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Clarke v. Upwork Global, Inc.

United States District Court, S.D. New York

May 10, 2017

Chris Clarke and Timothy Peterson, Plaintiffs,
v.
Upwork Global, Inc., Defendant.

          MEMORANDUM & ORDER

          ALISON J. NATHAN UNITED STATES DISTRICT JUDGE.

         Plaintiffs Chris Clarke and Timothy Peterson (together, "Plaintiffs") bring this diversity action against Defendant Upwork Global, Inc. ("Upwork"), seeking declaratory and injunctive relief precluding Upwork's further prosecution of certain claims asserted against Plaintiffs in an ongoing JAMS arbitration proceeding, reference number 1110019847, pending in California before the Honorable Richard J. McAdams (Ret.) (the "Arbitration"). Before the Court is Plaintiffs' motion for an order preliminarily enjoining Upwork from pursuing such claims and generally from taking any further action with respect to Plaintiffs in the Arbitration during the pendency of this lawsuit. For the reasons set forth below, Plaintiffs' motion is DENIED.[1]

         I. Background

         A. Factual Background

         The facts pertinent to the instant motion are substantially undisputed. Upwork operates a website that allows businesses and self-employed professionals to find and contract with one another directly for various services and to invoice and pay for such services through pre-funded escrow accounts. Declaration of Kimberly L. Owens, Dkt. No. 8-1 ("Owens Dec"), ¶ 2. Through its website, Upwork offers certain premium solutions to larger enterprise clients, including "Upwork Enterprise" services. Id. ¶ 3. A company that purchases Upwork Enterprise services receives, among other things, a private portal accessible to the company and its authorized users, the ability to apply standard terms and requirements across multiple contractual engagements, an option to consolidate invoicing across engagements, and an option to obtain "Enterprise Billing" services by which Upwork advances payment to the company's contractual partners and then invoices the company for reimbursement of these payments on a monthly basis. Id. ¶¶ 3-4.

         At all times relevant to this action, Plaintiffs were employed as officers of the CHR Group ("CHR"), a marketing services firm, with Clarke serving as Executive Vice President of Corporate Development and Mergers and Acquisitions and Peterson serving as Vice President, Digital.[2] On December 15, 2015, Upwork entered into a contract with CHR's subsidiary, Studio One Networks, Inc. ("Studio One"), by which Studio One purchased one year's worth of Upwork Enterprise and Enterprise Billing services (the "Enterprise Agreement"). Owens Dec. ¶ 5 & Ex. A ¶¶ 2-3, 6-7; Clarke Dec. ¶ 5; Peterson Dec. ¶ 5. The Enterprise Agreement explicitly incorporates by reference certain defined "Terms of Service, " including a "User Agreement, " available electronically through Upwork's website. Owens Dec. ¶¶ 5-6, 10 & Ex. A¶l.

         Peterson and Clarke each registered as users of Studio One's account with Upwork, on or around January 6, 2016 and April 15, 2016, respectively. Owens Dec. ¶ 12; Clarke Dec. ¶ 5; Peterson Dec. ¶ 5. In order to register as an authorized user of a preexisting enterprise account, one is required to complete an electronic form on Upwork's website that calls for at least basic personal information, such as full name and e-mail address, and also to affirmatively check an electronic box confirming the following statement: "Yes, I understand and agree to the Upwork Terms of Service, including the User Agreement and Privacy Policy." Owens Dec. ¶¶ 6-9. The words "Upwork Terms of Service, " "User Agreement, " and "Privacy Policy, " as set forth in the foregoing statement as it appears on Upwork's website, are hyperlinks to electronic versions of the referenced documents. Owens Dec. ¶ 10.

         Several provisions of Upwork's User Agreement are relevant to this action. The User Agreement's preamble states, among other things:

This User Agreement (this 'Agreement') is a contract between you ('you' or 'User') and Upwork Global, Inc. ('Upwork', 'we', or 'us') and, to the extent expressly stated in this Agreement, our Affiliates Elance Escrow Corporation ('EEC') and Elance Limited. You must read, agree to, and accept all of terms and conditions contained in this Agreement in order to use our website located at www.upwork.com (http://www.upwork.com)

Owens Dec. Ex. B at 1. The preamble further provides:

YOU UNDERSTAND THAT BY USING THE SITE OR SITE SERVICES AFTER THE EFFECTIVE DATE, YOU AGREE TO BE BOUND BY THIS AGREEMENT, INCLUDING THE MANDATORY BINDING ARBITRATION AND CLASS ACTION/JURY TRIAL WAIVER PROVISION IN SECTION 21.4. ... IF YOU AGREE TO THIS AGREEMENT ON BEHALF OF AN ENTITY, OR IN CONNECTION WITH PROVIDING OR RECEIVING SERVICES ON BEHALF OF AN ENTITY OR AGENCY, YOU REPRESENT AND WARRANT THAT YOU HAVE THE AUTHORITY TO BIND THAT ENTITY OR AGENCY TO THIS AGREEEMENT. IN THAT EVENT, 'YOU' AND 'YOUR' WILL REFER AND APPLY TO THAT ENTITY OR AGENCY.

Id. at 2 (capitalization in original). The referenced arbitration provision in turn states, among other things:

This Mandatory Binding Arbitration and Class Action/Jury Waiver provision ('Arbitration Provision') applies to all Users except Users located outside of the United States and its territories.
In the unlikely event that parties are unable to resolve a Claim within 60 days of the receipt of the applicable Notice, you, Upwork, and our Affiliates agree to resolve the Claim by binding arbitration before an arbitrator from JAMS.

Id. §21.4. It further provides:

This Arbitration Provision is the full and complete agreement relating to the formal resolution of Claims. For the avoidance of doubt, this Arbitration Provision covers, and the arbitrator shall have exclusive jurisdiction to decide, all disputes arising out of or relating to the interpretation, enforcement, or application of this Arbitration Provision, including the enforceability, revocability, scope, or validity of the Arbitration Provision or any portion of the Arbitration Provision. All such matters shall be decided by an arbitrator and not by a court. The parties expressly agree that the arbitrator and not a court ...

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