Jack Nelson Jones Professional Association

January 2-8, 2017

The Madison Cos., LLC v. Williams, 2016 Ark. App. 610 (December 14, 2016)

This appeal comes from the Pulaski County Circuit Court, Twelfth Division, honorable Alice Gray presiding. This case concerns the existence of an arbitration agreement.

In February 2015, Grant Williams purchased tickets online for an outdoor music festival, Thunder on the Mountain, to be held on Mulberry Mountain near Ozark, Arkansas. Williams’ alleged that Pipeline Productions, Inc. (“Pipeline”), and Backwood Enterprises, LLC (together, the “Pipeline Defendants”), and The Madison Companies, LLC (“Madison”) jointly organized and promoted the festival. In June 2015, Pipeline notified Williams the festival was canceled and refunds would be issued within 90 days. Williams subsequently filed a complaint, alleging the Pipeline Defendants and Madison violated the Arkansas Deceptive Trade Practices Act (ADTPA) by concealing a funding dispute and continuing to sell tickets despite the risk of cancellation; and that he, and other ticket holders incurred substantial damages, including making hotel reservations and other accommodation plans.

Madison filed a motion to compel arbitration. It did not produce either a contract or arbitration agreement between it and Williams. Rather, it produced an arbitration agreement from the website of Front Gate Tickets (“Front Gate”), the conduit through which all online tickets to the festival had allegedly been sold. They also attached the affidavit of David R. Lionette, a senior vice president for asset management with The Madison Companies, LLC. In his affidavit, Lionette stated that he had accessed the Front Gate Tickets Thunder on the Mountain Festival website through a Google search, where he “clicked on” a “terms of use” link and was transferred to a webpage containing Front Gate’s terms of use and terms of sale. He stated that the terms included a binding arbitration agreement. He attached a screenshot of the terms of use and terms of sale, including the arbitration agreement, to his affidavit. He then stated that, although he could not purchase tickets for the Thunder on the Mountain Festival because his search was performed months after the show had been canceled, he visited the main Front Gate Tickets’ website and accessed four other events for which he could purchase tickets. He stated that there was a prominent hyperlink for Front Gate’s terms of use at the bottom of each website for the four events. He stated that the terms of use for each event were identical and that all included arbitration agreements. He stated that a consumer could not execute a purchase until he or she affirmatively agreed to the terms of sale. He said that there was a hyperlink on the “terms of sale” language and that by clicking on the link, a consumer could view the entire terms of sale, including an arbitration agreement. He claimed that, based on his review of these websites, the arbitration agreement for each of the four events’ websites was identical to the arbitration agreement for Thunder on the Mountain Festival.

Using Mr. Lionette’s affidavit and attached screenshots and Mr. Williams’s ticket, or print pass, which included the Front Gate Tickets logo on the bottom, Madison argued that there was a valid and binding arbitration agreement between Front Gate and Mr. Williams; that language in the agreement extended the agreement to other parties; and that Mr. Williams was equitably estopped from refusing to arbitrate with appellants because he was seeking to enforce claims directly related to the contract.

At the hearing on the motion, the circuit court recognized two concerns: first, the affidavit was from an employee of a party rather than Front Gate and, second, there was nothing in the record to reflect that what the employee saw on Front Gate’s website was in place when Williams purchased his tickets ten months earlier. The circuit court then denied Madison’s motion to compel arbitration, finding no arbitration existed between the Williams and Madison. Madison appealed.

On appeal, the Court explained that when a court is asked to compel arbitration, it is limited to deciding two threshold questions: (1) Was there a valid agreement to arbitrate between the parties? and (2) If such an agreement existed, did the dispute fall within its scope? The inquiry is made in light of contract principles, in particular: (1) a court cannot make a contract for the parties, but can only construe and enforce a contract already made; and (2) a contract requires a meeting of the minds as to all terms, using objective indicators. Both parties must assent to particular terms, and, for a party to assent the term must have been effectively communicated. Finally, a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration.

Madison argued that it provided sufficient proof of an agreement to arbitrate between Front Gate Tickets and Williams. Their proof was comprised of Lionette’s affidavit and attached screenshots from Front Gate Tickets’ website. However, Williams specifically denied that he agreed to the arbitration provision attached to Lionette’s affidavit. Madison argued that “clickwrap agreements” pursuant to which a consumer must accept certain terms and conditions in order to purchase an item online have been upheld as valid and enforceable. However, the Court noted, they did not allege that they entered into an arbitration agreement with Williams, nor did they allege that they were in any manner affiliated with Front Gate Tickets. Indeed, they have alleged that they had “absolutely nothing to do with the promotion, sales, or marketing of tickets to Thunder Mountain Festival” and merely loaned money to Pipeline. They attempted to prove Front Gate’s operations, procedures, and processes by their own employee’s affidavit. This employee was a vice president for Madison who conducted internet searches on Front Gate’s website for events unrelated to Thunder on the Mountain. And, with no evidence provided by Front Gate Tickets and without being a party to any agreement, Madison attempted to argue that an arbitration agreement allegedly entered into by Williams and Front Gate Tickets was specifically intended to apply to appellants.

The Court concluded that this was simply insufficient to prove that an arbitration agreement was effectively communicated to Williams or that he assented to its terms. Screenshots obtained by the employee of a party unconnected with Front Gate ten months after Mr. Williams purchased his ticket was not sufficiently specific to demonstrate effective communication of Front Gate’s arbitration agreement to Mr. Williams. Although Mr. Williams’s print pass did contain a reference to Pipeline’s terms of use—specifically stating that it is “subject to Pipeline Ticketing’s Terms of Use, Terms of Ticket Sales and Terms of PrintPass Sales, each available at www.pipelineproductions.com”—it did not refer to terms of use for Front Gate. A Front Gate Tickets logo appeared on the bottom of the ticket, but there was no other information regarding Front Gate. Affirmed.