Judge McMahon Rules Outside Counsel’s Pre-Suit Download of Online Dating App Does Not Bind Party to Arbitration Agreement

Patterson Belknap Webb & Tyler LLP

Patterson Belknap Webb & Tyler LLP

On December 15, 2020, U.S. District Judge Colleen McMahon (S.D.N.Y.) denied plaintiff Perry Street Software, Inc.’s (“Perry Street”) motion to compel arbitration of defendant Jedi Technologies, Inc. (“Jedi”) patent infringement counterclaim. 

Perry Street makes mobile applications, including online dating apps Scruff and Jack’d.  In May 2020, Jedi, the owner of U.S. Patent No. 10,164,918 (the “’918 Patent”), alleged that Perry Street’s Scruff app infringed the ’918 Patent.  In June 2020, Perry Street sued Jedi, seeking a declaratory judgment that the Scruff app did not infringe the ’918 Patent, and later amended its complaint seeking to compel arbitration based on evidence that Jedi’s attorney’s downloaded the Scruff app and agreed to the associated terms of service.  Jedi filed a motion for a preliminary injunction enjoining or staying arbitration, and soon thereafter Perry Street filed a motion to compel arbitration.

On October 14, 2020, the court granted Jedi’s motion for a preliminary injunction but reserved decision on Perry Street’s motion to compel arbitration, reasoning that it mattered “what Jedi’s lawyer did and why he did it.”  Jedi’s counsel affirmed, in a written submission and later at his deposition, that he downloaded and used the Scruff app of his own accord, as opposed to on behalf of Jedi, and solely as part of his Rule 11 pre-filing investigation obligations. 

Based in large part on this testimony, the court denied Perry Street’s motion to compel arbitration.  Judge McMahon explained that arbitration would be appropriate only if Perry Street and Jedi had entered into a valid agreement to arbitrate their disputes.  Without evidence that Jedi knowingly agreed to the Scruff app’s terms of service, or “provided clear authority (either actual or apparent) to [its counsel] to bind it” to those terms of service, the court held that Jedi could not be compelled to arbitrate its dispute.  The Court also noted that the fact that Jedi’s counsel signed up for the app using his personal email address, on his personal phone, and using a picture of himself all supported that he did not sign up for the app with the intent or authority to bind Jedi to any arbitration agreement.

Case:  Perry Street Software, Inc. v. Jedi Techs., Inc., 20-CV-4539 (S.D.N.Y.).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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