Scotti v Tough Mudder Inc.

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[*1] Scotti v Tough Mudder Inc. 2019 NY Slip Op 29098 Decided on March 29, 2019 Supreme Court, Kings County Silber, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on March 29, 2019
Supreme Court, Kings County

Richard E. Scotti and Joseph Russo, Plaintiffs,

against

Tough Mudder Incorporated and Tough Mudder Event Production Incorporated, Defendants.



522905/17



Plaintiffs were represented by Brandon Michael Cruz THE BONGIORNO LAW FIRM, PLLC. Address: 1415 Kellum Place, Ste. 205, Garden City, NY 11530 Phone: 516-741-4170

Defendants were represented by Joshua Cash WILSON ELSER MOSKOWITZ EDELMAN & DICKER LLP Address: 150 East 42nd Street, New York, NY 10017 Phone: 212-915-5812
Debra Silber, J.

The following papers numbered 1 to 5 read herein: Papers Numbered



Notice of Motion/Order to Show Cause/

Petition/Cross Motion and

Affidavits (Affirmations) Annexed 1-3

Opposing Affidavits (Affirmations) 4

Reply Affidavits (Affirmations) 5

Affidavit (Affirmation) ________

Other Papers _______

Upon the foregoing papers, defendants Tough Mudder Incorporated and Tough Mudder Event Production Incorporated move for an order, pursuant to CPLR 7501 and 7503(a), to compel arbitration and to stay this action pending resolution of the arbitration proceeding. For the reasons which follow, the motion is denied.



Background and Procedural History

This personal injury action stems from an accident which occurred on July 23, 2016, when the plaintiffs Richard E. Scotti (Scotti) and Joseph Russo (Russo) (collectively, plaintiffs) participated in the "Tough Mudder," a physically challenging obstacle course event (hereinafter, the TM Event), which took place at 1303 Round Swamp Road, Old Bethpage, New York. Defendants Tough Mudder Incorporated and [*2]Tough Mudder Event Production Incorporated (collectively, "Tough Mudder") are the business entities that organized the TM Event. Plaintiffs commenced the within action on or about November 17, 2017 against Tough Mudder alleging that they each sustained injuries as a result of defendants' negligent operation of an activity at the event, referred to as the "salmon ladder." Tough Mudder joined issue on or about December 20, 2017, with the service of a Verified Answer. In their answer, Tough Mudder denied all material allegations and asserted various affirmative defenses, including that the plaintiffs' action is barred by the participation/ registration agreement, which included an arbitration clause.

Tough Mudder now moves, pursuant to CPLR 7501 and 7503, to compel arbitration, arguing that the plaintiffs are barred from pursuing the instant action in this Court because they each waived the right to sue by virtue of agreeing to arbitrate any "disputes, controversies, or claims" arising out of their participation in the TM event. Tough Mudder claims that the plaintiffs each entered into an agreement to arbitrate all claims related to their participation in the TM Event when they completed an on-line internet registration form. In support of this contention, Tough Mudder has submitted the sworn affidavit of Jenna Best, the Manager of Customer Relations for Tough Mudder Incorporated (Affirmation of Joshua Cash, Exhibit C). Best avers that she is fully familiar with the TM Event on-line registration process as it existed in 2016 when the plaintiffs registered for the TM Event at issue.[FN1] Tough Mudder has submitted copies of the on-line registration forms that the plaintiffs allegedly completed for the TM Event (Cash Affirmation, Exhibit D). Best states that, during the on-line registration process, the plaintiffs were required to scroll down to a section containing the "Participant Waiver and Course Rules" (hereinafter, PWCR), a document version of which has been submitted herein (Cash Affirmation, Exhibit F). She contends that the full text of the PWCR was contained in a box on the screen, which could be read by scrolling down in the text box. Best contends that the initial visible content of the scrollable box, which preceded the full PWCR document, which could be read in its entirety by scrolling down, read as follows:

"Participant Waiver: Tough Mudder IncorporatedASSUMPTION OF RISK, WAIVER OF LIABILITY, AND INDEMNITYAGREEMENTPARTICIPANTS: READ THIS DOCUMENT CAREFULLY BEFOREACCEPTING. THIS DOCUMENT HAS LEGAL CONSEQUENCES ANDWILL AFFECT YOUR LEGAL RIGHTS AND WILL ELIMINATE YOURABILITY TO BRING FUTURE LEGAL ACTIONS. (Cash Affirmation, Exhibit E).

