United States District Court, D. Colorado
In re HOMEADVISOR, INC. LITIGATION
A. BRIMMER CHIEF UNITED STATES DISTRICT JUDGE.
matter is before the Court on defendant HomeAdvisor,
Inc.'s Motion to Compel Arbitration and to Stay Claims
[Docket No. 51]. The Court has jurisdiction pursuant to 28
U.S.C. § 1332(d)(2).
HomeAdvisor, Inc. (“defendant”) is an online
business that connects consumers with home service
professionals (“HSPs”). Docket No. 51 at 6. An
HSP is generally an independent contractor in the business of
doing home repairs, remodeling, or inspections. See
Docket No. 1 at 15-20, ¶¶ 8-15. HomeAdvisor's
business model is that HSPs become members of its network.
Docket No. 51 at 6. HomeAdvisor charges the HSP for each
potential customer referral, or a “lead, ” that
it provides. Docket No. 1 at 24, ¶¶ 35-36.
Plaintiffs are all former members of HomeAdvisor's
network. Id. at 15-20, ¶¶ 8-15. Plaintiffs
allege that HomeAdvisor misrepresented the quality of its
leads as “project-ready homeowners.” Id.
at 24-25, ¶ 37. In reality, plaintiffs claim, the leads
were materially defective in that they contained incorrect
contact information, included individuals who had no home
service needs and had not contacted HomeAdvisor, and included
contacts for vacant or non-existent residences, among other
things. Id. at 27, ¶ 40-41.
plaintiff became a HomeAdvisor member through a telephone
sign-up process. Docket No. 73 at 5. After speaking with a
HomeAdvisor representative, agreeing to become a HomeAdvisor
member, and providing payment information, an interested HSP
is transferred to a “voice log” while the
HomeAdvisor representative stays on the line. Docket No. 74-5
at 5. A pre-recorded voice message then states, “This
confirmation process should be completed with the principal
of the business. At the tone, as confirmation that you are an
authorized principal of the company, and that you agree to
HomeAdvisor's terms and conditions, please state your
full name and company name.” Docket No. 51 at 10;
Docket No. 73 at 7. Each plaintiff did so. Docket No. 51 at
11. The voice log did not recite the terms and conditions and
did not inform the individual of a way to access the terms
and conditions. Docket No. 46-7 at 2.
completion of the voice log process, the HSP is subject to a
background check by HomeAdvisor, which usually is completed
within 24 hours. Docket No. 73 at 9. HomeAdvisor then
automatically bills the initial fee to the credit card the
HSP provided over the telephone. Id. Afterwards, the
HSP receives a “welcome email” and a
“confirmation email.” Id.; Docket No.
46-7 at 3-4.
welcome email directs the HSP to click a hyperlink to access
his or her HomeAdvisor account on the HomeAdvisor “Pro
Site.” Id. at 3. Underneath that hyperlink,
the email states, “By using this site, you are agreeing
to our Terms & Conditions.” Id. There is a
corresponding hyperlink to the terms and conditions.
Id. The confirmation email also references the
company's terms and conditions, stating, “See Terms
& Conditions, ” which also contains a hyperlink.
Id. at 4. By clicking on the terms and conditions
hyperlink, the recipient is provided with the full terms and
conditions, including an arbitration agreement. Docket No. 46
at 8, ¶ 13. The confirmation email states,
“Membership fees are non-refundable and are charged
automatically on each renewal date until
canceled.” Docket No. 46-7 at 4. Neither the
confirmation or welcome email, however, provides the terms
and conditions in the body or in an attachment. Docket No. 51
Federal Arbitration Act (“FAA”) “manifests
a liberal federal policy favoring arbitration.”
Comanche Indian Tribe v. 49, L.L.C., 391 F.3d 1129,
1131 (10th Cir. 2004) (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)).
Consequently, the Court must “resolve ‘any doubts
concerning the scope of arbitrable issues . . . in favor of
arbitration.'” P & P Industries, Inc. v.
Sutter Corp., 179 F.3d 861, 866 (10th Cir. 1999)
(quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983)). “In addition,
this liberal policy ‘covers more than simply the
substantive scope of the arbitration clause,' and
‘encompasses an expectation that [arbitration]
procedures will be binding.'” Id.
the presence of an arbitration clause generally creates a
presumption in favor of arbitration, this presumption
disappears when the parties dispute the existence of a valid
arbitration agreement.” Bellman v. i3Carbon,
LLC, 563 Fed.Appx. 608, 613 (10th Cir. 2014) (unpublished)
(citations omitted). Determining whether a dispute is subject
to arbitration “is similar to summary judgment
practice.” Id. at 612 (quoting Hancock v.
Am. Tel. & Tel. Co., 701 F.3d 1248, 1261 (10th Cir.
2012)). The party moving to compel arbitration must present
“evidence sufficient to demonstrate the existence of an
enforceable agreement.” Id. The burden then
shifts to the nonmoving party “to raise a genuine
dispute of material fact regarding the existence of an
agreement.” Id. “The district court,
when considering a motion to compel arbitration which is
opposed on the ground that no agreement to arbitrate has been
made by the parties, should give to the opposing party the
benefit of all reasonable doubts and inferences that may
arise.” Vernon v. Qwest Comm. Int'l, Inc.,
857 F.Supp.2d 1135, 1149 (D. Colo. 2012), aff'd,
925 F.Supp.2d 1185 (D. Colo. 2013).
argues plaintiffs assented to the terms and conditions during
the voice log process. Docket No. 51 at 10. Plaintiffs oppose
the motion, arguing that, because they were never informed
about the terms and conditions before the voice log process,
and had no opportunity to read or access the terms and
conditions before being prompted to accept them, they could
not have assented to them before they became members. Docket
No. 73 at 13.
Choice of Law
argues that the terms and conditions contain a choice of law
provision that Colorado law applies. Plaintiffs challenge the
validity of the choice of law provision, but do not challenge
the use of Colorado law. Docket No. 73 at 13, n.8. The Court
will therefore apply Colorado law to the question of contract
formation. See Terlizzi v. ...