Buffington v. sPay, Inc.

Background

The plaintiffs brought a proposed class action against SPay, Inc., doing business as Stack Sports. Stack Sports provides online enrollment software to youth sports organizations through its Sports Connect service. The plaintiffs alleged that they were charged service fees when registering their children and that the fees were not tied to an actual service or expense, were intended to generate profit, and were disclosed only after consumers had taken several steps toward completing registration.

The complaint asserted claims under consumer-fraud statutes in New York, Florida, Illinois, and Iowa, as well as a claim for unjust enrichment. Stack Sports moved under the Federal Arbitration Act to compel arbitration and stay the court proceedings. It argued that the plaintiffs agreed to its Terms of Service, which included a mandatory arbitration provision, by using the registration software.

Analysis

A motion to compel arbitration asks the court to determine whether the parties made a valid agreement to arbitrate and whether the dispute falls within that agreement. The party seeking arbitration has the initial burden of showing that an arbitration agreement was made. The court applies a standard similar to the one used for summary judgment, but it may not weigh evidence, decide witness credibility, or resolve genuine factual disputes. If the making of the arbitration agreement is disputed, the issue must be tried.

The court found a disputed material fact about whether the plaintiffs agreed to arbitration. Stack Sports submitted archived registration webpages displaying a notice that clicking “Create Account” meant agreeing to the Sports Connect Terms of Service. But the plaintiffs submitted screenshots that did not show that notice, along with sworn statements that they were unaware of the Terms of Service and did not agree to arbitrate.

The court also noted that the archived webpages submitted by Stack Sports showed dates different from the dates on which the plaintiffs alleged they registered. Although Stack Sports provided evidence that its Terms of Service had remained consistent since July 9, 2021, it did not show that the relevant registration webpages had remained consistent since 2021. Because the evidence presented a triable issue about whether the plaintiffs had notice of the Terms of Service and manifested assent to arbitration, the court did not resolve that factual dispute on the motion.

Disposition

Judge Philip M. Halpern denied the motion to compel arbitration and stay proceedings. The court directed Stack Sports to file its answer within 21 days and scheduled a conference concerning the scheduling of a jury trial on whether an agreement to arbitrate was made. The ruling addressed the arbitration issue and did not decide the plaintiffs’ underlying consumer-fraud or unjust-enrichment claims.