Sixth Circuit Rules In Favor of Lexis on Arbitration Clause

LexisNexis prevailed in a case from the Sixth Circuit that was released a few days ago.  The issue concerned whether the arbitration clause in a contract for access to LexisNexis databases allowed for class arbitration.  The ultimate answer to that question was no.  The underlying issue in the case that triggered the lawsuit and appeal had to do with the practice LexisNexis employed in its flat fee access plans to attorneys.  I’ll let the Court explain it:

        LexisNexis (a business division of Reed Elsevier) provides legal-research services, primarily on-line. In 2007, Craig Crockett and his former law firm—Dehart & Crockett, P.C.—subscribed to a LexisNexis Subscription Plan. The Plan allowed subscribers unlimited access to certain legal databases for a flat, monthly fee.  Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis told subscribers that a warning sign—such as a dollar ($) sign—would display if the subscriber was about to use a database outside of the Plan.

Several years after signing up for the Plan, Crockett complained to LexisNexis that his firm was being charged additional fees without any warning that the firm was using a database outside the Plan. LexisNexis allegedly insisted on payment of the additional fees anyway.

Those of us in academics working with our subscriptions to Lexis and Westlaw are very familiar with either premium databases not appearing or alternatively messages stating the desired content is not part of the current subscription.  It makes me wonder, assuming the allegations are true, why Lexis can’t manage flat fee plans.  Of course, we’ll never know since the dispute is heading to arbitration.

Though the Court is not sympathetic to Mr. Crockett’s legal arguments concerning how the arbitration clause in the contract is read (precedent is against him), it does offer this cautionary advice to prospective commercial consumers:

Crockett’s remaining argument is that, if read not to permit classwide arbitration, the arbitration clause is unconscionable. The clause is indeed as one-sided as Crockett says: the clause favors LexisNexis at every turn, and as a practical matter makes it economically unfeasible for Crockett or any other customer to assert the individual claims that Crockett seeks to assert here. The clause provides that any arbitration of any dispute concerning LexisNexis’s charges must occur in Dayton, Ohio, where LexisNexis is headquartered. The customer must pay his own legal fees, even if the arbitrator concludes that LexisNexis’s charges were improper. And unlike many corporations that require arbitration of disputes with their customers, LexisNexis makes its customer split the tab for the arbitrator’s fee.

The idea that the arbitration agreement in this case reflects the intent of anyone but LexisNexis is the purest legal fiction. But all of these things—the one-sided nature of the arbitration clause, and its adhesive nature—were also present in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013). And there the Supreme Court held that, all of those concerns notwithstanding, the absence of a class-action right does not render an arbitration agreement unenforceable. Id. at 2309 (The solution to Crockett’s problem is likely a market solution; as the district court observed, Westlaw’s agreement with its customers lacks any arbitration clause, much less a clause of the sort at issue here.)      Under Italian Colors, therefore, the agreement here is not unconscionable.

The case is Elsevier, Inc. v. Crockett, et al. (6th Cir. 12-3574, November 5, 2013).  Copies of the opinion are here and here.  Hat tip to Michael Ginsborg for the links.  As Paul Harvey would say, now you know the rest of the story.

Mark

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