# LAND OF LAND, INC. v. PAYPAL, INC.

> District Court, D. New Jersey · March 21, 2023

URL: https://www.frixlaw.com/law-library/cases/10275013

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** March 21, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

LAND OF LAND, INC.

Plaintiff,
No. 1:22-cv-00261-NLH-EAP
v.

OPINION
PAYPAL, INC.

Defendant.

APPEARANCES
Wolfgang Heimerl, Esq.
Robert J. Kinney, Esq.
Heimerl Law Firm
32 Dumont Road, P.O. Box 964
Far Hills, New Jersey 07931
Attorneys for Plaintiff.

Kelly Lloyd Lankford, Esq.
Dentons U.S. LLP
101 JFK Parkway
Short Hills, New Jersey 07078

Deborah Renner, Esq.
Dentons U.S. LLP
1221 Avenue of The Americas
New York, NY 10020-1089
Attorneys for Defendant.

HILLMAN, District Judge
This matter is presently before the court by way of PayPal,
Inc.’s Motion to Compel Arbitration or in the Alternative, to
Dismiss Plaintiff’s Amended Complaint (ECF No. 15). For the
reasons expressed below, Defendant’s Motion to Compel
Arbitration will be granted.
BACKGROUND
Plaintiff is in the business of buying and selling land
across the United States. (Am. Compl. ¶ 4.) On May 18, 2020,
Plaintiff entered into a User Agreement for the use of
Defendant’s services for Plaintiff’s business-related
transactions. (Am. Compl. ¶ 5.) Within the User Agreement was

an “Agreement to Arbitrate” provision, which read as follows:
Agreement to Arbitrate
You and PayPal agree that any claim or dispute at law
or equity that has arisen or may arise between us will
be resolved in accordance with the Agreement to
Arbitrate provisions set forth below. Please read this
information carefully. Among other things it:

• Affects your rights and will impact how claims
you and we have against each other are resolved.

• Includes a Prohibition of Class and
Representative Actions and Non-Individualized
Relief pursuant to which you agree to waive your
right to participate in a class action lawsuit
against us.

• Requires you to follow the Opt-Out Procedure to
opt-out of the Agreement to Arbitrate by mailing
us a written notice and the opt-out notice must
be postmarked no later than 30 days after the
date you accept this user agreement for the first
time.

If a dispute arises between you and PayPal, acting as
either a buyer or a seller, our goal is to learn about
and address your concerns. If we are unable to do so
to your satisfaction, we aim to provide you with a
neutral and cost effective means of resolving the
dispute quickly. Disputes between you and PayPal
regarding the PayPal services may be reported to
customer service online through the PayPal Help Center
at any time, or by calling (888) 221-1161 from Mon-Fri
5:00 AM to 10:00 PM PT and Sat-Sun 6:00 AM to 8:00 PM
PT.
* * * *
You and PayPal each agree that any and all disputes or
claims that have arisen or may arise between you and
PayPal, including without limitation federal and state
statutory claims, common law claims, and those based
in contract, tort, fraud, misrepresentation or any
other legal theory, shall be resolved exclusively
through final and binding arbitration, rather than in
court, except that you may assert claims in small
claims court, if your claims qualify and so long as
the matter remains in such court and advances only on
an individual (non-class, nonrepresentative) basis.
This Agreement to Arbitrate is intended to be broadly
interpreted. The Federal Arbitration Act governs the
interpretation and enforcement of this Agreement to
Arbitrate.

