Whalen v. NBA Properties, Inc.

Background

James Whalen and Victor Fuentes brought a potential class action against NBA Properties, Inc. They alleged that the NBA violated the federal Video Privacy Protection Act by intentionally disclosing League Pass users’ personally identifiable information to third parties without consent.

The NBA moved to transfer the case to the U.S. District Court for the Southern District of New York under a forum-selection clause in the parties’ online terms. In the alternative, it moved to compel individual arbitration under an arbitration clause in the same contractual materials. The plaintiffs opposed both requests, arguing that they never formed contracts with the NBA.

Fuentes purchased League Pass in November 2022, and Whalen purchased it in October 2023. Both created NBA.com accounts, provided payment information, and clicked an “Agree and Subscribe” button. The subscription screen stated that clicking the button acknowledged and accepted the Subscriber Agreement. The Subscriber Agreements linked to the NBA’s Terms of Use, which contained the relevant dispute-resolution provisions. The NBA later emailed Fuentes about updated terms, and Fuentes continued using League Pass after the email.

Contract Formation

The court applied the rule that an online contract is enforceable when the website gives reasonably conspicuous notice of the terms and the consumer takes affirmative action showing assent. The court found that both plaintiffs’ clicks on “Agree and Subscribe” satisfied the affirmative-action requirement.

The court also found that the subscription process provided sufficient notice of the Subscriber Agreements. The plaintiffs created accounts, supplied credit-card information, downloaded the NBA mobile app, and purchased ongoing subscriptions. The notice appeared in a paragraph directly above the button and stated that clicking the button acknowledged and agreed to the Subscriber Agreement. The court concluded that the website’s context and design would have put a reasonably prudent internet user on notice of the agreement.

The court held that the Terms of Use were effectively incorporated by reference. The Subscriber Agreements clearly stated that subscribers agreed to the Terms of Use, and the agreements provided hyperlinks to those documents. The court concluded that a reasonably prudent user would understand that the linked terms were binding.

Fuentes originally agreed to Terms of Use that did not contain the forum-selection clause. The court held, however, that the NBA’s email gave him constructive notice of the updated Terms of Use. The email identified changes involving dispute-resolution procedures, linked to the updated terms, and explained that continued use of the websites and mobile applications would constitute agreement to the updates. The court also held that the NBA’s evidence that it sent the email was sufficient to establish that Fuentes received it, and that the modification was supported by consideration because the updated terms included changes to the arbitration agreement and procedures.

Forum-Selection Clause and Arbitration

The plaintiffs did not separately challenge the forum-selection clause beyond their notice arguments. Because the court found those arguments unpersuasive, it held that the forum-selection clause in the 2023 Terms of Use was valid and enforceable.

The court did not decide whether the parties must arbitrate. It stated that, because it was granting the transfer motion, the motion to compel arbitration was not properly before it and should be heard by the Southern District of New York.

Disposition

Judge Charles R. Breyer granted the NBA’s motion to transfer. The case was transferred to the Southern District of New York, which the order left to decide the arbitration issue. The opinion did not state that the case or any claim was dismissed.