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Keena v. Groupon, Inc. - 192 F. Supp. 3d 630 (W.D.N.C. 2016)


The Federal Arbitration Act ("FAA") applies to provisions in a contract evidencing a transaction involving commerce. Under the FAA, agreements to arbitrate are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The Supreme Court of the United States has described the FAA as a liberal federal policy favoring arbitration and has stated that arbitration agreements must be enforced according to their terms. As a result, on a motion to compel arbitration, a court must compel arbitration if: (i) the parties have entered into a valid agreement to arbitrate, and; (ii) the dispute in question falls within the scope of the arbitration agreement.


Plaintiff Erin Keena purchased a voucher for a massage from a third-party vendor through defendant Groupon, Inc., a web-based company that provided discounted services to its customers. Before purchasing the voucher, Keena crated an account and acknowledged and accepted Groupon's "Terms of Use," including its arbitration provision, on two separate occasions. When Keena was unable to contact to vendor, she requested a refund; Groupon credited her account with "Groupon Bucks," which could only be used to make purchases on its website. Keena then filed a putative class action lawsuit against Groupon in federal district court alleging numerous causes of action, including breach of contract. Groupon filed a motion to compel arbitration or in the alternative to dismiss. Keena contended that the arbitration provision was unenforceable because it was unconscionable and illusory.


Was Groupon's arbitration provision enforceable?




The court granted Groupon's motion to compel arbitration. The court found that the Terms of Use bound the parties to settle their dispute through arbitration. Although the Terms of Use established that Illinois law governed any disputes, the Federal Arbitration Act favored strict enforcement of arbitration provisions and preempted state laws that interfered with arbitration. Thus, to the extent that Illinois law was inconsistent with the FAA, it would be preempted. Keena failed to substantiate the arguments that the arbitration provision was unenforceable on grounds it was unconscionable and illusory.

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