FAA “Nexus” Limits Platform Arbitration: Antitrust Claims Not Arbitrable Absent a Contractual Connection; Delegation Clauses Must Be Specifically Challenged

I. Introduction

In Davitashvili v. Grubhub (2d Cir. Mar. 13, 2025), restaurant customers brought a putative antitrust class action against Grubhub Inc., Postmates Inc., and Uber Technologies, Inc. (collectively, “Defendants”). Plaintiffs alleged that Defendants used “no-price competition clauses” (“NPCCs”) in agreements with restaurants—requiring restaurants not to offer lower prices off-platform—thereby inflating prices in violation of Section 1 of the Sherman Antitrust Act of 1890 and state analogues.

Defendants moved to compel arbitration based on arbitration provisions in their respective online Terms of Use. The appeal presented three recurring FAA issues in a modern “app/web checkout” setting:

  1. Formation: Did customers assent to the arbitration agreement (especially Grubhub’s)?
  2. Who decides arbitrability: Court or arbitrator?
  3. Scope/nexus: Do the antitrust claims fall within the arbitration clause’s coverage?

The Second Circuit’s answer is mixed: it largely vindicates online assent doctrines and delegation clauses, but sharply limits Grubhub’s ability to channel broad antitrust claims into arbitration where the claims lack a meaningful connection to the consumer platform contract.

II. Summary of the Opinion

  • Agreement formed (formation): The Court held Plaintiffs assented to Grubhub’s Terms of Use (reversing the District Court on that point), applying inquiry-notice principles to Grubhub’s app and web checkout interfaces.
  • Arbitrability decisionmaker:
    • Grubhub: The court decides arbitrability because Grubhub’s clause expressly assigns “scope, validity, and enforceability” issues to a court.
    • Uber/Postmates: The arbitrator decides arbitrability because Plaintiffs did not specifically and adequately challenge the delegation clause.
  • Scope: Grubhub’s arbitration clause does not apply to Plaintiffs’ antitrust claims because the claims do not “arise out of” or have the requisite “nexus” to Plaintiffs’ individualized platform use or the Terms of Use.
  • Disposition: Affirmed in part, reversed in part, and remanded—Grubhub stays in court on the merits; Uber/Postmates go to an arbitrator to decide arbitrability.

III. Analysis

A. Precedents Cited

1. FAA framework and “arbitration is a matter of contract”

The Court grounded its analysis in the FAA’s contract-centric architecture: AT&T Mobility LLC v. Concepcion (FAA embodies both a pro-arbitration policy and the principle that arbitration is contractual), Epic Sys. Corp. v. Lewis and Rent-A-Center, W., Inc. v. Jackson (courts must enforce chosen arbitration procedures and treat arbitration agreements like other contracts), and Am. Express Co. v. Italian Colors Rest. (agreements must be enforced according to their terms).

The decision’s posture and standard of review are consistent with Lloyd v. J.P. Morgan Chase & Co. (de novo review of denial of a motion to compel arbitration).

2. Contract formation and online assent (inquiry notice)

For formation, the Court applied “ordinary state-law principles” per First Options of Chi., Inc. v. Kaplan and used the summary-judgment-like evidentiary approach described in Nicosia v. Amazon.com, Inc.. The Court reiterated that the movant bears the initial burden under Zachman v. Hudson Valley Fed. Credit Union.

On online inquiry notice, the Court leaned heavily on the Second Circuit’s modern “interface design” line: Starke v. SquareTrade, Inc. (inquiry notice where terms are obvious/called to attention; clarity and conspicuousness are central), Meyer v. Uber Techs., Inc. (spatial/temporal coupling; clear language connecting action to assent), and Schnabel v. Trilegiant Corp. (temporal coupling and timing of notice).

These cases collectively supplied the Court’s checklist—hyperlink proximity to the “place order” button, whether the notice appears on the same screen, and whether the assent language is unambiguous—leading the panel to conclude that Grubhub’s “By placing your order, you agree” language and placement mirrored the enforceable design in Meyer v. Uber Techs., Inc., while being meaningfully less cluttered than the problematic interface in Nicosia v. Amazon.com, Inc..

3. Who decides arbitrability (delegation clauses)

The Court’s arbitrability sequencing followed Coinbase, Inc. v. Suski, which frames the threshold inquiries: whether an agreement to arbitrate exists, who decides arbitrability, and then whether the clause covers the dispute and is enforceable.

