9th Circuit Asks NV Supreme Court Whether Arbitration Clause is Void Under NV Law When Agreement Can Be Unilaterally Modified at Any Time

The U.S. Court of Appeals for the Ninth Circuit has certified a question to the Nevada Supreme Court asking whether an arbitration clause is void under Nevada law when the drafter can unilaterally modify the entire agreement at any time, the modification becomes effective immediately, and the arbitration clause and pending claims are not explicitly exempt from modification.

In the underlying case, the plaintiff sued the defendants–entertainment providers because they had declined to refund the value of festival tickets that the plaintiff had purchased after a security incident interfered with the event.  The plaintiff purchased the tickets through a website operated by one of the defendants.  And when purchasing the tickets, the plaintiff checked a box agreeing to the website’s terms of sale, which are governed by Nevada law.  The terms included an arbitration clause specifying, in relevant part, that: the company “may make changes to these Terms at any time.  Any changes [the company may] make will be effective immediately when [the company] post[s] a revised version of these Terms on the Site.”

After removing the case from Nevada state court to Nevada federal court, the defendants moved to compel arbitration based on the above-described arbitration clause.  The plaintiff opposed the motion, contending that the unilateral modification right made the entire contract (including the arbitration clause) unenforceable because the defendant’s promises thereunder were illusory.  The Nevada federal court granted the motion to compel.  But because the Ninth Circuit concluded that existing Nevada case law does not clearly dictate whether the arbitration clause is void, the Ninth Circuit certified this question to the Nevada Supreme Court.

Accordingly, the Ninth Circuit stayed all proceedings until the Nevada Supreme Court responds to the certified question.