Newman v. SL Green Realty Corp

Background

The plaintiffs filed a proposed class action under the Class Action Fairness Act, alleging that SL Green Realty Corp. and Summit OVA Tenant LLC violated New York Arts and Cultural Affairs Law § 25.07(4). The plaintiffs alleged that, before February 2024, the defendants’ website did not disclose a required $3 online processing fee before customers selected tickets to SUMMIT One Vanderbilt. The plaintiffs sought relief available under New York law, including damages, an injunction, and fees.

Joel Newman bought one ticket on January 12, 2024; Eric Gutman bought two tickets on April 23, 2023; and William Wong bought two tickets on December 17, 2023. During checkout, customers had to select a button indicating that they accepted the terms and conditions before submitting their orders. A nearby red hyperlink led to the terms and conditions. The terms applicable to the purchases contained arbitration provisions and class-action waivers.

The defendants moved to compel the plaintiffs to arbitrate their claims individually and to stay the court case while arbitration proceeded. The plaintiffs disputed that they had entered valid arbitration agreements and argued that the defendants had not adequately established which terms they had seen. The plaintiffs also requested expedited discovery about the checkout page and the linked terms.

Court’s Analysis

The Federal Arbitration Act generally requires courts to enforce valid arbitration agreements according to their terms. The court considered whether the plaintiffs had agreed to arbitrate and whether their claims fell within the arbitration provisions. Applying New York contract law, the court concluded that the plaintiffs manifested assent by affirmatively checking the box during checkout. It also found that the “View Terms and Conditions” link was reasonably noticeable because of its placement, color contrast, and proximity to the assent language and checkout button.

The court rejected the plaintiffs’ arguments that the link had to be bold or capitalized or that the checkout page had to use a single font and color. The plaintiffs’ failure to remember seeing or reading the terms did not invalidate their assent. The court also found that the defendants’ evidence, including sworn statements and reconstructed checkout-page images, established the relevant purchase process and did not present a genuine factual dispute requiring further discovery.

The court denied the plaintiffs’ request for expedited discovery because they had not shown good cause or a genuine, reasonable dispute about the existence and validity of the arbitration agreements.

Delegation and Class Waiver

The court held that the Newman and Wong terms incorporated JAMS rules giving the arbitrator authority to decide questions about the arbitration agreement’s formation, validity, scope, and applicability. It reached the same conclusion for Gutman’s terms, which incorporated American Arbitration Association rules giving the arbitrator authority to decide arbitrability. “Arbitrability” means whether a particular dispute must be resolved through arbitration.

Because the plaintiffs challenged the agreement as a whole rather than specifically challenging the delegation provisions, the court declined to decide the merits of their arguments about whether their claims were within the arbitration clauses or whether the terms were otherwise unenforceable. Those questions were assigned to the arbitrator.

The court separately enforced the class-action waivers. It concluded that the plaintiffs could not pursue the claims on behalf of a proposed class and instead had to arbitrate in their individual capacities.

Disposition

The court granted the defendants’ motion to compel arbitration. It ordered the plaintiffs’ claims to proceed in individual arbitrations and stayed the court proceedings pending resolution of those arbitrations. The parties must submit a joint status letter within 120 days of the order, or within seven days after the arbitrations conclude, whichever occurs first. The court did not decide the underlying question of whether the defendants violated New York’s ticket-pricing law.