Walker v. Nautilus, Inc.
| Decision Date | 28 May 2021 |
| Docket Number | Case No. 2:20-cv-3414 |
| Citation | 541 F.Supp.3d 836 |
| Parties | Robert WALKER, Plaintiff, v. NAUTILUS, INC., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Terence Richard Coates, Justin Charles Walker, Wilbert Benjamin Markovits, Zachary C. Schaengold, Markovits, Stock & DeMarco, LLC, Cincinnati, OH, Bryan L. Bleichner, Pro Hac Vice, Jeffrey D. Bores, Pro Hac Vice, Chestnut Cambronne PA, Minneapolis, MN, Nathan D. Prosser, Pro Hac Vice, Edina, MN, for Plaintiff.
Donald Jeffrey Ireland, Brian Donald Wright, Faruki Ireland Cox Rhinehart & Dusing PLL, Dayton, OH, Jason W. Palmer, Faruki Ireland Cox Rhinehart & Dusing PLL, Cincinnati, OH, for Defendant.
The matter before the Court is Defendant Nautilus, Inc.’s Motion to Compel Arbitration, or in the Alternative, to Dismiss and/or Strike. (ECF No. 13). At this juncture, this Court addresses Nautilus’ Motion to Compel Arbitration only. Nautilus’ alternative motions will be addressed in a separate Opinion and Order. For the reasons stated below, the Court DENIES Nautilus’ Motion to Compel Arbitration. (ECF No. 13).
When considering a motion to compel arbitration the Court may consider both the pleadings and additional evidence submitted by the parties. See Anderson v. Delta Funding Corp. , 316 F. Supp. 2d 554, 558 (N.D. Ohio 2004) ; see also Jones v. U-Haul Co. of Mass. & Ohio , 16 F. Supp. 3d 922, 930 (S.D. Ohio 2014). The facts relevant to this motion as laid out in the pleadings and the documents submitted by the parties are as follows.
Walker purchased a Bowflex treadmill from Nautilus.1 (See Compl. at ¶¶19, ECF No. 1). Walker purchased the treadmill online on March 4, 2019 at a cost of approximately $1,500 and had it shipped to his home in Bellefontaine, Ohio. (See id. at ¶¶ 19–20). Allegedly, Walker has not received the continuous horsepower marketed and advertised by Nautilus. (Id. at ¶¶ 1, 29–34).
Walker filed a Complaint against Nautilus on July 7, 2020, on behalf of himself and a proposed class, alleging breach of express and implied warranties, (Id. at PageID 25–32), violation of the Ohio Consumer Sales Practices Act (Id. at PageID 33), and Negligent Misrepresentation. (Id. at PageID 37). Nautilus then filed the instant Motion, seeking primarily to compel arbitration, and alternatively to dismiss or strike. (ECF No. 13).
At the very bottom of the Bowflex website, in small gray font, read the words "Terms of Use." (Pl. Ex. A, ECF No. 14-3, PageID 138). When Walker purchased the Bowflex treadmill he did not see or click on these "Terms of Use," (Walker Decl. at ¶ 4, ECF No. 14-1), but if he had he would have been taken via hyperlink to a document which, if printed, amounts to thirteen pages (Pl. Ex. A, ECF No. 14-4). After reaching the eleventh page of that document, a user would come upon an arbitration provision. (Id. at PageID 150–51). The arbitration provision spans five paragraphs. (Id. )
The arbitration provision covers virtually all claims that relate in any way to Nautilus’ "Service, your participation in any of the features available through them and/or your purchase of any products, content or services ...." (Id. at PageID 150). The provision continues that the parties "expressly waive the ability to participate in a class or representative proceeding, including any class arbitration or representative proceedings." (Id. ) By default, the arbitration would occur in Clark County, Washington. (Id. at PageID 151). And, both parties would bear their own expenses, while "shar[ing] equally the costs of the arbitration ...." (Id. ) The arbitration provision does allow for opting out, but only by writing to a listed address "no later than 60 days after initial acceptance of these Terms." (Id. ) Finally, the arbitration provision provides that it "survives" any termination of the "Terms." (Id. )
Purchasing the Bowflex treadmill was not Walker's first interaction with Nautilus; he previously purchased a Bowflex elliptical in 2017, and in December 2018 Walker installed fitness apps including the "Max Intelligence" app ("the app"). (Walker Supp. Decl. II at ¶¶ 4–6, ECF No. 25-2; Lewis Decl. at ¶ 5, ECF No. 25-1; Pl. Ex. A & B, ECF No. 25-1). Though Walker downloaded the app, he did not subscribe to, pay for, or use the app, and he later uninstalled it. (Walker Supp. Decl. II at ¶¶ 6, 9, ECF No. 25-2).