Best claims the PWCR contained the following "Mediation and Arbitration" provision:

Mediation and Arbitration: In the event of a legal issue, I agree to engage in good faith efforts to mediate any dispute that might arise. Any agreement reached will be formalized by a written contractual agreement at that time. Should the issue not be resolved by mediation, I agree that all disputes, controversies, or claims arising out of my participation in the TM event shall be submitted to binding arbitration in accordance with the applicable rules of the American Arbitration Association then in effect. The costs of such action shall be shared equally by the parties. I further acknowledge and agree that any question, issue or dispute as to the arbitrability of any dispute, controversy, or claim arising out of my participation in the TM event, will be submitted to an arbitrator in accordance with the applicable rules of the American Arbitration Association then in effect. The Arbitration Rules of the American Arbitration Association are available on-line at www.adr.org (Cash Affirmation, Exhibit F).

Below the box containing the scrollable PWCR was another box next to the statement: "I agree to the above waiver." Best avers that it was necessary for the plaintiffs, or any other registrant, to click on the box to indicate his or her consent to the PWCR in order for the registrant to complete his or her registration for the TM Event. According to Best, the internet registration form cannot proceed to the payment page, and registration cannot be completed, until the registrant checks the box indicating his or her consent to the PWCR (Cash Affirmation, Exhibit D at ¶ 5). She further avers that both plaintiffs did in fact click on the box indicating their consent to the PWCR, as otherwise they would not have been able to participate in the TM Event (id at ¶ 6). Based upon the foregoing, Tough Mudder contends that the plaintiffs agreed to the terms of the on-line waiver, which included the arbitration clause and, therefore, are barred from pursuing the instant action.

In opposition, plaintiffs argue that the arbitration provision at issue is unenforceable because Tough Mudder has failed to establish that they actually agreed to it. In this regard, plaintiffs point out that the web page where the PWCR was located contained a text box that did not show the entire document. In order to read the full PWCR, including the arbitration provision, plaintiffs contend it would have been necessary to scroll down through many screens of text using the arrows on the right-hand side of the text box. The PWCR fills seven single-spaced pages of text (Exhibit F to Cash Affirmation). Plaintiffs further argue that Tough Mudder has failed to proffer any evidence that either plaintiff actually signed/checked the consent box, or any evidence identifying the computers or electronic devices from which their respective registrations were completed.

Plaintiffs additionally argue that the arbitration clause in the PWCR is unenforceable because it contains a conflicting provision regarding disputes. Plaintiffs point out that the PWCR contains a clause entitled "Venue and Jurisdiction" located several paragraphs before the "Mediation and Arbitration" clause, which states [Exhibit F, Page 3]:

I understand that if legal action is brought, the appropriate state or federal trial court for the state in which the TM Event is held has the sole and exclusive jurisdiction and that only the substantive laws of the State in which the TM Event is held shall apply.

Plaintiffs argue that this provision clearly conflicts with the arbitration clause located many lines of type below it, thereby rendering it void and unenforceable.

Finally, plaintiffs argue that the entire PWCR agreement, including the purported arbitration provision, is unenforceable because the "Waiver of Liability for Ordinary Negligence" clause (on page three of the PWCR as Exhibit F) violates General Obligations Law (GOL) § 5-326, which prohibits contracts between the owner or operator of any "place of amusement or recreation" from exempting such owner or operator from "liability for damages caused by or resulting from the negligence of the owner, operator or person in charge of such establishment." In this regard, plaintiffs contend that Tough Mudder's operation of the TM Event obstacle course was clearly operated as "a place of amusement or recreation" within the meaning of GOL § 5-326. Since the plaintiffs paid a fee to use the obstacle course and were injured while engaged in that activity, they argue that GOL § 5-326 renders the entire waiver of liability clause, and all remaining provisions of the PWCR, including the arbitration clause, void and unenforceable.

