Amazon Arbitration Clause Upheld in Canadian Court Ruling

The Supreme Court of British Columbia determined that an Amazon customer was bound by a mandatory arbitration clause and therefore could not proceed with a class action lawsuit challenging Amazon’s allegedly anticompetitive business practices.

Plaintiff John Williams says he created an Amazon account in 2015 and used his account to purchase products, including books, through the Amazon Canada Store.

John alleges in the Amazon class action lawsuit that the company has made an agreement with third party sellers not to compete for sales of new books, movies and music sold through the Buy Box on the Amazon Canada website. He says this agreement causes Amazon customers in Canada to be unlawfully overcharged.

The Amazon class action lawsuit seeks an injunction and restoration order, damages and equitable remedies for unjust enrichment.

John sought to certify the case as a class action lawsuit under the Class Proceedings Act. Proposed Class Members of the Amazon class action lawsuit include: “All persons in Canada who purchased new books, music, videos or DVDs through the Buy Box on www.amazon.ca for personal use between November 3, 2003 and the date of certification.”

In response, Amazon sought an order to stay the proceedings under the Arbitration Act because John’s claim is covered by a mandatory arbitration clause to resolve disputes between the parties.

Amazon argues that John and the putative Class members are bound by its Conditions of Use, which has a clause that requires any disputes to be resolved through binding arbitration or, for certain disputes, small claims court.

John argues that Amazon’s Conditions of Use do not provide for a binding arbitration agreement because it is not exclusive and allows customers to pursue claims in small claims court. According to the Amazon class action lawsuit, “small claims court” is not defined in the agreement and therefore the B.C. Supreme Court could qualify. He says that, by filing a civil claim in the B.C. Supreme Court, he was simply using an option that was available to him in the Arbitration Clause.

However, the judge did not find the case law that John relied upon to be applicable to his situation. In one case, the arbitration clause was disregarded because both parties reached a mutual agreement to do so. The judge said that the case does not support a proposition that one party can terminate an arbitration agreement by taking the dispute to court.

The other cases cited by John did not involve contract clauses that mandated binding arbitration and therefore did not directly apply to this case, the judge concluded.

“In my view, the Arbitration Clause in the 2014 Conditions of Use is of a fundamentally different nature than the clauses in issue in the cases cited by the plaintiff,” the judge wrote. “The Arbitration Clause provides that all disputes or claims ‘will be resolved by binding arbitration, rather than in court,’ with the exception that a claim can be filed in a small claims court if the claim qualifies.”

The judge notes that the small claims court exception is a feature of any arbitration that is governed by the AAA’s Consumer Arbitration Rules, which provide that either party can take their claim to small claims court if it falls within that court’s jurisdiction.

“The Arbitration Clause, on its clear terms, does not entitle the plaintiff to unilaterally elect to file a proposed class proceeding in B.C. Supreme Court,” the judge wrote. The judge also noted that there is no ambiguity about what is considered “small claims court” in British Columbia because its jurisdiction is defined under the Small Claims Act.

“The fact is that the plaintiff has not opted to file an action in small claims court,” the judge wrote. “The procedure he has chosen – filing a proposed class proceeding in B.C. Supreme Court – is not one permitted by the Arbitration Clause. Unless and until the plaintiff files an action in small claims court, his only option under the Clause is mandatory arbitration.”

The judge determined that John’s claims could be handled in arbitration and that doing so would not be contrary to public policy.

The judge ordered a stay in the proceedings for non-consumer claims and determined that the arbitration clause was not void or incapable of being followed.

What do you think about the Amazon Canada overcharging class action lawsuit ruling? Do you think Amazon’s arbitration clause is fair? Tell us your opinion in the comment section below!

The Amazon Canada Overcharging Class Action Lawsuit is Williams v. Amazon.com Inc., et al., Case No. S1810560, in the Supreme Court of British Columbia, Canada.

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