The presumption that courts decide arbitrability absent “clear and unmistakable evidence” derives from First Options of Chi., Inc. v. Kaplan, and the Court noted the general presumption that arbitrability is for courts, consistent with BG Grp., PLC v. Republic of Argentina.

For delegation by reference, the Court invoked Contec Corp. v. Remote Sol., Co. (incorporation of rules empowering arbitrators can be “clear and unmistakable” evidence). For the critical limit—courts must enforce delegation clauses unless the delegation itself is specifically challenged—the Court relied on Henry Schein, Inc. v. Archer & White Sales, Inc. and Rent-A-Center, W., Inc. v. Jackson.

Plaintiffs’ failure to mount a developed, specific challenge to Uber/Postmates’ delegation clause was reinforced by waiver/forfeiture principles: City of New York v. Mickalis Pawn Shop, LLC (arguments only in footnotes are not adequately raised) and Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist. (issues must be sufficiently argued).

Finally, the Court distinguished Gingras v. Think Fin., Inc., where a targeted attack on the delegation mechanism (alleged “sham” arbitral forum) was sufficient to keep arbitrability with the court. Here, Plaintiffs challenged arbitration generally, not why an arbitrator deciding arbitrability would be unconscionable.

4. Scope and the FAA’s “arising out of” nexus

The Court’s scope analysis emphasized that coverage turns on facts alleged, not labels, citing Specht v. Netscape Commc'ns Corp. (quoting Genesco, Inc. v. T. Kakiuchi & Co.).

It then read the FAA’s “arising out of” language as imposing a causal/nexus limitation, citing Viking River Cruises, Inc. v. Moriana (noting “arising out of” typically denotes causal relationship). As an application point, the Court relied on Cooper v. Ruane Cunnif & Goldfarb Inc., where ERISA claims were not arbitrable under an employment agreement because non-employees could have brought identical claims—demonstrating the claims’ independence from the contractual relationship.

5. Concurring and dissenting authorities as signals of future disputes

Judge Pérez’s concurrence situated the decision within broader FAA doctrine, citing Morgan v. Sundance, Inc. (FAA makes arbitration agreements as enforceable as other contracts, not more so), Prima Paint Corp. v. Flood & Conklin Mfg. Co., Doctor's Assocs., Inc. v. Casarotto (generally applicable contract defenses), and examples from the Second Circuit’s notice jurisprudence such as Soliman v. Subway Franchisee Advert. Fund Tr., Ltd. and Edmundson v. Klarna, Inc.. The concurrence also referenced Cedeno v. Sasson to highlight substantive limits on enforcing arbitration agreements that waive statutory remedies.

Judge Sullivan’s partial dissent framed the nexus inquiry with out-of-circuit and district court examples: Revitch v. DIRECTV, LLC, McFarlane v. Altice USA, Inc., and Calderon v. Sixt Rent a Car, LLC, and invoked the pro-arbitration presumption of Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. and KPMG LLP v. Cocchi. The dissent thus previews a likely fault line: how “market power” theories interact with “arising out of” language in consumer platform contracts.

B. Legal Reasoning

1. Formation: inquiry notice in the checkout flow

The Court treated the Grubhub interface question as a classic inquiry-notice problem: even absent actual notice, a user is bound if terms are presented clearly and conspicuously and assent is manifested by conduct. Applying Starke v. SquareTrade, Inc. and Meyer v. Uber Techs., Inc., the Court credited (i) hyperlink proximity to the order button (spatial coupling), (ii) presentation at the moment of purchase (temporal coupling), and (iii) unambiguous assent language (“By placing your order, you agree”).

The web interface was closer to the line, but the panel distinguished Nicosia v. Amazon.com, Inc. on clutter and maintained that the notice-and-link placement was sufficient. This is an important reinforcement that enforceability depends not on magic words but on a totality-of-design evaluation.

2. Delegation: the “specific challenge” requirement has real bite

The Court enforced the distinction drawn by Rent-A-Center, W., Inc. v. Jackson and Henry Schein, Inc. v. Archer & White Sales, Inc.: a party cannot avoid a delegation clause by attacking arbitration in general; it must challenge the delegation provision itself. Plaintiffs’ relegation of unconscionability to a footnote, without developed argument, failed both preservation principles and the substantive “specificity” standard.