In reply, Tough Mudder points out that the plaintiffs do not dispute that they each did in fact register for the TM Event. In addition, Tough Mudder argues that GOL § 5-326 is not applicable herein and, therefore, does not invalidate the waiver or any other PWCR provision. In this regard, Tough Mudder maintains that the TM Event is distinguishable from the"recreational"activities intended to be covered under the statute, such as horseback riding, auto racing, cycling and skiing, which Tough Mudder characterizes as being "relaxed and undemanding" activities, which "do not necessitate any research or physical preparation." Tough Mudder argues that the TM Event is distinguishable from the foregoing activities in that it is "a rigorous and grueling athletic competition that requires proper training and dedication" (Cash Reply Affirmation, at ¶ 8). Tough Mudder further argues that TM Events are "unique to their participants," and pose risks and challenges exclusive to obstacle courses, thereby rendering such events completely distinct from the recreational activities engaged in by the "general public" as contemplated by GOL § 5-326.

In addition, Tough Mudder points out that the PWCR contains a "Severability" provision which states, in relevant part, as follows:

"I understand and agree that this . . . Waiver of Liability . . . is intended to be as broad and inclusive as is permitted by the state in which the TM Event is held and that if any provision shall be found to be . . . void, or for any reason unenforceable, then that provision shall be severed from this Agreement and does not affect the validity and enforceability of any remaining provisions."

In light of the foregoing provision, Tough Mudder argues that, in the event a clause is deemed unenforceable, it does not invalidate any of the remaining provisions of the [*3]PWCR, including the arbitration clause at issue.

Tough Mudder also argues that the "Venue and Jurisdiction" clause is not contradicted by the "Mediation and Arbitration" clause, as the latter clause only mandates arbitration regarding disputes "arising out of [one's] participation in the TM event . . ." Therefore, Tough Mudder contends that there are clearly certain circumstances when a state or federal trial court would be the appropriate venue for claims that do not arise out of one's participation in the TM Event. However, since plaintiffs' claims do arise out of their participation, Tough Mudder maintains that arbitration of this matter is required.

Discussion

It is well settled that "[a] party to an agreement may not be compelled to arbitrate its dispute with another unless the evidence establishes the parties' clear, explicit and unequivocal agreement to arbitrate" (God's Battalion of Prayer Pentecostal Church, Inc. v Miele Assocs., LLP, 6 NY3d 371, [2006] [internal quotation marks omitted]; see Matter of Robert Stigwood Org. [Atlantic Recording Corp.], 83 AD2d 123, 126 [1981]). When one party seeks to compel the other to arbitrate any disputes between them, the court must first determine whether the parties made a valid arbitration agreement (see Harriman Group v Napolitano, 213 AD2d 159, 162 [1995]). The party seeking arbitration bears the burden of establishing that an agreement to arbitrate exists (see Seneca Ins. Co. v Secure—Southwest Brokerage, 294 AD2d 211, 212 [2002]; Matter of Allstate Ins. Co. v Roseboro, 247 AD2d 379, 380 [1998]). The court must draw all inferences in favor of the non-moving party. (Nicosia v Amazon.com Inc., 834 F3d 220, 229 [2d Cir. 2016]).

"The creation of online contracts 'has not fundamentally changed the principles of contract'" (Resorb Networks, Inc. v YouNow.com, 51 Misc 3d 975, 981 [Sup Ct NY County 2016] quoting Register.com, Inc. v Verio, Inc., 356 F3d 393, 403 [2d Cir 2004]). The question of whether there is agreement to accept the terms of an on-line contract turns on the particular facts and circumstances. Courts generally look for evidence that a website user had actual or constructive notice of the terms by using the website (see Schnabel v Trilegiant Corp., 697 F3d 110, 120 [2d Cir 2012]). Where the person's alleged consent is solely online, courts seek to determine whether a reasonably prudent person would be put on notice of the provision in the contract, and whether the terms of the agreement were reasonably communicated to the user (id. at 120; see Fteja v Facebook, Inc., 841 F Supp 2d 829, 833, 835 [SDNY 2012]; Starke v Gilt Groupe, Inc., 2014 WL 1652225, *2, *3, 2014 U.S. Dist. LEXIS 58006, *6—7 [SDNY 2014]; Jerez v JD Closeouts, LLC, 36 Misc 3d 161, 168 [Nassau Dist Ct 2012]). In Specht v Netscape Commc'ns Corp. (306 F3d 17 [2d Cir 2002]), the court emphasized that "[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility" (id at 35; see Starke v Squaretrade, Inc., No. 16-CV-7036 [NGG], 2017 WL 3328236, at *5 [EDNY Aug. 3, 2017], affd 913 F 3d 279 [2d Cir 2019]).

