SquareTrade moves to compel arbitration in class action suit over protection plans

By John Revak | Jun 30, 2017

BROOKLYN, N.Y. (Legal Newsline) – Tech company SquareTrade recently moved to compel arbitration in a lawsuit claiming the company offered fraudulent protection plans to consumers on Amazon.

The motion, filed May 18, cites the terms and conditions that consumers must consent to before purchasing a protection plan, which it claims forces litigants into arbitration and prohibit class action lawsuits.

“The terms and conditions for the plan plaintiff purchased on Sept. 11, 2014 required arbitration of any dispute thereunder, and a waiver of the ability to bring claims as a class representative or participate in a class action against Square Trade,” the motion said.

The company says the plaintiff made six additional purchases over the next 15 months before bringing the lawsuit. Additionally, plaintiff was allotted a 30-day period to cancel the protection plan free of charge, but refrained from doing so and was emailed a link to the terms and conditions.

Furthermore, the company argues that even if there is a dispute over the legitimacy of an arbitration clause, under the Federal Arbitration Act (FAA) this dispute must be resolved before an arbitrator and not before a court.

“Under the FAA, an agreement to arbitrate under the rules of a particular provider whose rules so provide requires the arbitrator – and not a court faced with the motion to compel arbitration – to determine questions of arbitrability…” the motion said.

In addition to arbitration, the motion also demanded that the court “order the plaintiff’s claims be arbitrated on an individual and not a class wide basis; and… stay the instant litigation in favor of arbitration.”

The claim, brought in the U.S. District Court for the Eastern District of New York, was initially filed in December 2016 after plaintiff Adam Starke alleged that the company marketed its protection plans in a misleading fashion on Amazon.com.

Starke claims that he suffered financial damage upon purchasing a plan that turned out to be different and less generous then what was advertised, according to Legal Newsline.

He also claims that SquareTrade “sells protection plans for products on Amazon.com that are ineligible for coverage."

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