This case involves the Peloton treadmill (“Tread+”). The treadmill has caused numerous personal injuries, and Peloton has recalled it. In this case, a 3 year old boy suffered personal injuries due to a Tread+ his dad bought. The dad, mom, and child sued Peloton for negligence and misrepresentation. Peloton invoked the arbitration clause in its TOS. The court’s resolution likely satisfies no one. The Dad
The specific evidence Peloton introduced of its TOS formation:
The court overrules the plaintiffs’ objections to this evidence. It’s a reminder that you must consider how you will introduce evidence of contract formation in addition to worrying about the contract terms and formation process. The court discusses another topic I don’t often see discussed. The Federal Arbitration Act applies only to interstate commerce. “To the extent the contract pertains to use of Peloton’s Services (e.g., its app, website, and on-demand fitness classes), because those services require use of the Internet, the Agreement would involve interstate commerce.” The Mom and Son Peloton tries to bind the mom and son to the TOS via “equitable estoppel.” The idea is that sometimes nonsignatories get benefits from a contract sufficient to impose the contract terms on them anyways. But not in this case. The son son is 3 years old. He lacks capacity to agree to the TOS, and he could disaffirm it even if he did. He got no benefits from the treadmill. Peloton’s TOS expressly restricted use by minors, and the 3 year old never used it. The story is the same for the wife: “Mrs. Stern never used the Tread+, nor did she benefit from it.” Thus, the nonparties cannot be swept into the contract. The court distinguishes the Nicosia v. Amazon and Tice v. Amazon rulings; but the result is consistent with the uncited BF v. Amazon case. Consequences Abstracting from the nuances, the court’s ruling is obvious. Peloton can’t bind parties not in privity to the terms of its contract. That’s Contracts Law 101. Still, the consequences can be pretty significant in the IoT era. Many products can affect the rights of home residents and visitors who aren’t in privity, like voice-command and surreptitious video devices. This ruling reinforces the unlikelihood that the device manufacturer can reach those parties with its TOS–in some cases, raising questions about the devices’ permissibility under existing law. In terms of this lawsuit, the dad’s case goes to arbitration but the wife and son’s cases remain in court. The dad signaled that he plans to challenge the arbitrability of his claims, so it’s possible the arbitrator will decide that the claims are outside the arbitration scope and bounce the dad’s case back to court as well. Another possibility is that the family decides to drop the dad’s claims altogether because the bulk of the case’s value likely rests in the son’s claims. Otherwise, the parties are in a Mexican standoff. The family can proceed with the full set of claims only by litigating in two venues, which doubles the litigation costs for both sides and creates a risk of inconsistent judgments. Both sides would benefit from merging the cases back into one, but someone has to concede, and neither party has an incentive to do so. Another possibility would be to stay one case–likely the arbitration–until the resolution of the other cases to see what happens and decide if the second case is worth pursuing. Either way, the court’s “split the baby” decision (see what I did there? or too soon?) on arbitration was potentially a bummer for both parties. Case citation: S.S. v. Peloton Interactive, Inc., 2021 WL 4711675 (S.D. Cal. Oct. 7, 2021). Note: my wife is a big Peloton fan, and we own some stock in the company. The post Peloton Can’t Bind All Family Members To Its Arbitration Provision–SS v. Peloton appeared first on Technology & Marketing Law Blog. Peloton Can’t Bind All Family Members To Its Arbitration Provision–SS v. Peloton published first on https://immigrationlawyerfirm.weebly.com/ via Tumblr Peloton Can’t Bind All Family Members To Its Arbitration Provision–SS v. Peloton
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About MeI am a professional marketer of legal plans and identity theft plans for individuals, families, and small businesses. I have subscribed to a legal plan for more than 15 years and has been an advocate of affordable legal protection in the USA and Canada. |