Judge sends Amazon case to arbitration

By: The VNN Team  //  Legal

by Carol Thompson

A Washington federal judge ruled Tuesday that the lead plaintiffs in a proposed class action against Amazon.com Inc. must arbitrate claims that the company’s Amazon Prime free-shipping service contained hidden charges.

U.S. District Judge John Coughenour granted Amazon’s motion to arbitrate claims brought by Cemal Ekin and Marcia Burke on behalf of a proposed class of Amazon Prime members due to the arbitration provisions contained in Amazon’s clickwrap agreement.

Amazon asked the court in October to bound the plaintiffs in a class action suit to arbitration.

At the center of the case is Amazon’s prime memberships. Earlier this year,  Ekin filed a claim in the U.S. District Court in Seattle alleging that some prices on Amazon Prime-eligible products are inflated. The Amazon Prime subscription program offers free two-day shipping on Prime-eligible products. The suit alleges that  Amazon encourages vendors who use Amazon to ship items to mark up their prices to essentially cover shipping charges.

The Prime program requires members to pay an annual fee of $79 in return for free shipping on Prime-eligible products. Amazon also offers the service to members on certain third-party merchandise referred to as Fulfilled by Amazon (FBA).

The lawsuit alleges that Prime members were deceived by the company because of the inflated prices. “The routine inclusion and encouragement of inclusion of shipping charges in the prices of FBA Prime-Eligible items constitutes a breach of Amazon’s promise to Prime Program Members that shipping charges would not be included in the prices of items offered for sale as FBA Prime-Eligible, and violates Amazon’s agreement that shipping would be “free.”

Filed as a class action, the plaintiffs cite examples including a 12-pack of Callaway Hex Chrome Golf Balls that were available from a third-party vendor for $29.99 with free shipping for Prime customers, while non-Prime members paid $24.99 plus $5 shipping, effectively the same total price.

Amazon filed two motions in the case. The first sought dismissal and the second sought forced arbitration. According to Amazon, every Prime user agrees to its terms, which includes arbitration.

The plaintiffs contend the terms and conditions state, “Any dispute … in which the aggregate total claim for relief sought on behalf of one or more parties exceeds $7,500 shall be adjudicated in any state or federal court in King County, Washington…. [That court shall have] exclusive jurisdiction and venue.”

Despite the terms and conditions set forth, the judge ruled that the case must go before an arbitrator.

Image: Kate Hopkins/Flickr