Ninth Circuit Affirms District Court's Denial of Amazon's Attempt to Compel Arbitration

Amazon Flex drivers make deliveries of food and other goods, using their own vehicles, for Amazon.com.  In February 2021, Drickey Jackson sued Amazon, seeking to represent a class of Amazon Flex drivers and alleging privacy violations.  He claimed that Amazon wiretapped and monitored off-hours conversations among the drivers in private Facebook chat groups.  The District Court held that, because the drivers did not have adequate notice of a 2019 update to Amazon Flex's terms of service (ToS), the parties were bound by the 2016 ToS.  The arbitration provision in the 2016 ToS do not cover this dispute, and so the District Court denied Amazon Flex's motion to compel arbitration.  In Jackson v. Amazon.com, Inc., the Ninth Circuit affirmed.

The 2016 ToS provided that Amazon Flex could modify the terms at any point simply by giving notice to drivers that it was doing so.  By continuing to serve as drivers, the drivers accepted new terms. 

Amazon may modify this Agreement, including the Program Policies, at any time by providing notice to you through the Amazon Flex app or otherwise providing notice to you . . . . If you continue to perform the Services or access Licensed Materials (including accessing the Amazon Flex app) after the effective date of any modification to this Agreement, you agree to be bound by such modifications.

The most relevant difference between the 2019 ToS and the 2016 ToS is that the former provided that questions of arbitrability were to be determined by the arbiter.  Because Amazon provided neither the e-mail that purported to alert Mr. Jackson to the new ToS nor evidence that it was delivered to Mr. Jackson, the District Court held that the 2016 ToS applied.  Amazon had the burden of showing that Mr. Jackson had assented to the new terms, and it did not meet its burden.  The Ninth Circuit agreed. 

The Ninth Circuit, per Senior Judge Schroeder (left), also rejected Amazon's alternative argument that Mr. Jackson was bound because the new ToS were on the Amazon Flex app, and he was obligated under the 2016 ToS to check the app for updates.  Citing the new Restatement of Consumer Contracts Law and its prior decisions, the Ninth Circuit  noted that assent requires both reasonable notice of a term and a reasonable opportunity to reject.  Generalized notice that new terms might be coming are not enough.  This is the first citation to the new Restatement that I have seen, and it is exciting to see it!

The District Court then determined that the conduct alleged was not covered by the arbitration provision, which covered that "any dispute or claim . . . arising out of or relating in any way to this Agreement, including . . . participation in the program or . . . performance of services."  The Ninth Circuit again agreed.  

If first noted that the complaint did not make any claims relating to the drivers' contractual relationship with Amazon.  Rather, it alleged violations of federal and state law.  Attentive readers might here be expecting a reference to  David Horton and his article, Infinite Arbitration Clauses, which, as we noted, was relevant to the Southern District's decision in Davitashvili v. Grubhub.  You will be disappointed.  C'mon Ninth Circuit, he's in your jurisdiction!  Nevertheless, the same reasoning applies.  Even when an arbitration provision is very broad, in order to be applicable, the factual allegations of the complaint must "touch matters covered by the contract containing the arbitration clause."  Here they don't.  People who were not Amazon Flex drivers were allowed to join the Facebook groups.  According to the complaint, Amazon violated those non-drivers' state and federal privacy rights as well.  The factual allegations do not relate to the contract that contains the ToS.

Image by Fmuzzio, CC BY-SA 4.0, via Wikimedia Commons

Senior Judge Graber (right) who was born in Oklahoma City dissented from the denial of the motion to compel arbitration, arguing that the broad arbitration clause in the 2016 ToS did indeed cover the dispute.  In her view, the only requirement is that the dispute "touch matters" covered by the 2016 agreement.  According to the complaint, Amazon was motivated by its desire to monitor its drivers and to learn what it could about their conversations relating to work conditions, unionizing, and strikes, among other things.  The dissent does not seem to believe that anybody other than drivers were able to access the chat group and dismisses as speculative the idea that non-driver union officials or spouses might have been on the chat.  The majority responds that this reasoning confuses Amazon's motives with the nature of plaintiffs' claims. 

Moreover, it is not entirely clear to Judge Graber that the claims do not raise claims of contractual interpretation.  It is entirely possible that the ToS entail some sort of consent that Amazon engage in some monitoring of its drivers .  As creepy and unsettling as she acknowledges the alleged conduct is, Judge Graber would dismiss the suit and compel arbitration.