In Berkson v Gogo LLC (97 F Supp 3d 359, 394—403 [EDNY 2015]), the four "general types of online consumer contracts are identified as (a) browsewrap; (b) [*4]clickwrap; ( c ) scrollwrap; and (d) sign-in-wrap." As explained by Judge Weinstein in Berkson:

Browsewrap exists where the online host dictates that assent is given merely by using the site. Clickwrap refers to the assent process by which a user must click "I agree," but not necessarily view the contract to which she is assenting. Scrollwrap requires users to physically scroll through an internet agreement and click on a separate "I agree" button in order to assent to the terms and conditions of the host website. Sign-in-wrap couples assent to the terms of a website with signing up for use of the site's services. . . . (Id. at 394—95).

(see Applebaum v Lyft, Inc., 263 F Supp 3d 454, 465 [SDNY 2017] [applying New York law and denying motion to compel arbitration where notice of contract terms was insufficient to bind plaintiff]).

Here, the PWCR at issue appears to be a click-wrap agreement as identified in Berkson in that the clickable box is located directly below the scrollable text box that allegedly contained the full text of the agreement. Only by scrolling down in the text box would the user see all of the terms of the PWCR, including the arbitration clause at issue. However, the user could proceed to complete the registration process without necessarily scrolling down through the text box to view the full document, thereby rendering it a click-wrap agreement. At oral argument, counsel for defendants claimed that it was a scrollwrap agreement, as it was not possible to click "I agree" without scrolling through the agreement, but there is nothing in the record to support this claim.[FN2]

A party may be bound to a click wrap agreement by clicking a button declaring assent, so long as the party is given a "sufficient opportunity to read the . . . agreement, and assents thereto after being provided with an unambiguous method of accepting or declining the offer." (Serrano v Cablevision Sys. Corp., 863 F Supp 2d 157, 164 [EDNY 2012]; see also Whitt v Prosper Funding LLC, 15—CV—136, 2015 WL 4254062, at *4 [SDNY July 14, 2015]; Kai Peng v Uber Techs., Inc., 237 F Supp 3d 36, 47—48 [EDNY 2017]; Berkson, 97 F Supp 3d at 397). However, as stated by Judge Koeltl in Applebaum v Lyft, Inc. (263 F Supp 3d at 466),

"[a] court cannot presume that a person who clicks on a box that appears on a . . . screen has notice of all contents not only of that page but of other content that requires further action (scrolling, following a link, etc.) . . . The presentation of the online agreement matters: Whether there was notice of the existence of additional contract terms presented on a webpage depends heavily on whether the design and [*5]content of that webpage rendered the existence of terms reasonably conspicuous. . . . Clarity and conspicuousness of arbitration terms are important in securing informed assent." (internal citations omitted)

Thus, on a motion to compel arbitration, a valid agreement to arbitrate exists where the notice of the arbitration provision was reasonably conspicuous, and manifestation of assent is unambiguous as a matter of law (see Specht v Netscape Commc'ns Corp., 306 F 3d 17, 28 [2d Cir 2002]). Therefore, the issue herein is whether Tough Mudder's website registration screen put a reasonably prudent user on inquiry notice of the relevant terms of the PWCR, particularly the arbitration clause at issue (see Applebaum, 263 F Supp 3d at 465). Insofar as it turns on the reasonableness of notice, the enforceability of a web-based agreement is clearly a fact-intensive inquiry (id.; see Meyer v Uber Techs., Inc., 868 F3d 66, 76 [2d Cir 2017], citing Schnabel v Trilegiant Corp., 697 F3d 110, 124 [2d Cir 2012]).