(ECF No. 15-3 at 48-50) (emphasis added).1
The Opt-Out Procedure provided for in the Agreement to
Arbitrate reads as follows:
Opt-Out Procedure If you are a new PayPal customer,
you can choose to reject this Agreement to Arbitrate
by mailing us a written opt-out notice. The opt-out
notice must be postmarked no later than 30 days after
the date you accept this user agreement for the first
time.
You must mail the opt-out notice to PayPal, Inc.,
Attn: Litigation Department, 2211 North First Street,
San Jose, CA 95131. For your convenience, we are
providing an opt-out notice form you must complete

1 Defendant has attached the User Agreement to its motion. A
court may consider “an undisputedly authentic document that a
defendant attaches as an exhibit to a motion to dismiss if the
plaintiff’s claims are based on the document.” Pension Benefit
Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196
(3d Cir. 1993). The User Agreement further provides “the laws
of the State of Delaware, without regard to principles of
conflict of laws, will govern this user agreement and any claim
or dispute that has arisen or may arise between you and PayPal.”
(ECF No. 15-3 at 58.) Accordingly, this Court will apply
Delaware law.
and mail to opt out of this Agreement to Arbitrate.
You must complete this form by providing all the
information it calls for, including your name,
address, phone number, and the email address(es) used
to log in to the PayPal account(s) to which the opt-
out applies. You must sign the opt-out notice for
it to be effective. This procedure is the only way you
can opt out of the Agreement to Arbitrate. If you opt
out of this Agreement to Arbitrate, all other parts of
the user agreement will continue to apply. Opting out
of this Agreement to Arbitrate has no effect on any
previous, other, or future arbitration agreements
that you may have with us.

(ECF No. 15-3 at 54-55.)

On March 11, 2021, Defendant began limiting Plaintiff’s
ability to send and withdraw money from its account. On May 2,
2021, Defendant ultimately terminated its business relationship
with Plaintiff, stating via email:
After a review, we decided to permanently limit your
account as there was a change in your business model
or your business model was considered risky. This
could be due to how and when items or services were
sold and delivered and your inventory management.

(Am. Compl. ¶ 9.)

At the time Plaintiff’s account was blocked by Defendant,
Plaintiff had a balance of $95,766.50 “available” to it.
(Am. Compl. ¶ 12.) Plaintiff has since been unable to access
any of the balance. (Am. Compl. ¶ 12.)
DISCUSSION
I. Subject Matter Jurisdiction
This matter is before the Court pursuant to 28 U.S.C. §
1332(a)(1) as there is complete diversity between the parties.
Defendant and Plaintiff are both corporations and are citizens
of Delaware and California, and Wyoming and New Jersey,
respectively. (ECF No. 6 at 2.)
II. Standard of Review

The Federal Arbitration Act (FAA) provides that a written
arbitration provision contained in a "contract evidencing a
transaction involving commerce . . . shall be valid, irrevocable
and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C. § 2. Under
the FAA, a private arbitration agreement is enforceable if: (1)
a valid arbitration agreement exists between the parties; and
(2) the dispute before it falls within the scope of the
agreement. Flintkote Co. v. Aviva PLC, 769 F.3d 215, 220 (3d
Cir. 2014); see also Johnson v. Ace Cash Express, Inc., C.A. No.
13-1186, 2014 U.S. Dist. LEXIS 100857, at *5 (D. Del. July 24,
2014) (same).
“[C]ourts apply a ‘presumption of arbitrability’ when

construing the scope of arbitration clauses.” Lloyd v. MBNA Am.
Bank, N.A., 27 F. App’x 82, 85 (3d Cir. 2002). Similarly,
Public policy favors the broad enforcement of
arbitration provisions and courts, in deciding the
question of arbitration, should follow the advice that
any doubts concerning the scope of arbitrable issues
must be resolved in favor of arbitration, and once it
is determined that a claim is arbitrable, the Court
may not delve any further into the dispute[.]
Douty v. Nationwide Mut. Ins. Co., Civil Action No. 85-27, 1987
U.S. Dist. LEXIS 4921, at *6 (D. Del. June 4, 1987).
Depending on the circumstances, a court considering a
motion to compel arbitration may apply a motion to dismiss or
motion for summary judgment standard. If, as is the case here,
the face of the Complaint and any documents relied on in the

