Boatman v. Houzz Inc.

Background

Mike Boatman, a professional photographer, joined Houzz in 2014 and enrolled in Houzz’s Photography Network in 2016. He alleged that, after he uploaded photographs, Houzz copied, distributed, displayed, and modified them without permission. He brought a copyright-infringement action seeking damages and injunctive relief.

When Boatman created his Houzz account and uploaded photographs, he agreed to Houzz’s Terms of Use. Those terms required disputes arising from the agreement or use of the Houzz platform to be resolved through binding arbitration. They also preserved each party’s right to seek injunctive or other equitable relief in court for actual or threatened violations of intellectual-property rights. The terms incorporated the American Arbitration Association’s rules, which give an arbitrator authority to decide questions about the existence, scope, validity, and arbitrability of an arbitration agreement.

Consent to the Terms of Use

The court found that Houzz presented sufficient evidence that Boatman had to affirmatively accept the Terms of Use when registering his account and that users agreed to the terms when uploading images. Boatman did not dispute that he accepted the terms in 2014 or reaffirmed his consent when uploading photographs. Instead, he argued that the terms did not apply to the Photography Network. The court rejected his attempts to create a factual dispute about consent and found that he had agreed to the Terms of Use.

Delegation of Arbitrability

The court explained that courts ordinarily decide two threshold questions: whether the parties agreed to arbitrate and whether their agreement covers the dispute. But the parties may clearly and unmistakably assign those questions to an arbitrator. The court held that the combination of the arbitration provision’s broad language and its incorporation of the American Arbitration Association rules clearly assigned arbitrability questions to the arbitrator.

As a result, the arbitrator—not the court—must decide whether the Terms of Use apply to Boatman’s claims and whether those claims fall within the arbitration provision. The court therefore did not decide Boatman’s argument that the Photography Network was separate from the Houzz platform or his argument concerning the provision’s treatment of injunctive-relief claims. Boatman also did not argue that the delegation provision was unfair or otherwise invalid.

Effect of the Earlier Order

An earlier order by Judge Shadid denied Houzz’s first motion to compel arbitration because the arbitration was to occur in San Francisco and the Central District of Illinois court concluded that it could not compel arbitration outside that district. That order transferred the case to the Northern District of California. Judge White concluded that the earlier order had not decided the delegation issue and therefore did not apply the earlier ruling on the scope of the arbitration provision.

Disposition

The court granted Houzz’s motion to compel arbitration and stayed the case. The parties must file a joint status report about the arbitration every 120 days and must notify the court within 14 days after the arbitrator decides whether the arbitration provision applies to Boatman’s claims. The court stated that it will dismiss the action if the arbitrator determines that all claims are covered; otherwise, the action will remain stayed until arbitration concludes.