Arbitrability and the Nexus Requirement in Online Contracts: A New Precedent on Antitrust Claims: 2d Cir.

Introduction

This commentary reviews the recent decision in Mariam Davitashvili and Adam Bensimon, individually and on behalf of all others similarly situated, et al. v. Grubhub Inc., Postmates Inc., and Uber Technologies, Inc. rendered by the United States Court of Appeals for the Second Circuit on March 13, 2025. The case involves a putative antitrust class action challenging the enforceability of arbitration clauses contained in the online platforms’ Terms of Use.

The core dispute arises from allegations that the defendants, through so‐called no-price competition clauses (NPCCs) in their contracts with restaurants, artificially inflated meal prices for consumers. The Defendants moved to compel arbitration based on the arbitration clauses found in their digital interfaces, while the Plaintiffs challenged both the formation and the scope of those clauses – asserting that their claims lacked the requisite “nexus” to the contractual relationship. The appeal focuses on salient questions such as: whether an agreement to arbitrate was formed, who (the court or an arbitrator) should decide the arbitrability issue, and whether the specific claims at issue fall within the scope of the arbitration clauses.

Summary of the Judgment

The Second Circuit Court delivered a split decision that:

Affirmed in Part: It held that the threshold question of arbitrability in the dispute involving Grubhub is to be resolved by the court; specifically, Grubhub’s arbitration clause does not apply to Plaintiffs’ antitrust claims because those claims do not arise out of the contract.
Reversed in Part: It reversed the District Court’s finding that Grubhub failed to establish an agreement to arbitrate with the Plaintiffs.
Remanded: The case is remanded for further proceedings – with the disclaimer that questions concerning arbitrability with respect to Uber and Postmates be resolved by an arbitrator, as their Terms of Use delegate such questions to the arbitrator.

In addition, the Court’s opinion was accompanied by concurring and dissenting opinions that further elucidated the delicate balance between enforcing mandatory arbitration and ensuring that the claims have sufficient causal connection (nexus) to the underlying contract.

Analysis

Precedents Cited

The decision leans heavily on several important precedents, including:

AT&T Mobility LLC v. Concepcion – the Court reiterated the principle that arbitration agreements are to be rigorously enforced according to their terms.
Epic Sys. Corp. v. Lewis and Rent-A-Center, W., Inc. v. Jackson – these cases underscore the federal policy favoring arbitration under the Federal Arbitration Act (FAA).
Nicosia v. Amazon.com, Inc. and Meyer v. Uber Technologies, Inc. – these opinions form the backbone of the inquiry into whether online interfaces provide sufficient inquiry notice, especially in the context of shifting platforms and complex contract formations.
Gingras v. Think Fin., Inc. – provided guidance on the delegation of arbitrability questions and reinforced that a clear delegation clause should be respected.

The Court’s reliance on these cases demonstrates an adherence to established principles of contract formation and arbitration while adjusting for the digital context, emphasizing the need for clarity, notice, and direct connection between the contractual transaction and the judicial claims.

Legal Reasoning

The Court’s opinion meticulously breaks down the following core issues:

Formation of the Arbitration Agreement: The Court applied ordinary state-law principles, particularly those under New York law, to determine that Plaintiffs did, in fact, assent to the defamation of the arbitration clauses by their use of the platforms. The evaluation focused on the design and prominent placement of the arbitration clauses within Grubhub’s and other Defendants’ mobile and web interfaces.
Arbitrability and Delegation of Authority: The decision carefully distinguishes between issues that should be decided by the court versus those for an arbitrator. In Grubhub’s case, the arbitration clause unequivocally reserves to the court questions of its own arbitrability, whereas for Uber and Postmates, where the Terms of Use delegate arbitrability to an arbitrator, the Court defers accordingly.
Scope of the Arbitration Clause: A pivotal point in the legal reasoning was whether Plaintiffs’ antitrust claims fell within the ambit of the arbitration agreement. The Court found that while the agreement broadly covers disputes related to “access and use” of the platform, the antitrust claims against Grubhub were too remote – lacking the necessary causal relationship – and therefore did not “arise out of” the contract.

Impact

The ruling establishes important limits on the enforcement of arbitration clauses in online contracts. Its implications include:

Clarification on Arbitrability: The decision clarifies that even where a customer has ostensibly assented to an arbitration clause through reasonable notice provided by digital interfaces, the arbitration clause’s scope is limited to disputes that have a direct nexus to the contractual relationship.
Separation of Court and Arbitrator Roles: By segregating the arbitrability inquiries – assigning the court its role in certain instances and deferring to an arbitrator in others – the Court reaffirms the principle that the scope and validity of arbitration agreements must be strictly construed.
Future Litigation and Legislative Policy: This Opinion will undoubtedly influence future antitrust challenges against online platforms. It sets a precedent that mandatory arbitration clauses cannot be overextended to cover disputes that are not tightly bound to the underlying transaction, thereby protecting consumers from being forced into arbitration for claims unrelated to their direct contractual use.

Complex Concepts Simplified

The Judgment invokes several potentially complex legal constructs. Below, these are explained in plain language:

Arbitrability: This is the issue of whether a particular dispute can be resolved through arbitration based on an existing agreement. The court must determine if the dispute “arises out of” the contract that contains the arbitration clause.
Nexus Requirement: This concept refers to the necessary connection between the underlying contract and the dispute at hand. If the dispute does not have a clear, causal relationship with the transaction (for example, a generalized antitrust claim unlinked to a direct contractual relationship), then the arbitration clause may not apply.
Delegation Clause: Some online contracts explicitly state who should resolve disputes regarding the scope and validity of the arbitration clause. In this case, the Grubhub Terms of Use reserve that the court, not an arbitrator, should decide arbitrability for Grubhub, while for Uber and Postmates, the arbitrator is empowered.
Inquiry Notice: This is the legal standard whereby a user is considered to have notice of a contract term if the term is clear, conspicuous, and presented in such a way that a reasonable person would understand that by proceeding, they are agreeing to such terms.

By breaking down these definitions, the Judgment demonstrates that even a seemingly routine online clickwrap agreement is subject to stringent legal scrutiny, especially when applied to significant claims such as those under antitrust law.

Conclusion

In summary, this Landmark decision reinforces the principle that not all disputes can be forced into arbitration simply due to the existence of an arbitration clause. The Court’s detailed analysis confirms:

That Plaintiffs did in fact assent to the Terms of Use of the respective platforms, thereby establishing an agreement to arbitrate in principle.
That the question of arbitrability must be dissected according to which party’s Terms of Use are at issue – with Grubhub’s case being resolved by the courts due to explicit contractual language, and Uber’s and Postmates’ claims delegated to the arbitrator.
That a crucial “nexus” requirement exists, ensuring that only claims directly arising from the contractual relationship fall within the ambit of the arbitration agreement.

This Judgment is significant for its balanced approach in enforcing arbitration agreements within online consumer contracts. It promotes consumer protection by limiting the scope of mandatory arbitration and ensures that courts do not compel arbitration for disputes that are too far removed from the original contractual transaction. With its nuanced treatment of digital contract formation and contractual delegation clauses, the decision sets a precedent that will influence upcoming cases and legislative debates regarding online dispute resolution.

Overall, the decision is a critical contribution to the evolving jurisprudence on arbitration in the digital age. As online merchants and consumers continue to navigate the complexities of digital contract formation, this ruling serves as an instructive guide on the boundaries of enforcing broad arbitration clauses in antitrust and other consequential claims.

Arbitrability and the Nexus Requirement in Online Contracts: A New Precedent on Antitrust Claims