Complaint clearly show that a party's claim is subject to an
enforceable arbitration clause, the court will use a "Rule
12(b)(6) standard without discovery's delay." Guidotti v. Legal
Helpers Debt Resolution, L.L.C., 716 F.3d 764, 777 (3d Cir.
2013)(cleaned up).
III. Analysis
Plaintiff herein seeks to avoid arbitration by arguing the
arbitration provision contained within the User Agreement
constitutes an unenforceable contract of adhesion. (ECF No. 16
at 4.) Specifically, Plaintiff asserts the provision was not
“bargained for” and is unconscionable. (ECF No. 16 at 4-7.)

It is well established that:
“An adhesion contract is a standardized contract
written entirely by a party with superior bargaining
power, leaving the weaker party in a ‘take-it-or-
leave-it’ position.” Cubic Corp. v. Marty, 185 Cal.
App. 3d 438, 449, 229 Cal. Rptr. 828 (Ct. App. 4th
Dist. 1986). “In the characteristic adhesion contract,
the stronger party has drafted the contract and given
the weaker party no opportunity to negotiate its term
and the weaker party may have no realistic opportunity
to look elsewhere for a more favorable contract, but
must adhere to the standardized agreement.” Id.
However, a contract is not adhesive when the party
claiming adhesion had the requisite experience in
dealing in this type of contract, and was free to walk
away from it and not deal with the other party to the
contract, or was free to bargain for better terms.
Progressive Int'l Corp. v. E.I. du Pont de Nemours &
Co., 2002 Del. Ch. LEXIS 91, 2002 WL 1558382 (July 9,
2002).

Yellow Book United States v. Sullivan, C.A. No. 1999-02-046,
2003 Del. C.P. LEXIS 15, at *15-16 (New Castle C.P. Feb. 20,
2003).
In other words, “contracts are not ones of adhesion [when]
the very terms at issue — the arbitration clauses — were
optional, i.e., they were not presented on a take-it-or-leave-it
basis.” Chassen v. Fid. Nat'l Fin., Inc., 836 F.3d 291, 307 (3d
Cir. 2016). Moreover, “unequal bargaining power is not alone
enough to make an agreement to arbitrate a contract of
adhesion.” Brennan v. CIGNA Corp., 282 F. App’x 132, 136 (3d
Cir. 2008).
Of particular significance to this case, is the fact that
while . . .
Delaware law allows a court to rescind a contract on
the grounds of unconscionability[,] [] the Delaware
Supreme Court has held that mere disparity between the
bargaining power of parties to a contract will not
support a finding of unconscionability. Instead, in
order for a court to find unconscionability, the party
with the superior bargaining power [must have] used it
to take advantage of his weaker counterpart by
drafting terms that are so one-sided as to be
oppressive.

Johnson v. Tele-Cash, Inc., Civil Action No. 99-104, 1999 U.S.
Dist. LEXIS 20653, at *20 n.5 (D. Del. Dec. 29, 1999) (cleaned
up).
“Delaware’s public policy strongly favors arbitration
unless the parties did not contractually agree to arbitrate.”
CLP Toxicology, Inc. v. Casla Bio Holdings LLC, C.A. Nos. 2018-
0783-PRW, 2019-0401-PRW, and C.A. No. N18C-10-332 PRW CCLD, 2021

Del. Ch. LEXIS 131, at *23 (Del. Ch. June 24, 2021). To that
end,
[T]the sole question a court confronted with a valid
arbitration clause should answer is “whether the
parties should be arbitrating at all. . . .” To
determine an arbitration clause’s validity, the Court
starts with the contract’s text. An arbitration
clause is presumptively valid unless it is ambiguous
or does not clearly indicate an intention to
arbitrate. Doubt as to the parties’ intentions,
however, ordinarily is resolved in favor of
arbitration. And if the enforceable arbitration
clause is “broad in scope,” the Court “will defer to
arbitration on any issues that touch on contract
rights or contract performance” “so far as the series
of obligations set forth in the underlying agreement.”

