Feld v. Postmates Inc.

Background

Jamie Feld filed a proposed class action against Postmates, Inc. She alleged that Postmates violated New York General Business Law § 349, which prohibits deceptive business practices, and was unjustly enriched. Feld claimed that Postmates’ statement that it delivered “Anything. Anytime. Anywhere.” was misleading because deliveries were limited to particular vendors, times, and locations. She also claimed that Postmates’ statement about a set delivery fee was misleading because the company charged an additional service fee.

Postmates operated a website and mobile application through which consumers ordered goods for delivery by independent contractor-couriers. To place an order, a consumer had to create a Postmates account. During account creation, the website stated, “By clicking the Sign Up or Facebook button, you agree to our Terms of Service and Privacy Policy.” The app used similar language: “By tapping Sign Up or Facebook, you agree to the Terms of Service & Privacy Policy.” The linked Terms of Service contained a mandatory arbitration provision and a waiver of the right to bring a class or representative action or go to court, subject to stated exceptions.

Postmates moved to compel arbitration. Feld argued that she had not agreed to the Terms of Service because the terms were not displayed during sign-up, Postmates did not require an affirmative acceptance, and the links appeared on a cluttered screen in smaller and less noticeable text. Feld did not state whether she used the website or the app to sign up.

Court’s Analysis

Under the Federal Arbitration Act, the court first determines whether the parties formed a valid arbitration agreement and then determines whether the dispute falls within that agreement’s scope. The party seeking arbitration bears the burden of showing that an agreement exists. The court applies a standard similar to the one used for summary judgment.

The court treated the Postmates sign-up process as a type of online agreement in which the user is notified of terms through the sign-in or registration process. Because Feld denied actual notice, the issue was whether a reasonably careful user would have been on “inquiry notice”—meaning the website gave enough information to prompt the user to investigate the terms—and whether Feld’s conduct showed agreement.

The court concluded that the Terms of Service links were reasonably noticeable on both the website and the app. On the website, the notice appeared directly above the sign-up buttons, used contrasting text, and displayed the linked terms in darker, bolder type. On the app, the notice and links likewise appeared directly above the account-creation buttons and at the time the user created an account. The court found that the notice was both physically close to and presented at the same time as the sign-up action.

The court held that Postmates did not need to display the full Terms of Service on the sign-up screen or require Feld to open and read them. It also held that Feld showed agreement by signing up for the service, even if she did not click the links. The court therefore concluded that a valid arbitration agreement existed.

The court next held that Feld’s claims fell within the arbitration provision’s scope. It characterized the provision as broad because it covered disputes arising from or relating to the Terms of Service or use of the Postmates platform. The court found that none of the provision’s three exceptions applied.

Disposition

The court granted Postmates’ motion to compel arbitration. It directed the Clerk to terminate the motion, stayed the proceedings pending arbitration, and ordered the parties to update the court on the arbitration’s status by June 30, 2020. The opinion does not state that the action or any claim was dismissed.