Hidalgo v. Amateur Athletic Union of the U.S., Inc.

• Decision Date: 24 June 2020
• Docket Number: 19-cv-10545 (JGK)
• Citation: 468 F.Supp.3d 646
• Parties: Timothy HIDALGO, Plaintiff, v. AMATEUR ATHLETIC UNION OF the UNITED STATES, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

468 F.Supp.3d 646

Timothy HIDALGO, Plaintiff,

v.AMATEUR ATHLETIC UNION OF the UNITED STATES, INC., Defendant.

19-cv-10545 (JGK)

United States District Court, S.D. New York.

Signed June 24, 2020

William Bernard Federman, Federman & Sherwood, Oklahoma City, OK, for Plaintiff.

Paul A. Ferrillo, McDermott Will & Emery, Stephen L. Saxl, William Andrew Wargo, Greenberg Traurig, LLP, Michael Elias Berman, McDermott, Will & Emery, LLP, New York, NY, for Defendant.

OPINION & ORDER

JOHN G. KOELTL, District Judge:

The defendant, the Amateur Athletic Union of the United States, Inc. (the "AAU"), moves to compel arbitration on the claims brought by the plaintiff, Timothy Hidalgo, for common law negligence, negligence per se, and breach of implied contract, as well as for statutory violations of the New York General Business Law, N.Y. Gen. Bus. Law § 349(a) and the Rhode Island Deceptive Trade Practices Act, R.I. Gen. Laws § 6-13.1-1. All the plaintiff's claims arise out of a data breach that allegedly resulted in financial losses, identity theft, and other injuries to people, like the plaintiff, who had personal information, including credit card and debit card information, stored with the AAU. The defendant also moves to stay this litigation pending arbitration.

For the reasons that follow, the defendant's motion to compel arbitration and its motion to stay this action pending arbitration are granted.

I.

The following facts are undisputed unless otherwise indicated.

A.

The AAU is a non-profit, volunteer-based, multi-sport event organization that promotes and develops amateur sports and physical fitness programs for youths and adults. Kimbrell Decl. ¶ 2. Individuals may apply to become members of the AAU as athletes or non-athletes; the latter category includes coaches, administrators, managers, instructors, and officials. Id. Individuals may apply for AAU membership by filling out an online application at https://aausports.org (the "Website"). Id. at ¶¶ 3, 6 & Ex. A.

The AAU online membership application contains many questions that require the applicant to answer. At the end of the application is a section that is replicated here:

Kimbrell Decl., Ex. A.

Before submitting the application by clicking the green "Continue" button in the bottom right corner, an applicant must, among other things, check a box that appears to the immediate left of the words "*I understand and agree to all terms and conditions listed. " Kimbrell Decl. at ¶¶ 6-8 (bold and color in original). The check box and the accompanying text appear at the bottom of a yellow box in the application immediately below the bold heading "Terms and Conditions – Digital Signature. " Id. (bold in original). One of the statements in the "terms and conditions" section of the application is the statement that

Membership in any category may be granted only after an application is submitted and approved. By submitting an application, the applicant agrees to comply with the provisions of the AAU Code, including its constitution, bylaws, policies, procedures, regulations, and rules.

Id. at ¶ 7 (color in original). The blue text is a hyperlink that takes the applicant to a separate "AAU Code Book" screen. Id. at ¶ 8. Also in the "terms and conditions" section is the statement "*I accept all terms and conditions for this AAU membership application as laid out by the AAU code book (available here) and this application." Id. (color in original). The blue text, "available here," is another hyperlink that takes the applicant to the same AAU Code Book screen. Id. Additionally, in the green box in the "terms and conditions" section of the application is the statement "By entering my name below, I hereby authorize AAU to create the requested membership, accept and acknowledge all terms and conditions presented to me during the application process." Id. at Ex. A.

Regardless which of the two hyperlinks one uses to access the AAU Code Book screen from the application page, the resulting page that a user is taken to displays the table of contents of the AAU Code Book. Id. at ¶¶ 10-11 & Ex. B. On the table of contents page, a complete PDF version of the AAU Code Book can be accessed by clicking on a button near the top of the AAU Code Book screen labeled "Complete Book." Id. at Ex. B. The AAU Code Book screen also contains hyperlinks to each chapter contained within the AAU Code Book, one of which is titled "Policies." Id. Adjacent to the "Policies" heading in the table of contents on the AAU Code Book screen is a hyperlink that reads "AAU National Policies of the AAU." Id. (underline and color in original). In the "Policies" section of the table of contents, the first subheading is labeled "Membership Policy" and a sub-subheading below the "Membership Policy" subheading is labeled "Binding Arbitration." Id. Upon clicking on the hyperlink labeled "AAU National Policies of the AAU," the web user is then directed to a screen that displays the specific pages of the larger AAU Code Book containing the "AAU National Policies." Id. at ¶¶ 11-12 & Ex. C.