The app's "Terms of Use" include an arbitration provision identical to the arbitration provision hyperlinked to the Bowflex website. (Citti Decl. at ¶ 9, ECF No. 15-1; Def. Ex. 2, ECF No. 15-1). According to Nautilus, before using the app users are required to click "accept" affirming that they "agree to the Terms of Use and Privacy Policy" hyperlinked thereto. (Citti Decl. at ¶¶ 4–7, ECF No. 15-1). Nautilus’ declarant did not affirmatively state whether the requirement to click "accept" has always been in place. (See id. )
According to Walker, users of the app may not have been required to accept any terms of use when Walker downloaded the app. Video from a developer's website shows that the prototypes did not include an "accept" button, (Markovits Decl. at¶¶ 3, ECF No. 25-3) (website link omitted), and Walker does not recall clicking any "accept" button. (Walker Supp. Decl. II at ¶ 6, ECF No. 25-2). The app is currently on its twenty-first version and is now called the "JRNY" app. (Lewis Decl. at ¶ 11, ECF No. 25-1).2
The Federal Arbitration Act ("FAA") provides that a party to an arbitration agreement who is aggrieved by another party's refusal to submit an arbitrable dispute to arbitration, may petition any federal district court which would otherwise have jurisdiction over the underlying matter in order to compel arbitration. 9 U.S.C. § 4. Under the FAA "[a] written provision in any ... contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id. § 2.
When considering a motion to compel arbitration under the FAA, the Court has four tasks: (1) "it must determine whether the parties agreed to arbitrate;" (2) "it must determine the scope of that agreement;" (3) "if federal statutory claims are asserted, it must consider whether Congress intended those claims to be non-arbitrable; and" (4) "if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration." Stout v. J.D. Byrider , 228 F.3d 709, 714 (6th Cir. 2000).
Congress’ primary concern in passing the FAA "was to enforce private agreements into which parties had entered ...." Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). To that end, courts are to "rigorously enforce" arbitration agreements. Id. However, before there can be rigorous enforcement there must have been an enforceable agreement. Arbitration agreements are on "an equal footing with other contracts" and like any other contract may be unenforceable based on any of the "generally applicable contract defenses, such as fraud, duress, or unconscionability ...." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quotation omitted). Federal courts apply state-law principles governing contract formation when deciding whether parties agreed to arbitrate a matter. First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).
The parties have not agreed whether Ohio or Washington law applies in this case, but they each refer to Ohio and Washington law in their briefs, and they agree that the choice of law does not change the outcome. (See Pl. Sur-Reply at 7, ECF No. 25; see also Def. Sur-Sur-Reply at 6, fn. 6, ECF No. 26). The Court agrees that here the result is the same under both Washington and Ohio law. The Court will analyze this case under Ohio law, but will refer also to Washington law.
Defendant Nautilus initially argues that the arbitration provision contained within the Bowflex website's "browsewrap"3 terms of use is valid and enforceable, and that the Court should thus compel arbitration. (Mot. at 7, ECF No. 13, PageID 83). According to Nautilus, the Bowflex website's browsewrap terms of use are enforceable because they are, in Nautilus’ view, "easily accessible" and "prominently displayed" on the website. (Mot. at 8, ECF No. 13). One of the "[e]ssential elements" of a contract is "mutual assent[.]" Kostelnik v. Helper , 96 Ohio St.3d 1, 2002 -Ohio- 2985, 770 N.E.2d 58, 61 (2002) (quotation omitted); Keystone Land & Development Co. v. Xerox Corp. , 152 Wash.2d 171, 94 P.3d 945, 949 (2004). Walker contends that there was no mutual assent to the asserted terms of use, and no agreement formed. Walker submits that due to the inconspicuous nature of the website's browsewrap terms of use, he had neither actual nor constructive knowledge of their existence and thus could not assent to them. The question is whether Walker and Nautilus agreed to arbitrate. The Court finds that they did not.
In determining the enforceability of browsewrap terms of use, "courts have focused on whether the website user has actual or constructive knowledge of a site's terms and conditions prior to using the site." Snap-on Business Solutions v. O'Neil & Associates , 708 F.Supp.2d 669, 681 (N.D. Ohio 2010) (quotations omitted). As Nautilus observes, courts have found that a website's users have constructive knowledge of browsewrap terms of use where the website host has placed notice of the terms "prominently" and provided "easy access" to the full terms. (Mot. at 8, ECF No. 13) (citing Freeplay Music v. Dave Arbogast Buick-GMC , 2019 WL 4647305 at *10–11, 2019 U.S. Dist. LEXIS 163383 at *30 (S.D. Ohio 2019) ; Snap-on Business Solutions , 708 F.Supp.2d...
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