Mikkilineni v. PayPal, Inc., C.A. No. N19C-05-123 PRW CCLD, 2021
Del. Super. LEXIS 499, at *23 (Del. Super. Ct. July 1, 2021)
(cleaned up).
Without any relevant legal authority to support its
position, Plaintiff argues “[e]ven though the Plaintiff did not
exercise its privilege to opt-out, this does not make the
contraction in the Agreement language somehow valid or negate
its inconsistency.” (ECF No. 16 at 7.)
When challenged on this same basis, PayPal’s arbitration
provision has been found to be valid and enforceable by a court
applying Delaware law:
The dispute raised by [Plaintiff]’s opposition is
whether the arbitration agreement is valid and
enforceable. [Plaintiff] argues that the arbitration
agreement is unconscionable under Delaware law and
therefore unenforceable. [Plaintiff] complains that
PayPal, the entity with superior bargaining power,
unilaterally drafted the {User Agreement (“UA”)] and
the arbitration agreement.
* * * *
PayPal says that its UA is an enforceable clickwrap
agreement under Delaware law. PayPal contends that
the individual provisions as not unconscionable,
pointing to Delaware case law rejecting [Plaintiff]'s
arguments that similar provisions in other contracts
are unconscionable.

The Court agrees with PayPal that the arbitration
agreement is valid and enforceable. First, the
arbitration agreement is part of a valid clickwrap
agreement under Delaware law. “A clickwrap agreement
is an online agreement that requires a ‘webpage user
[to] manifest assent to the terms of a contract by
clicking an 'accept' button in order to proceed.’”
Massage Envy Franchising, 2020 Del. Super. LEXIS 3021,
2020 WL 7624620, at *2 (quoting Newell Rubbermaid Inc.
v. Storm, 2014 Del. Ch. LEXIS 45, 2014 WL 1266827, at
*1 (Del. Ch. Mar. 27, 2014)). “Clickwrap agreements
are routinely recognized by courts and are enforceable
under Delaware law” Id. (citing Newell Rubbermaid,
2014 Del. Ch. LEXIS 45, 2014 WL 1266827, at *1). The
agreement here is a clickwrap agreement. To proceed
with creating a PayPal account, [Plaintiff] needed to
(1) check a box indicating that he had “read and
agree[d] to the User Agreement,” and then (2) click a
large blue button labeled “Agree and Create Account.”
[Plaintiff] was required to click two items indicating
his assent to the UA. The UA was thus a presumptively
valid clickwrap agreement containing an arbitration
clause.

A contract provision is unconscionable under Delaware
law only if “no man in his senses and not under
delusion would make [it] on the one hand, and as no
honest or fair man would accept [it], on the other.”
Tulowitzki v. Atlantic Richfield Co., 396 A.2d 956,
960 (Del. 1978). Ignoring the outdated language of
the Delaware test, this formulation has been divided
into procedural unconscionability—the lack of a
meaningful choice—and substantive unconscionability—
unreasonably favorable terms to one party. Progressive
Int'l Corp. v. E.I. Du Pont de Nemours & Co., 2002
Del. Ch. LEXIS 91, 2002 WL 1558382, at *11 n.46 (Del.
Ch. Jul. 9, 2002). It is [Plaintiff]’s burden to
prove unconscionability. Harris v. Green Tree Fin.
Corp., 183 F.3d 173, 181 (3d Cir. 1999).
* * * *
[Plaintiff] [ ]complains that PayPal unilaterally
drafted the UA and has superior bargaining power to
him. But “[u]nequal bargaining power, without more,
is insufficient to hold an arbitration agreement
unconscionable.” Wells v. Merit Life Ins. Co., 671 F.
Supp. 2d 570, 574 (D. Del. 2009); see also Mikkilineni
v. PayPal, Inc., 2021 Del. Super. LEXIS 499, 2021 WL
2763903, at *12 (Del. Super. Ct. Jul. 1, 2021 (“An
otherwise clear intent to arbitrate will not be
invalidated merely because a party did not negotiate
the arbitration provision or participate in its
drafting.”).
* * * *
The arbitration clause is accordingly not procedurally
unconscionable.