Here, plaintiffs did not have actual notice of the arbitration provision at issue in this case. However, plaintiffs can still be bound by the contractual terms if there is inquiry notice of the terms and plaintiffs "assent[ed] to [the terms] through the conduct that a reasonable person would understand to constitute assent" (Plazza v Airbnb, Inc., 289 F Supp 3d 537, 548 [SDNY 2018]; see also Nicosia, 834 F3d at 233). A person is on inquiry notice if a "reasonably prudent offeree would be on notice of the terms at issue" (Schnabel, 697 F 3d at 120 ["'[I]nquiry notice' is 'actual notice of circumstances sufficient to put a prudent man upon inquiry'"] quoting Specht v Netscape Commc'ns Corp., 306 F 3d 17, 27 n.14 [2d Cir. 2002]).

As cited in a recent decision, Corwin v NYC Bike Share, LLC (238 F Supp 3d 475 [SDNY 2017]) "a user's clicking of a box is not, without more, sufficient to signal their assent to any contract term. The touchstone in most courts' analysis of the enforceability of clickwrap contracts turns on whether the website provided 'reasonably conspicuous notice that [users] are about to bind themselves to contract terms'" (Specht v Netscape Communications Corp., 306 F 3d 17, 32 [2d Cir. 2002] [Sotomayor, J.]). In many cases, this becomes a fact-intensive inquiry because "electronic agreements fall along a spectrum in the degree to which they provide notice, and it is difficult to draw bright-line rules because each user interface differs from others in distinctive ways (Meyer v Kalanick, 200 F Supp 3d 408, 420 [SDNY 2016]). In Meyer, a putative class action claiming price-fixing, the district court found that adequate notice was not given to plaintiff of mandatory arbitration when he registered to use Uber. The screen had a hyperlink to the agreement, but plaintiff did not need to click on it to register as a user. Then, after clicking on it, you needed to click further to read the Terms of Service and the arbitration provision was at the bottom of page seven. This was determined to be a "browsewrap" agreement. The Second Circuit, on appeal,[FN3] determined that the issue was whether the plaintiff was on inquiry notice of the arbitration provision by virtue of the hyperlink on the screen, under California Law, and determined that adequate notice was [*6]given. The panel reversed the district court, finding the motion to compel arbitration should have been granted.

The court further notes that on-line agreements may be revised from time to time, so not only must the court determine whether the party seeking to enforce such an agreement has provided the version seen by the other party at the time the contract was made, but whether the court in any seemingly on point case cited actually rendered its decision based on the same version of the agreement (see Plazza v Airbnb, 289 F Supp 3d 537 [SDNY 2018] [archived computer code for 2009 sign-up screen provided to court, along with screen shots of Terms of Service]).

In Berkson, (supra), Judge Weinstein of the Eastern District of New York, surveying cases from federal courts nationwide, provided a useful set of parameters to guide a court's inquiry. First, terms of use should not be enforced if a reasonably prudent user would not have had at the very least inquiry notice of the terms of the agreement (Berkson, 97 F Supp. 3d at 401 [citing Nguyen v Barnes & Noble Inc., 763 F 3d 1171, 1177 [9th Cir. 2014]). Second, terms should be enforced when a user is encouraged by the design and content of the website and the agreement's webpage to examine the terms, such as when they are clearly available through a hyperlink. Third terms should not be enforced when they are "buried at the bottom of a webpage or tucked away in obscure corners." Special attention should be paid to whether the site design brings the consumer's attention to "material terms that would alter what a reasonable consumer would understand to be her default rights when initiating an online [transaction]," and, in appropriate cases, such terms should not be enforced even when the contract is otherwise enforceable. "When contractual terms as significant as . . . the right to sue in court are accessible only via a small and distant hyperlink . . . with text about agreement thereto presented even more obscurely, there is a genuine risk that a fundamental principle of contract formation will be left in the dust: the requirement for a manifestation of mutual assent" (Meyer v Kalanick, 200 F Supp 2d at 421-22 [internal quotation marks and citation omitted]). A broad exculpatory clause waiving liability for negligence would also certainly qualify as a material term and one that alters a contracting party's commonly-understood rights.

