In re Online Travel Company (OTC)

953 F. Supp. 2d 713, 2013 WL 2948086, 2013 U.S. Dist. LEXIS 84842
CourtDistrict Court, N.D. Texas
DecidedJune 14, 2013
DocketCivil Action No. 3:12-cv-3515-B
StatusPublished
Cited by18 cases

This text of 953 F. Supp. 2d 713 (In re Online Travel Company (OTC)) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Online Travel Company (OTC), 953 F. Supp. 2d 713, 2013 WL 2948086, 2013 U.S. Dist. LEXIS 84842 (N.D. Tex. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE, District Judge.

Before the Court is the Motion to Compel Arbitration (doc. 71) filed April 1, 2013 by Defendants Travelocity.com LP and Sabre Holdings Corporation1 (the “Traveloeity Defendants” or collectively “Travelocity”). Having considered the Motion and the filings in this case, the Court finds that it should be and hereby is GRANTED.

I.

BACKGROUND

This consolidated proceeding concerns allegations of price fixing against certain online travel companies and hotel companies. Plaintiffs claim that these companies conspired to set hotel room resale prices and that online travel websites agreed not to resell hotel rooms below this fixed price. The central agreement of the alleged conspiracy contained most favored nation restrictions prohibiting hotels from offering [717]*717lower prices on rooms through any other distribution channel, including their own websites. Plaintiffs assert that this price-fixing scheme allowed online travel websites to deceive customers by advertising the “best” or “lowest” prices, when in fact all companies were offering the same price.

While disputing Plaintiffs’ claims, Travelocity also argues that Plaintiffs who booked hotel rooms via Travelocity’s website may not bring their claims in federal court due to Travelocity’s User Agreement (“User Agreement”). According to Travelocity, every user completing transactions on Travelocity’s website as of February 4, 2010 agreed to the User Agreement, which contains a clause requiring arbitration for “[a]ny Claim where the total amount in controversy is less than U.S. $10,000.” Travelocity Mot. Compel 3; see also Travelocity App. 13, 23, 33.2 Furthermore, subparagraph (e) of the arbitration clause stipulates that “unless otherwise mutually agreed by the parties in writing, the arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class proceeding.” Travelocity Mot. Compel 4; see also Travelocity App. 13, 23, 34. In light of such contractual language, Travelocity argues that Plaintiffs must arbitrate their claims individually. Plaintiffs respond that their inability to proceed as a class would prohibit them from vindicating their statutory rights and consequently object to Travelocity’s request.

Travelocity filed the instant motion seeking to compel arbitration pursuant to the terms of the User Agreement on April 1, 2013. In response, Plaintiffs filed a Motion to Stay Arbitration pending the Supreme Court decision in American Express Co. v. Italian Colors Restaurant, Case No. 12-133 (the “Amex case”). That motion also requested that the Court allow discovery regarding arbitration and requested that the Court extend the briefing schedule on Travelocity’s Motion to Compel Arbitration. This Court denied Plaintiffs’ requests on April 21, 2013. Mem. Op. Apr. 24, 2013. Defendants’ Motion to Compel Arbitration is now ripe for disposition.

II.

LEGAL STANDARD

The Fifth Circuit follows a two-step procedure in determining whether to compel arbitration. Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th Cir.1996) (per curiam). First, the Court must ascertain whether the parties agreed to arbitrate the dispute at issue. Id. at 258. An agreement to arbitrate a dispute is shown where (1) there, exists between the parties a valid agreement to arbitrate, and (2) the dispute in question falls within the scope of the agreement. Id. Once the Court is satisfied that the parties agreed to arbitrate the dispute, it must then determine whether any external legal constraints foreclose arbitration of the dispute. Id. A court, “[i]n determining the contractual validity of an arbitration agreement, [applies] ordinary state-law principles that govern the formation of contracts.” Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 301 (5th Cir.2004).

III.

ANALYSIS

A. Choice of Law

As the User Agreement itself provides, its terms are governed by Texas law. Tra[718]*718velocity Mot. Compel App. (“Traveloeity App”) 13, 23, 33 (Exs. B-D). Plaintiffs do not contest the application of Texas law. See Pis.’ Opp’n Mot. Compel (“Pis.’ Opp’n”) 2 (citing Texas contract law). As such, the Court examines Texas law in determining whether there is a valid agreement to arbitrate.

B. Is the Dispute Governed by a Valid Arbitration Agreement ?

1. Is there a valid agreement to arbitrate?

Plaintiffs contend that Traveloeity has not shown that there is a valid arbitration agreement, based on their argument that Traveloeity has not shown that they assented to the agreement. Plaintiffs also argue that even if they did assent to the User Agreement, it is an unenforceable and illusory “browsewrap” agreement. The Court will address each issue in turn.

i Did Plaintiffs assent to the User Agreement?

Under Texas law, a valid contract requires an offer, acceptance, mutual assent, execution and delivery of the contract with the intent that it be mutual and binding, and consideration. Buxani v. Nussbaum, 940 S.W.2d 350, 352 (Tex.App.-San Antonio 1997, no writ); McCulley Fine Arts Gallery, Inc. v. “X” Partners, 860 S.W.2d 473, 477 (Tex.App.-El Paso 1993, no writ). The first issue in determining the validity of the arbitration agreement in this case is whether or not Plaintiffs assented to the User Agreement.

Plaintiffs assert that their contracts with Traveloeity are not valid because “Traveloeity has not submitted any transaction-specific evidence showing that any Plaintiff assented” to the User Agreement. Pis.’ Opp’n 5. The Court, however, agrees with Traveloeity that, to the extent Plaintiffs’ transactions occurred on or after February 4, 2010, Plaintiffs and all Travelocity users did assent to Travelocity’s User Agreement by clicking on a button that said “Agree and Complete Reservation.” See Traveloeity Reply Supp. Mot. Compel (“Traveloeity Reply”) at 2; Traveloeity App. 6 (Ex. A). This button was located directly above a notice explaining that, by clicking the button, the user agrees to the policies set forth in the User Agreement, which was accessible via hyperlink. See Traveloeity Reply 2; Traveloeity App. 6 (Ex. A).

Traveloeity has submitted three similar versions of their User Agreement that have been in force at different times. The first version was in force from February 4, 2010 through April 15, 2010. See Travelocity App. 8 (Ex. B). The second version was in force from April 16, 2010 through March 31, 2010. See id. at 18 (Ex. C). The current version has been in force since February 1, 2011. See id. at 28 (Ex. D). All three versions contain the same arbitration provision and class action waiver provision. Traveloeity App. 4 (Trejo Decl. 114). Thus, any Plaintiffs who made bookings on Travelocity’s website from February 4, 2010 through the present were required to assent to the User Agreement containing the arbitration clause in order to complete each transaction. Id. at ¶ 13.

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953 F. Supp. 2d 713, 2013 WL 2948086, 2013 U.S. Dist. LEXIS 84842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-online-travel-company-otc-txnd-2013.