There are two justice systems in America: the public justice system, with courts, judges, the Supreme Court, the federal and state rules of procedure, and the rules of evidence. Then there is the private justice system, also known as arbitration, in which the parties choose the arbitrator, the rules of evidence and prior precedent don't always apply, appellate options are limited, and the proceeding may operate in secret. In many employment disputes, the employer pays the arbitrator's bill. Many people, upon starting a new job or signing up for a service, "agree" to arbitration by signing a sheet of paper they never read, or by clicking through an internet link with fine print that says that any dispute arising from the relationship (whether an employment relationship or consumer transaction) must be arbitrated and cannot be taken to court. This case asks when the arbitration "agreement" in a consumer transaction can be invalidated.
The case is Soliman v. Subway Franchisee Advertising Fund, issued on June 8. Plaintiff went to a Subway sandwich shop and signed up for a promotion that would give her a free sandwich. All you have to do is send a text message to Subway. Of course, plaintiff signed up for this. Then she opted out of the promotion later on, but the promotional text messages from Subway continued unabated. She sues under the Telephone Consumer Protection Act over the unwanted text messages. The problem is that Subway argues that she has to take the case to arbitration, not court. Arbitration is regarded as a lesser forum for plaintiffs then court, so she challenges Subway's arbitration demand.
Courts normally assume that most arbitration agreements are valid, even if the plaintiff never read them prior to signing them, or if they contain legalese. Most people are not in a position to negotiate the arbitration provision, particularly new hires who want the job and don't have the gumption to take issue with arbitration; they have no bargaining power, and what new employee argues with management about where they might take any future employment dispute?
This case is different. The plaintiff prevails on appeal, as the Second Circuit (Jacobs, Pooler and Bianco) finds the arbitration agreement agrees with the district court in holding the arbitration provision cannot force plaintiff to arbitration because it was too obscure (and frankly, tricky) to place her on notice that any dispute she would have with Subway would have to proceed to arbitration. Here is what the Court of Appeals says about all of this:
At oral argument in this appeal, the Second Circuit jumped all over Subway's lawyer from the outset, noting that this was a different kind of arbitration case and suggesting the terms of the arbitration provision were too obscure to place anyone on notice that any disputes would have to be arbitrated. Subway's lawyer argued in part that a reasonable consumer would expect that a free sandwich will come with certain conditions. The panel was not buying it, though it did say that no precedents really address a case like this.