A Southern District of New York judge this week sent to arbitration a lawsuit claiming the NBA: Live Games & Scores app illegally shares users’ real-world names and email addresses with Adobe, Braze and other platforms.
U.S. District Judge Jeannette A. Vargas reasoned that California residents James Whalen and Victor Fuentes accepted terms of use that contained an arbitration clause, and the two men failed to offer a sufficient reason for Vargas to deem the clause unenforceable.
The ruling arrives as the use of arbitration—which, unlike litigation, is conducted in private and before an arbitrator instead of a judge or jury—has become a central topic in sports law. Most notably, Minnesota Vikings defensive coordinator Brian Flores and former Las Vegas Raiders head coach Jon Gruden are contesting the legality of the NFL using a league-overseen arbitration process to resolve disputes in which the league is accused of wrongdoing.
For leagues and teams, arbitration clauses are a powerful method of preempting potential lawsuits brought by fans, consumers and others who contractually accept terms to attend a game, purchase merchandise, watch online videos or other activities and who claim they were injured in a way the law ought to protect. When enforced, arbitration clauses require a party to exhaust arbitration, which can be expensive and last months or years, before suing. Judges also review arbitration awards with a high degree of deference, meaning the side that loses the arbitration is often disincentivized to petition a judge to vacate the award.
Whalen and Fuentes sued NBA Properties, the marketing and licensing arm of the NBA, in January. The case was originally filed in California and then transferred to New York.
Whalen downloaded the NBA app on his iPhone in 2023 and subscribed to League Pass Premium, which provides access to out-of-market games and other features. Fuentes downloaded the app in 2022 on his Android phone and, like Whalen, subscribed to League Pass Premium. The two men used the app to watch highlights, game previews and other content.
Whalen and Fuentes say they didn’t know the app would share their personally identifiable information. Their video-viewing records were allegedly used for “marketing, advertising and analytics purposes.”
They argue NBA Properties has violated the Video Privacy Protection Act (VPPA), which President Ronald Reagan signed into law in 1988 and which prohibits videotape service providers from knowingly disclosing a consumer’s personal information.
In recent years, the VPPA has been used to sue sports leagues, including the NBA and NFL, as well as media companies over the use of pixel tracking cookies to share video-watching histories. As Sportico has detailed, many of these cases have come up short, including because courts have found the VPPA concerns information that would be decipherable to an ordinary person—like a list of videos someone watched—whereas interpretation of cookies requires technology and expertise.
Whether the arguments brought by Whalen and Fuentes have traction will now be decided by an arbitrator, not a judge. The plaintiffs insist that the arbitration clause is unconscionable and thus unenforceable, but Vargas disagreed.
In her decision, Vargas emphasized that federal law and accompanying policies favor arbitration and that judges “must resolve any doubts” regarding the scope of arbitrable issues in favor of enforcing arbitration.
She also explained that a finding of unconscionability requires a substantial showing. For instance, there often must be a finding of “oppression and surprise” about the terms of an agreement, such as using “unreadably small print” or vexing language. Another way of showing unconscionability is by pointing out the terms are so “overly harsh or one-sided” that they “shock the conscience.”
NBA Properties didn’t engage in those types of practices, Vargas reasoned. She found that hyperlinks to terms were available and were conspicuous. A “reasonably prudent Internet user” would have been on notice, the judge found.
Vargas also didn’t see the arbitration clause as unusually one-sided, as, unlike in cases cited by the plaintiffs, the terms applied to both users and the NBA.
Whalen and Fuentes can appeal to the U.S. Court of Appeals for the Second Circuit.
