Goceri v. Amazon.Com, Inc.

Background

Pro se plaintiffs brought claims for breach of contract and fraud against Amazon.Com, Inc., on behalf of their business, which the opinion describes as a seller on Amazon’s online marketplace. The plaintiffs filed the case in state court on October 11, 2023. Amazon removed the case to federal court and moved to compel arbitration under the Federal Arbitration Act.

The plaintiffs did not dispute entering into an agreement with Amazon. Their complaint alleged that Spring Design LLC agreed to Amazon’s policies and procedures for selling on Amazon’s marketplace. Amazon contended that the plaintiffs registered as Amazon sellers in June 2019 and accepted the March 2019 version of the Amazon Services Business Solutions Agreement.

The agreement stated that, for sellers registered in the United States, disputes with Amazon or its affiliates, or claims relating to the agreement or use of Amazon’s services, would be resolved by binding arbitration rather than in court, subject to stated exceptions. It also said that arbitration would be conducted by the American Arbitration Association under its rules, including the Supplementary Procedures for Consumer-Related Disputes. The agreement specified Washington law, the Federal Arbitration Act, and other applicable federal law as governing law.

Analysis

The Federal Arbitration Act generally makes written arbitration provisions in contracts involving interstate commerce enforceable, subject to ordinary contract defenses. Courts ordinarily decide threshold questions about whether an arbitration agreement was formed, whether it is valid, and whether it covers the dispute. The parties may instead clearly and unmistakably agree that an arbitrator will decide some of those questions through a delegation provision. However, formation challenges cannot be delegated.

Amazon argued that the agreement incorporated a delegation provision through its reference to the American Arbitration Association’s rules. The court applied Washington contract law to determine whether the agreement actually incorporated those rules. Under that law, incorporation by reference requires a clear and unequivocal reference to another document, along with knowledge of and assent to the incorporated terms.

The court concluded that Amazon had not proved that the agreement incorporated a specific set of American Arbitration Association rules containing a delegation provision. The agreement referred generally to the association’s rules and specifically mentioned the Supplementary Procedures for Consumer-Related Disputes. The court found that this language was uncertain because the association had multiple active and archived sets of rules, and because the consumer-related procedures referenced in the agreement did not contain a delegation provision. The court also noted that the agreement did not expressly refer to the commercial rules, despite Amazon’s argument that those rules applied.

Because Amazon did not establish an enforceable delegation provision, the court considered whether the plaintiffs’ claims were covered by the arbitration agreement. It held that the agreement’s broad language—covering any dispute or claim relating in any way to the agreement or use of Amazon’s services—covered the plaintiffs’ claims, which alleged a breach of their agreement with Amazon. The court rejected the plaintiffs’ argument that arbitration would be unjust, explaining that the Federal Arbitration Act did not permit the court to refuse to compel arbitration on that basis.

Disposition

The court granted Amazon’s motion to compel arbitration and stayed the case. The court stated that the circumstances would justify dismissing the complaint under Ninth Circuit authority, but it chose to stay the case because the Supreme Court was considering whether the Federal Arbitration Act permits dismissal when all claims are subject to arbitration.

The stay was to remain in place until July 1, 2024. The court stated that, absent new authority precluding dismissal, the case would be dismissed on that date. If the Supreme Court held that dismissal was not permissible, the stay would remain in place until arbitration was complete.