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Wayfair Buyers Must Arbitrate Bedbug Claims

A proposed class of customers must arbitrate their claims that online furniture retailer Wayfair Inc. violated both state and federal laws when it sold products allegedly infested with bedbugs, an Illinois federal judge ruled Friday.

U.S. District Judge Matthew F. Kennelly agreed with Wayfair's contention that the dispute falls within the scope of a binding agreement to arbitrate that named plaintiff Ronald Gorny assented to when he ordered a headboard and other pieces from Wayfair's website. A plain reading of that provision makes it clear that the matter belongs in arbitration, Judge Kennelly said.

"Gorny advocates a reading that would effectively limit the contract to disputes arising from the navigation of Wayfair's website, and perhaps intellectual property disputes related to the imagery displayed on it," Judge Kennelly said. "But that reading ignores much of the provision's language — most critically the portion about disputes arising from relationships resulting from the terms of use — and, as a result, is contrary to law."

Gorny can't simply say his claims don't fall under the agreement, the judge said. The purchase of his allegedly infested headboard is governed by the website's terms of use, which contain the relevant arbitration provision, he said.

"A dispute related to the purchase of goods through necessarily implicates this buyer-seller relationship and thus unambiguously arises out of the website's terms of use and/or a relationship governed by them," Judge Kennelly said.

Gorny's assertion that he shouldn't be held to the contract because he never read the terms or physically signed an agreement is also unsupported by law, the judge said. The webpages presented to Gorny adequately communicated the terms and conditions of the agreement, he said, and courts around the country recognize an electronic "click" can suffice to signify the acceptance of a contract.

Judge Kennelly also shot down Gorny's argument that Wayfair Inc. isn't covered under the arbitration agreement as Wayfair LLC's parent company, saying Wayfair was "clearly correct" when it referred the court to language in the arbitration clause defining it as applying to all disputes with "Wayfair, its agents, employees, officers, directors, principals, successors, assigns, subsidiaries or affiliates."

The lawsuit, filed in December, accused Wayfair of breach of contract, breach of warranty, negligence, fraudulent concealment, unjust enrichment and violations of multiple states' consumer fraud laws, and sought more than $5 million in damages. Gorny sought to represent a national class, a multistate consumer fraud class and an Illinois class of individuals who bought from Wayfair a "headboard, mattress, bedframe or other component of a bed" that contained bedbugs.

Gorny alleges the upholstered headboard he bought from Wayfair in July was infested with the insects. When he reported the matter to Wayfair through a customer satisfaction survey, the company sent an apology and a 10% off coupon for a future order, according to the complaint.

Citing online reviews containing similar bedbug reports from Wayfair products, Gorny and the proposed class contend Wayfair knowingly continues to sell and ship infested products and has failed to eradicate its bedbug problem.

Wayfair disputed that it was the source of the bedbugs but argued that regardless, the matter didn't belong in court, noting that a hyperlink to the terms of use appeared on more than 13,000 pages Gorny visited on and that he was told multiple times that "by continuing to the site, you agree to the updated terms of use and privacy policy," according to court documents.

Further, the company said, customers are notified before making an order that by placing it, they're agreeing to those terms, including the arbitration clause.

A spokesperson for Wayfair declined to comment. Representatives of the putative class did not immediately respond to requests for comment on Friday.

Gorny is represented by Katrina Carroll, Kyle A. Shamberg and Nicholas R. Lange of Carlson Lynch LLP.

Wayfair is represented by Robert B. Ellis and A. Katrine Jakola of Kirkland & Ellis LLP.

The case is Gorny et al. v. Wayfair Inc. et al., case number 1:18-cv-08259, in U.S. District Court, Northern District of Illinois.