The Court’s contrast to Gingras v. Think Fin., Inc. underscores what “specificity” looks like: alleging the delegation device is part of a rigged or fraudulent mechanism for deciding arbitrability (not merely that arbitration is undesirable or burdensome).

3. Scope: “arising out of” is not “anything involving the defendant”

The central doctrinal move is the panel’s insistence that even broad arbitration language must be tethered to the contractual relationship contemplated by the FAA. Although Grubhub’s clause purported to sweep in disputes that “in any way relate” to platform use or the “relationship,” the Court treated Plaintiffs’ claims as functionally independent: NPCC-induced price effects were alleged to raise prices across restaurants and platforms, including for consumers who never used Grubhub.

The Cooper v. Ruane Cunnif & Goldfarb Inc. analogy did the heavy lifting: where the same claim could be brought by someone outside the contractual relationship, that is strong evidence the claim does not “arise out of” that relationship in the relevant sense. The Court also rejected as “speculative” and “attenuated” the idea that a plaintiff’s platform usage—by increasing market share—creates the needed causal link.

The upshot is a meaningful constraint on drafting-by-breadth: describing a “Dispute” as having “the broadest possible meaning” does not eliminate the FAA’s requirement that the controversy be tied to the contract/transaction.

C. Impact

1. For consumer platforms and arbitration drafting

  • Interface design remains dispositive: The decision reinforces that enforceable “browsewrap/clickwrap-like” flows depend on conspicuous, proximate, and timely notice—continuing the practical influence of Meyer v. Uber Techs., Inc. while keeping Nicosia v. Amazon.com, Inc. as a cautionary boundary.
  • Delegation clauses will be enforced: Parties seeking to keep arbitrability in court must mount a developed, targeted challenge to the delegation clause, not simply argue that arbitration is unfair. This likely increases the frequency of early, clause-specific unconscionability/fraud pleadings where plausible.

2. For antitrust and other “marketwide” statutory claims

The most significant forward-looking consequence is the Court’s embrace of a robust nexus concept for scope: statutory claims alleging marketwide harm may resist arbitration where the factual theory does not depend on the plaintiff’s individual use of the platform contract and where similarly situated non-users could assert the same injury.

This reasoning invites future litigation over how to characterize “nexus” when plaintiffs themselves plead that platform usage contributed to market power. Judge Sullivan’s dissent shows an alternative framing: if the complaint ties anticompetitive power to user adoption, the claims may “arise out of” platform use. That disagreement may shape how antitrust complaints are drafted and how courts parse causation versus background conditions.

IV. Complex Concepts Simplified

  • Arbitrability: The threshold question whether the dispute must be arbitrated at all (i.e., whether the arbitration clause covers the claim).
  • Delegation clause: A contract term that assigns the arbitrability decision to the arbitrator rather than the court. Under Rent-A-Center, W., Inc. v. Jackson, to avoid delegation a party must specifically challenge the delegation provision itself.
  • Inquiry notice: Even if a user did not actually read terms, they can be bound if the interface made the terms reasonably noticeable and the user took an action (like placing an order) that a reasonable person would understand as assent.
  • Spatial and temporal coupling: Design factors from Meyer v. Uber Techs., Inc.—whether the terms link appears near the assent button (spatial) and at the moment the user acts (temporal).
  • FAA “arising out of” / nexus: The idea that the FAA compels arbitration only for disputes sufficiently connected to the contract/transaction containing the arbitration clause; courts may reject attempts to arbitrate claims that are merely associated with the defendant but not meaningfully tied to the agreement.

V. Conclusion

Davitashvili v. Grubhub reinforces three practical rules. First, online assent stands or falls on interface clarity and conspicuousness, following Meyer v. Uber Techs., Inc. and related Second Circuit notice cases. Second, delegation clauses are powerful: unless a plaintiff specifically and adequately challenges the delegation provision, arbitrability goes to the arbitrator. Third—and most novel in effect—the Court treats the FAA’s “arising out of” requirement as a real limiting principle: even extremely broad arbitration language will not reach statutory claims, like these antitrust allegations, that lack a meaningful nexus to the consumer’s platform contract and individualized use.