Barclay v. iFit Health & Fitness Inc.

Background

Teeda Barclay, Nicole Nordick, and Jay Ovsak alleged that Icon Health & Fitness, Inc. and NordicTrack, Inc. misrepresented the continuous horsepower ratings of NordicTrack treadmills. Ovsak purchased a treadmill and registered for an iFit membership on March 25, 2016. The iFit Terms of Use in effect then did not contain an arbitration clause, but they allowed the company to change the terms without notice and stated that continued use of the site after a change would show acceptance of the modified terms.

Icon later added an arbitration provision on March 1, 2018. The defendants moved to compel individual arbitration of Ovsak’s claims. The court had previously found that Ovsak agreed to the 2015 Terms of Use, including the unilateral-modification provision, but left open whether he became bound by the later-added arbitration clause.

Legal standard

Because the parties presented evidence outside the pleadings, the court treated the motion to compel arbitration as a motion for summary judgment under Federal Rule of Civil Procedure 56. The defendants had the burden to prove a valid and enforceable arbitration agreement. Under the Federal Arbitration Act, an arbitration agreement is generally enforceable, but a person cannot be required to arbitrate a dispute unless he agreed to do so. The court applied Utah law under the Terms of Use’ choice-of-law provision.

Notice and contract formation

The court rejected Ovsak’s argument that Icon necessarily had to give him personal notice of the new arbitration provision. Based on the text of the modification clause and Utah law, the court concluded that Icon did not need to provide more notice than the contract required. The clause stated that Icon could change the Terms of Use without notice, required Ovsak to review the site and terms for modifications, and provided that continued use after a modification would constitute agreement to the modified terms.

Delegation of unconscionability

Ovsak also argued that applying the arbitration provision would be unconscionable, meaning unfairly one-sided or imposed under unfair circumstances. The court concluded that the Terms of Use clearly assigned questions about the arbitration agreement’s validity to an arbitrator by incorporating the American Arbitration Association’s rules. Under that delegation, the court could consider only whether the delegation provision itself was unconscionable. The court found that Ovsak’s arguments challenged the arbitration agreement and modification process generally, not the delegation provision specifically, so the court did not decide the broader unconscionability challenge.

Evidence of continued use

The court interpreted the 2015 modification clause to require actual continued use of the “site” before a later modification would bind Ovsak. The relevant definition of “site” covered the iFit website and downloadable applications. The defendants therefore had to show that Ovsak used the iFit website or an iFit application after March 1, 2018.

The court found the evidence insufficient. The continued existence of Ovsak’s membership did not establish that he actually used iFit. His testimony indicated that he used the membership until his treadmill stopped working in early 2018, and the record did not show actual iFit use after March 1, 2018. Communications Ovsak had with iconfitness.com in January 2020 also did not establish use of iFit because they did not reference iFit, and the record appeared to show that iconfitness.com and the iFit website were different sites.

The court concluded that the defendants had not met their burden to prove that Ovsak assented to the later-added arbitration clause. The defendants also had not shown a genuine dispute of material fact requiring a trial under the Federal Arbitration Act.

Disposition

The court denied the defendants’ request for additional discovery because the parties had already conducted discovery focused on Ovsak’s use of iFit, including questioning him at a deposition. The court ordered that the defendants’ Motion to Compel Individual Arbitration of Plaintiff Jay Ovsak’s Claims was DENIED.