Here, the court finds that Tough Mudder has failed to establish that the webpage, as it existed in 2016 when the plaintiffs registered for the TM Event, provided reasonable notice of the relevant term (the arbitration provision) of the PWCR. In fact, Tough Mudder has failed to set forth sufficiently detailed evidence as to how its on-line registration webpage appeared to the plaintiffs, or other users/registrants, during the relevant time period. In this regard, the court finds that the affidavit by Ms. Best holds little evidentiary value, as she does not set forth the basis of her personal knowledge of Tough Mudder's on-line registration process at the time the plaintiffs registered, or of her familiarity with the applicable computer generated documents (see Gogos v Modell's Sporting Goods, Inc., 87 AD3d 248, 253—254 [2011]). Additionally, absent from her affidavit is any indication that she was even employed by Tough Mudder at the relevant [*7]time period.

In addition, the court notes that the purported copies of the plaintiffs' respective on-line registration forms (screen shots) submitted by Tough Mudder (Exhibit D ) are black and white copies of poor quality, the text of which is in an extremely small font size and is barely legible. Tough Mudder has not proffered any color copies of any screen shots depicting its on-line registration process. In addition, the full text of the PWCR, as provided by Tough Mudder, is not a screen shot but a black and white document, consisting of seven pages of single-spaced language, all in the same font and size, with no underlined, hyperlinked or bolded terms. In order to view the "Mediation and Arbitration" clause, the plaintiffs, by using the arrows inside the text box, needed to scroll down significantly beyond what is initially visible, to page four of the seven-page single-spaced PWCR document. The court additionally notes that, as with the entire document, the arbitration provision is neither underlined, bolded nor hyperlinked. Further, since this court has only been provided with a black and white document, not screen shots, it is unable to discern how the subject arbitration clause actually appeared to the user. Indeed, "[i]n the context of web-based contracts, [courts] look to the design and content of the relevant interface to determine if the contract terms were presented to the offeree in a way that would put her [or him] on inquiry notice of such terms" (Starke v Squaretrade, Inc., 913 F3d 279, 289—90 [2d Cir. 2019] citing Nguyen v Barnes & Noble Inc., 763 F3d 1171, 1177 [9th Cir 2014] and Specht v Netscape Commc'ns Corp., 306 F3d 17, 23 [2d Cir 2002] [where court refused to enforce terms of use that "would have become visible to plaintiffs only if they had scrolled to the next screen"]). Here, Tough Mudder's submissions with respect to the "design and content" of its website and the relevant terms of the PWCR, especially the arbitration clause, are woefully inadequate.

The court further notes that the initially visible portion of the on-line text box containing the scrollable PWCR has an all-caps header stating: "ASSUMPTION OF RISK, WAIVER OF LIABILITY, AND INDEMNITY AGREEMENT PARTICIPANTS: READ THIS DOCUMENT CAREFULLY BEFORE ACCEPTING. THIS DOCUMENT HAS LEGAL CONSEQUENCES AND WILL AFFECT YOUR LEGAL RIGHTS AND WILL ELIMINATE YOUR ABILITY TO BRING FUTURE LEGAL ACTIONS." However, while this header specifically draws the user's attention to certain specified provisions (i.e., Assumption of Risk, Waiver of Liability and Indemnity) which appear at the beginning of the document (on pages one and three), it makes no reference to the arbitration provision, which appears on page four of the seven-page PWCR document.

Additionally, the court notes that the "Venue and Jurisdiction" clause, which appears on page three of the PWCR states that if "legal action is brought, the appropriate state or federal trial court for the state in which the TM Event is held has the sole and exclusive jurisdiction. . . ." This provision clearly conflicts with the arbitration clause at issue, which mandates that all claims "arising out of [one's] participation in the TM Event shall be submitted to binding arbitration. . . ." Given that the plaintiffs would have viewed (in the scrollable text box) the"Venue and Jurisdiction" provision first, the court [*8]finds it highly unlikely that they would have been placed on inquiry notice of the arbitration provision, which appeared on a subsequent page in the agreement.

As noted above, the party seeking to compel arbitration bears the burden of establishing that an agreement to arbitrate exists (see Seneca Ins. Co. v Secure—Southwest Brokerage, 294 AD2d at 212), which Tough Mudder has failed to do. Under the circumstances presented here, the court finds that the arbitration provision was not sufficiently conspicuous to place the plaintiffs on inquiry or constructive notice and, therefore, is not enforceable (see Specht v Netscape Commc'ns Corp., 306 F3d at 32; Applebaum, 263 F Supp 3d at 465). Further, due to the conflicting provisions regarding litigation and arbitration, the arbitration provision is void due to ambiguity. Accordingly, Tough Mudder's motion to stay the action and compel arbitration is denied.



