Notice of Mandatory Arbitration Disputed

Kass v. PayPal presents the issue whether plaintiff agreed to mandatory arbitration. No 22-2575, United States Court of Appeals, Seventh Circuit, July 27, 2023.

Plaintiff Terry Kass filed a lawsuit in federal court alleging defendant PayPal mishandled charitable donations she made through PayPal.

PayPal moved to compel arbitration arguing it amended its User Agreement requiring mandatory arbitration of disputes by posting a notice of the amendment on its website and emailing a copy of the amendment to its User Agreement to all users. PayPal submitted an affidavit that Kass “would have been” within the group of PayPal account holders to whom the amendment e-mail was sent.

Kass denied ever receiving the alleged email.

The district court granted PayPal’s motion to compel arbitration. The matter went to arbitration and Kass lost. The district court affirmed the arbitrator’s decision in favor of PayPal.

Kass appealed repeating her denial she received or knew about the amendment to the User Agreement and therefore was not bound by amendment mandating arbitration.

PayPal relied on the “mailbox rule” that where a communication is shown to have been property sent, Illinois law presumes it was received.

The 7th circuit panel held the mailbox rule presumption is not conclusive rather merely a presumption of receipt and Kass’ denial of receipt rebutted the presumption of receipt creating a genuine dispute of material fact to be resolved by trial. The court vacated the judgment in favor of PayPal and remanded the case for trial on the issue whether there was an agreement to arbitrate.