Last week my firm distributed an article I wrote on the Ninth Circuit’s recent decision in Douglas v. United States District Court for the Central District of California as a Client Alert entitled Don’t Try This on Your Site: Changing Contracts via Website Notice Alone.
Ultimately I think the Ninth Circuit was justified in granting this writ of mandamus because the district court never clearly held that Douglas had notice of the new terms to be added to the contract. So it is a clear error of law for the district court to compel arbitration pursuant to a contract that it held binding on Douglas without a clear finding that he had notice of the new terms.
However, the district court’s more problematic error is never really reached. It’s entirely possible that the original agreement had a change of terms clause that would have provided for website only notice, and if so, perhaps the new contract was binding on Douglas. I really think there shouldn’t have been a ruling compelling arbitration until we’ve had a look at the original contract.
Alternatively, perhaps it was the plaintiff’s burden to come forward with something more than a declaration to overcome defendant’s production of the more recent contract. That burden issue is far more tricky than it at first appears. There are two separate lines of cases regarding how to assign the burdens on motions compelling arbitration that reach opposite conclusions. As a policy matter, I think the Federal Arbitration Act shows that Congress wanted to encourage arbitration and if all a plaintiff need do is declare he didn’t have notice, then we’re going to get to arbitration far less often. Seems like something a little more than a self-serving declaration ought to be required here.