Brown et al v. WalMart, Inc.

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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
LAURIE BROWN; OLUWAKEMI FOSUDO;
and ABIGAIL MUSICK 	PLAINTIFFS
V. 	CASE NO. 5:24-CV-5144
WALMART, INC. 	DEFENDANT
OPINION AND ORDER
Now before the Court is Defendant Walmart’s Motion to Compel Arbitration (Doc.
25), Plaintiffs’ Response in Opposition (Doc. 33), Walmart’s Reply (Doc. 37), and
Plaintiffs’ Sur-Reply (Doc. 40). For the following reasons, Walmart’s Motion to Compel
Arbitration is GRANTED.
The parties agree that an enforceable arbitration agreement exists but disagree
whether it applies to Plaintiffs’ claims. Therefore, the first question the Court must resolve
is who decides whether Plaintiffs’ claims are arbitrable, the Court or the arbitrator.
Walmart contends that the arbitration agreement delegates the question of arbitrability to
the arbitrator. Plaintiffs respond that such delegation does not apply to their claims
because they are specifically excluded from the arbitration agreement.
Plaintiffs in this case purchased video materials on Walmart.com. They allege that
Walmart systematically transmits its customers’ video viewing information to a third party,
Meta, via a program on Walmart’s website called “Meta Pixel,” which links a Walmart.com
user’s video purchase history to their Facebook account. This, Plaintiffs allege, violates
the Video Privacy Protection Act, which makes a “video tape service provider” liable for
“actual damages but not less than liquidated damages in an amount of $2,500” if the
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provider 	“knowingly 	discloses, 	to 	any 	person, 	personally 	identifiable 	information
concerning any consumer of such provider.” 18 U.S.C. § 2710(b)–(c).
Before making a purchase on Walmart.com, the user must agree to Walmart’s
Terms of Use (“TOU”). The TOU contains an “Arbitration Agreement” which provides as
follows:
EXCEPT FOR DISPUTES THAT QUALIFY FOR SMALL CLAIMS COURT,
YOU AGREE THAT ALL DISPUTES ARISING OUT OF OR RELATED TO
THESE TERMS OF USE OR ANY ASPECT OF THE RELATIONSHIP
BETWEEN YOU AND WALMART, INCLUDING ANY PRODUCTS OR
SERVICES OFFERED OR SOLD BY WALMART OR THE WALMART
ENTITIES, 	WHETHER 	BASED 	IN 	CONTRACT, 	TORT, 	STATUTE,
FRAUD, MISREPRESENTATION, OR ANY OTHER LEGAL THEORY,
WILL BE RESOLVED THROUGH FINAL AND BINDING ARBITRATION
BEFORE A SINGLE NEUTRAL ARBITRATOR INSTEAD OF IN A COURT
BY A JUDGE OR JURY. EXCEPT AS OTHERWISE PROVIDED IN THESE
TERMS OF USE, YOU AND WALMART AGREE THAT EACH IS WAIVING
THE RIGHT TO SUE IN COURT AND TO HAVE A TRIAL BY A JURY.
(Doc. 26, ¶ 20.1). The TOU further provide that “The arbitration will be administered by
the AAA [American Arbitration Association] pursuant to the current AAA Consumer
Arbitration Rules, except to the extent modified by these Terms of Use. The AAA rules
and instructions are available on the AAA website at www.adr.org/consumer.” Id. at
¶ 20.4.
The AAA rules state that “The arbitrator shall have the power to rule on his or her
own jurisdiction, including any objections with respect to the existence, scope, or validity
of the arbitration agreement or to the arbitrability of any claim or counterclaim.” Consumer
Arbitration 	Rules, 	Am. 	Arb. 	Ass’n, 	R-14(a) 	(effective 	Sept. 	1, 	2014),
https://www.adr.org/sites/default/files/Consumer-Rules-Web_0.pdf
[https://perma.cc/T57T-JCTF].
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Under the Federal Arbitration Act, 9 U.S.C. §§ 1–16, “arbitration is a matter of
contract, and courts must enforce arbitration contracts according to their terms.” Henry
Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 67 (2019). Parties can contract
to arbitrate “‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed
to arbitrate or whether their agreement covers a particular controversy.” Id. at 68 (internal
quotation marks omitted) (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69
(2010)).
Interpretation of arbitration agreements is generally a matter of state law. First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). However, “courts should
not assume that the parties agreed to arbitrate arbitrability unless there is ‘clear and
unmistakable’ evidence that they did so.” Id. (cleaned up) (quoting AT&T Techs., Inc. v.
Commc'ns Workers of Am., 475 U.S. 643, 649 (1986)). The Arkansas Supreme Court has
held that the incorporation of the AAA Rules in a broadly worded arbitration provision
“manifests a clear and unmistakable intent to arbitrate the questions of arbitrability.” HPD,
LLC v. TETRA Techs., Inc., 2012 Ark. 408, at 11 (2012).
Plaintiffs argue that their claims do not fall within the arbitration agreement
because they qualify for small claims court, and such claims are specifically excluded
from the arbitration agreement. Because, on Plaintiffs’ reading, these claims do not fall
within the arbitration agreement at all, the provision incorporating the AAA Rules,
including the AAA’s delegation rule, does not apply to them. Plaintiffs point to Horton v.
Dow Jones & Co., Inc., 2019 WL 952314 (S.D.N.Y. Feb. 27, 2019), aff'd, 804 F. App'x 81
(2d Cir. 2020). There, the court found that Plaintiffs claims, which qualified for small claims
court, were not arbitrable under an arbitration agreement similar to the one here.
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However, the court did not address the threshold question of who decides arbitrability,
perhaps because the agreement did not have a provision addressing that question. Here,
however, there is a delegation provision in the Agreement that the Court cannot simply
ignore.
Even assuming that Plaintiffs’ claims fall within the small claims exception,
[w]hen the parties' contract delegates the arbitrability question to an
arbitrator, a court may not override the contract. In those circumstances, a
court possesses no power to decide the arbitrability issue. That is true even
if the court thinks that the argument that the arbitration agreement applies
to a particular dispute is wholly groundless.
Henry Schein, 586 U.S. at 68. Here, under Arkansas law, the parties have manifested a
clear and unmistakable intent to delegate the question of arbitrability, “including any
objections with respect to . . . the arbitrability of any claim.” Consumer Arbitration Rules,
Am. Arb. Ass’n, R-14(a).
IT 	IS 	THEREFORE 	ORDERED 	that 	the 	parties 	are 	COMPELLED 	TO
ARBITRATION. The Court declines to enter a formal stay of these proceedings. Instead,
the Clerk of Court is DIRECTED TO ADMINISTRATIVELY TERMINATE THE CASE, and
the parties may move to reopen it if further action of the Court is required after arbitration
has been concluded.
IT IS SO ORDERED on this 31st day of January, 2025.
______________________________
TIMOTHY L. BROOKS
UNITED STATES DISTRICT JUDGE
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