Tingyu Cheng v. Paypal, Inc., Case No. 21-cv-03608-BLF, 2022
U.S. Dist. LEXIS 7245, *7-10, 12 (N.D. Cal. Jan. 13, 2022).
Importantly, a “Plaintiff[’s] failure to establish
procedural unconscionability eliminates the need to consider
substantive unconscionability.” Maxwell v. Cellco P’ship, Civil
Action No. 19-152-RGA, 2019 U.S. Dist. LEXIS 188816, at *19 (D.
Del. Oct. 30, 2019).
Plaintiff claims here the contract at issue is
unconscionable because he had no opportunity to “negotiate” its
terms. (ECF No. 16 at 4.) Therefore, as in Cheng, Plaintiff is
making a procedural unconscionability argument. But there is no
procedural unfairness here. By the very terms of the User
Agreement, Plaintiff, a corporation presumably run by an

individual or individual with experience in contract
negotiations and substantial and sophisticated enough to require
the services of internet payment vendor, had the opportunity to
reject the arbitration provision not once – upon signing - but
twice – during the 30 day rejection period. In the language of
the Yellow Book United States case cited above, Plaintiff cannot
assert adhesion “when [it] ... had the requisite experience in
dealing in this type of contract, and was free to walk away from
it and not deal with the other party to the contract, or was
free to bargain for better terms.” Yellow Book United States v.
Sullivan, 2003 Del. C.P. LEXIS 15, at *15-16.

In view of the foregoing precedents, this Court finds
Plaintiff’s argument that the subject Agreement to Arbitrate is
unconscionable to be without merit. See Mikkilineni, 2021 Del.
Super. LEXIS 499 at *24 (“An otherwise clear intent to arbitrate
will not be invalidated merely because a party did not negotiate
the arbitration provision or otherwise participate in its
drafting.”)2 Accordingly, its claims against Defendant for
fraud, unlawful conversion, unjust enrichment, and breach of
contract are not properly before this Court. See Ashe v.
Blenheim Homes, L.P., C. A. No.: 06C-07-204 (CLS), 2007 Del.
Super. LEXIS 500, at *10-11 (Del. Super. Ct. March 12, 2007)
(concluding binding arbitration agreement prohibited court from

assessing the merits of contract, negligence and fraud claims
filed in Superior Court by Plaintiff in an effort to bypass
arbitration proceedings).
CONCLUSION
For the reasons expressed above, Defendant’s Motion to
Compel Arbitration or in the Alternative, to Dismiss Plaintiff’s
Amended Complaint (ECF No. 15) will be granted.3
An appropriate Order will be entered.
Date: 3/21/23 /s/ Noel L. Hillman, J.
At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.

2 Plaintiff also takes issue with the Limitation of Liability
provision of the Agreement, claiming it is “at odds” with what a
court could award. However, this provision clearly specifies
that it applies only “to the extent permitted by applicable
law.” (ECF No. 16 at 6.) This argument is without merit.

3 In its Response, Plaintiff states “Dismissal of the Plaintiff’s
action should not be ordered until the court has determined that
the arbitration clause itself is valid.” (ECF No. 16 at 7.)
Because this Court has determined the arbitration clause is
valid and neither party requests that the court stay the action
pending arbitration, the case will be dismissed. See Lloyd v.
Hovensa, LLC, 369 F.3d 263, 269 (3d Cir. 2004)(“[T]he plain
language of [9 U.S.C.] § 3 affords a district court no
discretion to dismiss a case where one of the parties applies
for a stay pending arbitration.”) (emphasis added).

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10275013. Public record. Not legal advice.