr. Enderle's certification attaches screenshots of the Booking Websites in an attempt to document the process that plaintiffs underwent when reserving their rentals online. (Id. ¶¶ 12, 17, 27). Those screenshots, however, date from over a year after the named plaintiffs actually used the websites to book their rentals.
Thus, for example, Mr. Enderle attaches screenshots of the Expedia.com website dating from December 11, 2017. Plaintiffs Alexander and Geary booked their rentals through Expedia.com nearly eighteen months earlier, on June 21 and June 17, 2016. (DSMF ¶¶ 65, 66). The time gap is
Mr. Enderle's certification goes on to describe the process the plaintiffs would have experienced when booking their rentals online. For example, he describes the locations of hyperlinks used to access the Terms of Use (DE 81-14 ¶¶ 13, 21, 28); what a customer had to click in order to complete a reservation (Id. ¶¶ 15, 23, 30); the text within the box that acknowledged the customer's assent to the Terms of Use (Id. ¶¶ 15, 23, 30); and the requirement of clicking large colored boxes to acknowledge having read and accepted the Terms of Use. (Id. ¶¶ 16, 24, 31). Those facts are highly material to the question of whether plaintiffs properly assented to the Booking Websites' Terms of Use. See Hite v. Lush Internet Inc., 244 F.Supp.3d 444, 451 (D.N.J. 2017) (examining whether a website gave reasonable notice of the terms of use and recognizing that New Jersey courts apply a `reasonable notice' standard to the manner in which contract terms are displayed in determining whether they are enforceable, including looking to the style or mode of presentation, and the placement of the provision (internal quotations omitted)); see also Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 35 (2d Cir. 2002) ("Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.").
If the plaintiffs did not assent to the Booking Websites' Terms of Use, they cannot be bound by the arbitration provisions found therein. See James v. Glob. TelLink Corp., 852 F.3d 262, 265 (3d Cir. 2017). It follows that if the evidence as to the reservation process on the websites were inadmissible or otherwise insufficient, the Court would lack a sufficient basis to find there was an agreement to arbitrate.
On summary judgment, a movant's adversary "may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." Fed. R. Civ. P. 56(c)(2); Countryside Oil Co., Inc. v. Travelers Ins. Co., 928 F.Supp. 474, 482 (D.N.J. 1995). Federal Rule of Evidence 901(a) states that "to satisfy the requirement of authenticating or identifying an item of evidence, the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is." Fed. R. Evid. 901(a). On summary judgment, such a foundation is ordinarily supplied, or at least its existence is suggested, by affidavit or other sworn statement. Such a certification, like any other, "shall be restricted to statements of fact within the personal knowledge of the signatory." Countryside Oil Co., Inc., 928 F.Supp. at 482; see also Local Civ. R. 7.2(a); Steele v. Depuy Orthopaedics, Inc., 295 F.Supp.2d 439, 446 (D.N.J. 2003);
I do not find a sufficient basis for knowledge in Mr. Enderle's statement that he "review[s] and reference[s] [the booking process] from time to time as part of [his] job." (Id. ¶ 8). Such a statement does not suffice to support his conclusory assertion that the layouts and procedures of the websites when the plaintiff used them in mid-2016 were precisely those he observed at the end of 2017. Defendants' presentation is, however, suggestive, and such information, if it exists, should be readily available from the operators of the websites.
One option would be to simply rule that defendants' proofs have failed and to deny arbitration on this basis. Where there has been full discovery and a party's case has failed on the merits, that option is often appropriate. In such a case, summary judgment will have served its purpose of narrowing and defining the issues to be tried. Here, however, there has been only limited discovery, and denial of defendants' motion will not end the case, but rather guarantee that it go forward, meaning that further discovery is a foregone conclusion. That option, then, seems an improvident exercise of my discretion. Rule 56(e) affords the Court the additional option of permitting a party to supplement its proofs.
Assuming the plaintiffs have assented, there remains the issue of what they assented to. The defendants proffer evidence as to the Booking Websites' Terms of Use as of the dates that the plaintiffs booked their reservations. For this, they do not rely solely on Mr. Enderle's recollection. Rather, they also attach copies of those online Terms of Use that they obtained from the Internet Archive's "Wayback Machine."
Should both assent and the particulars of the Terms of Use be established, many issues will remain before arbitration can be ordered. One such issue is choice of law, which may play out differently vis-à-vis the websites than it did in relation to the in-person car rental agreements.
For the foregoing reasons, the defendants' motion for summary judgment to compel arbitration (DE 81) is
More specifically:
Id. at 444, 752 S.E.2d 586.
Similarly, the defendants urge the Court to consider Tantillo v. CitiFinancial Retail Servs., Inc., No. 12-cv-511, 2013 WL 622147, at *4 (D.N.J. Feb. 19, 2013), in which a federal court in the District of New Jersey granted the party's motion to compel arbitration when the arbitration clause was part of an external document incorporated by reference. But there, unlike here, the main agreement described the incorporated document with specificity, listing within the main contract the date, title, and publication number of the external document. And, importantly, the main contract itself explicitly alerted the customer that the external document contained an arbitration provision. Id. at *4-*9 (noting that the main contract included a provision stating that "Paragraph 27 of the [external document] contains provisions requiring arbitration of various claims and controversies."). Thus, in signing the main contract, the customer explicitly "acknowledged the existence of another document that contained an applicable arbitration provision." Tantillo, 2013 WL 622147, at *9.
Other cases cited by the defendants are similarly distinguishable. Principally, those other cases did not address incorporation by reference at all; involved plaintiffs who had read or been given the opportunity to review the incorporated terms; or involved plaintiffs that had been specifically made aware of an arbitration waiver in the incorporated document.
Fed. R. Civ. P. 56(e).
Defendants' motion includes a certification from Christopher Butler, an Office Manager at the Internet Archive, who declares that the exhibit attached to his certification includes true and accurate copies of printouts of the URLs listed from the specified dates. (DE 81-29). Those copies are the Booking Websites' Terms of Use that defendants offer as evidence and use as the basis for their arguments regarding the arbitration provisions found therein. (DE 81-30).