The "Binding Arbitration" provision contained in the AAU National Policies, which appears in bold text and in capital letters, reads as follows:

B. BINDING ARBITRATION

1. BY APPLYING FOR AAU MEMBERSHIP (OR HAVING A THIRD PARTY SUBMIT AN APPLICATION FOR MEMBERSHIP IN THE AAU ON BEHALF OF THE APPLICANT), OR UPON ENTERING ANY AAU EVENT, THE APPLICANT/MEMBER/ENTRANT AND THE AAU AGREE TO SUBMIT ALL CIVIL DISPUTE(S) ARISING OUT OF OR DURING THE TERM OF MEMBERSHIP TO BINDING ARBIRATION ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION ("AAA") IN ACCORDANCE WITH ITS CONSUMER ARBITRATION RULES. THE ARBITRATION HEARING SHALL BE HELD IN NEW YORK, NEW YORK BEFORE ONE (1) ARBITRATOR.

2. DEPOSITION(S), REQUESTS FOR ADMISSIONS, AND REQUESTS FOR PRODUCTION OF DOCUMENTS ARE STRICTLY DISCOURAGED AND WILL NOT

BE ALLOWED WITHOUT AN ORDER FROM AAA; AND, IN ORDER TO BE CONSIDERED, A REQUEST FOR ANY SUCH ORDER, IF ANY, SHALL ACCOMPANY THE FILING OF THE APPLICABLE PARTY'S FIRST SUBMISSION TO AAA OR SUCH REQUEST SHALL BE WAIVED AND/OR DENIED. A LIST OF WITNESSES AND ALL EXHIBITS TO BE INTRODUCED AT THE HEARING WILL BE EXCHANGED AT LEAST TWENTY (20) DAYS PRIOR TO THE HEARING. THE PARTIES AGREE THAT THE BINDING ARBITRATION SHALL BE IN LIEU OF ANY LITIGATION BY AND BETWEEN ALL OF THE PARTIES RELATED TO THE DISPUTE.

3. THE PARTIES DECLARE THAT IT IS THEIR CLEAR AND UNMISTAKABLE INTENT FOR THE ARBITRATOR TO DETERMINE ANY AND ALL QUESTIONS OF ARBITRABILITY, IF ANY. ANY OBJECTION TO THE ARBITRATOR'S JURISDICTION, INCLUDING ANY OBJECTIONS WITH RESPECT TO THE EXISTENCE, SCOPE OR VALIDITY OF THE ARBITRATION AGREEMENT SHALL BE DECIDED BY THE ARBITRATOR.

4. THE PARTIES WILL BE RESPONSIBLE FOR THEIR OWN LEGAL FEES, COSTS AND COST OF WITNESSES. THE PARTIES WILL SHARE EQUALLY THE ARBITRATOR'S FEES AND COSTS. THE PARTIES WAIVE ANY RIGHT TO SEEK AND THE PARTIES COVENANT NOT TO SEEK, ANY PUNITIVE OR EXEMPLARY DAMAGES.

Id. at ¶ 13 & Ex. C.

On May 16, 2019, the plaintiff applied for membership with the AAU by filling out an application on the Website. Kimbrell Decl. ¶ 4.¹ The plaintiff used his debit card to pay the $32.00 fee for a coach's certificate at the time he submitted his application. Compl. ¶ 19. The plaintiff applied for membership by accessing the Website on the Safari web browser application on his iPhone. Hidalgo Decl. ¶¶ 4-7. Because he used his iPhone to complete the membership application the plaintiff allegedly "had to move the screen back and forth for each line of text. By pinching [his] fingers together on the screen [he] could zoom out and see more of the Application, but even then the full application was not visible and it would pop back to the misconfigured size when [he] lifted [his] fingers from the screen." Id. at ¶ 7 & Ex. A. Nevertheless, the plaintiff states that the image of the membership application reproduced above "may well be essentially the same as the application [he] filled out in May 2019, although ... due to the lack of mobile compatibility, he never saw it formatted as a unified document." Id. at ¶ 8. The plaintiff states that he "remember[s] a section that talked about terms and conditions for background check and another yellow box that talked about terms and conditions of membership. The second terms and conditions box talked about how membership was not guaranteed by just filling out the application and that members had to comply with the AAU Code and its constitution and rules." Id. at ¶ 10.

When the plaintiff applied for membership he necessarily checked the box in the "terms and conditions" section adjacent to the statement "*I understand and agree to all terms and conditions listed " because, had he not checked the box, an error message would have popped up on the screen when he attempted to click the "Continue" button at the bottom right of the application. Kimbrell Decl. ¶ 9. The plaintiff's membership was accepted by the AAU on May 29, 2019, roughly two weeks after he applied, and the plaintiff thereafter became eligible to participate in the AAU's youth program as a coach or other kind of volunteer. Hidalgo Decl. ¶ 16 & Ex. B.

B.

Private information, including credit and debit card information, of individuals who conducted transactions on the Website between October 1, 2018 and July 2, 2019, including that information from the plaintiff, was subject to a data breach that the AAU publicly disclosed in September 2019. Compl. ¶ 3. The plaintiff generally alleged in the Complaint that the AAU "failed to take reasonable steps to employ adequate security measures or to properly protect sensitive payment Personal Information" and that in the aftermath of the breach, AAU's actions in remedying the injuries of victims of the breach were inadequate. See generally id. at ¶¶ 33-66.

On November 13, 2019, the plaintiff brought this case as a class action on behalf of "[a]ll residents of the United States whose Personal Information was compromised as a result of...