General Obligations Law § 5-326

As to plaintiffs' argument that the waiver and release provision set forth in the PWCR [Exhibit F Page 3] is invalid pursuant to GOL § 5—326, the court agrees. That statute protects consumers from the effect of form releases printed on membership applications and similar documents when such releases are offered in connection with the use of a "place of amusement or recreation" for which a fee is paid (GOL § 5—326; see Rogowicki v Troser Mgt., 212 AD2d 1035 [1995]; Blanc v Windham Mtn. Club, 115 Misc 2d 404 [1982], affd 92 AD2d 529 [1983]). The terms of this statute apply to the plaintiffs herein, who paid a fee to use Tough Mudder's obstacle course, which, contrary to Tough Mudder's assertion, is a place of recreation (see Leftow v Kutsher's Country Club Corp., 270 AD2d 233, 234 [2000]). Indeed, the nature of the TM Event as described by Tough Mudder — a rigorous, athletic competition requiring proper training — is comparable to the other activities, such as horseback riding, auto racing, cycling and skiing, which have been held to be covered by GOL § 5-326. Furthermore, Tough Mudder's assertion that, unlike the TM Event, such activities are "relaxed and undemanding" and "do not necessitate any research or physical preparation" is an inaccurate and absurd distinction. Thus, the PWCR's waiver provision, waiving defendants' liability for "ordinary negligence" violates GOL § 5-236 and is therefore void (see Garnett v Strike Holdings LLC, 64 AD3d 419 [2009] [applying § 5—326 where plaintiff paid a fee to use the recreational facility]; Alibey v Tough Mudder Inc., 2018 WL 5298473, at *2 [Sup Ct, Kings County, Oct. 24, 2018]; Hansen v Tough Mudder, Inc., [Sup Ct Kings Co. 2018, Ind. 515072/15]).

However, as Tough Mudder correctly argues, the unenforceable provisions of the PWCR do not nullify the entire agreement. Where an agreement consists partially of an unlawful objective, "the court may sever the illegal aspect and enforce the legal one, so long as the illegal aspects are incidental to the legal aspects and are not the main objective of the agreement." (Mark Hotel LLC v Madison Seventy-Seventh LLC, 61 AD3d 140, 143 [2009]). "[W]hether the provisions of a contract are severable depends largely upon the intent of the parties as reflected in the language they employ and the particular circumstantial milieu in which the agreement came into being." (Matter of Wilson's [*9]Estate, 50 NY2d 59, 65 [1980]).

Here, the waiver of liability provision in the PWCR releasing Tough Mudder from liability, as well as the arbitration clause, are severable from the remainder of the PWCR agreement on the ground that the unenforceable provisions are incidental to the legal aspects and not the main objective of the agreement. Further, the severability provision in the PWCR reflects the intent of the parties that the legal provisions of the agreement be severed from any provisions determined to be void and unenforceable.



Conclusion

For the reasons state above, Tough Mudder's motion to compel arbitration and stay the action is denied.

The parties are directed to appear on May 1, 2019 in the Intake Part for a Preliminary Conference.

The foregoing constitutes the decision and order of the court.



E N T E R,

Hon. Debra Silber, J.S.C. Footnotes

Footnote 1:It seems defendants conduct similar events all over the United States. There are two other actions pending in Kings County Supreme Court against defendants, and in both actions, defendants motions to compel arbitration were denied, albeit on different grounds.

Footnote 2:In any event, as the court states in Meyer v Uber Tech., Inc. (868 F3d 66, 76 [2d Cir 2017]): Classification of web-based contracts alone, however, does not resolve the notice inquiry. See Juliet M. Moringiello and William L. Reynolds, From Lord Coke to Internet Privacy: The Past, Present, and Future of the Law of Electronic Contracting, 72 Md. L. Rev. 452, 466 (2013) ("Whether terms are classified as clickwrap says little about whether the offeree had notice of them."). Insofar as it turns on the reasonableness of notice, the enforceability of a web based agreement is clearly a fact-intensive inquiry. See Schnabel, 697 F 3d at 124.

Footnote 3:Meyer v Uber Techs., Inc., 868 F 3d 66 (2017)