Johnson v. Maker Ecosystem Growth Holdings, Inc.

Background

Peter Johnson sued Maker Ecosystem Growth Holdings, Inc. and Maker Ecosystem Growth Foundation, collectively called the Maker Defendants. In 2018, Johnson signed up as a user on a digital-currency platform managed by the Maker Defendants through a click-wrap agreement titled the “Dai Terms of Service.” The agreement contained a binding-arbitration clause requiring disputes arising under the agreement to be resolved individually through arbitration under the American Arbitration Association’s consumer-arbitration rules. It also waived a jury trial and participation in a class action or class-wide arbitration.

The American Arbitration Association rules provided that the arbitrator could decide questions about the existence, scope, or validity of the arbitration agreement and the arbitrability of claims. The Maker Defendants moved to compel arbitration. Johnson did not dispute that he reviewed and agreed to the Terms of Service.

Arguments and analysis

Johnson argued that the Terms of Service and its arbitration clause were not relevant because he later signed up for a different platform offered by the Maker Defendants, and he said his claims concerned how that later platform was managed. The Maker Defendants argued that whether Johnson’s claims fell within the arbitration clause had to be decided first by the arbitrator.

The court agreed. Because the arbitration clause incorporated the American Arbitration Association rules, the court found that Johnson had agreed to delegate questions about arbitrability—the issue of whether a dispute must be arbitrated—to the arbitrator. The court also rejected the suggestion that such delegation could not be enforced against an “unsophisticated” party, finding on the record that Johnson was not unsophisticated. The court granted the Maker Defendants’ request for judicial notice of the American Arbitration Association’s consumer-arbitration rules. It denied Johnson’s request to file a sur-reply because the Maker Defendants had not raised new arguments in their reply.

Ruling

Judge Maxine M. Chesney granted the Maker Defendants’ motion to compel arbitration. The court vacated the hearing scheduled for October 2, 2020 and stayed Johnson’s claims against the Maker Defendants pending completion of arbitration proceedings.