Background
Erin J. Paxson purchased five tickets through Front Gate Ticketing Solutions’ website for the 2022 Lovers and Friends music festival in Las Vegas. The site required her to agree to its Terms of Sale and stated that continuing also constituted agreement to its Terms of Use. Those Terms required arbitration of disputes related to the site or products and services sold through it.
The Terms also allowed Front Gate to change them “at any time,” without notice, with changes effective immediately upon posting. After an alleged active-shooter announcement caused a stampede at the festival and Live Nation declined to provide refunds or credits, Paxson filed a putative class action asserting breach-of-contract, unjust-enrichment, and other claims. The district court applied Nevada law and compelled arbitration, reasoning that Nevada’s implied covenant of good faith and fair dealing constrained Front Gate’s modification power and that modifications could not apply to accrued or pending claims. Paxson appealed.
The Court’s Holding
The Ninth Circuit did not decide whether the arbitration clause was enforceable. It certified to the Supreme Court of Nevada whether, under Nevada law, an arbitration clause lacks consideration when the drafter may modify the entire agreement at any time, without notice and effective immediately upon posting, and the modification provision does not expressly exempt the arbitration clause or accrued or pending claims.
The panel concluded that Nevada appellate precedent does not control whether the implied covenant of good faith and fair dealing can supply consideration at the contract-formation stage or whether an unrestricted modification clause should be construed as prospective only. Because the answer will likely determine whether any arbitration agreement was formed, and because unilateral modification provisions are common in consumer contracts, the panel stayed the appeal, withdrew it from submission, and administratively closed the docket pending the Nevada Supreme Court’s response.
Key Takeaways
- The Ninth Circuit made no merits ruling on the enforceability of Live Nation’s arbitration clause.
- The certified question concerns contract formation: whether unrestricted unilateral modification authority makes the promise to arbitrate illusory and leaves the agreement without consideration.
- The panel found Live Nation’s survival and severability arguments insufficient to eliminate the formation issue and deemed its part-performance argument forfeited.
Why It Matters
The Nevada Supreme Court’s answer could determine how businesses and consumers evaluate arbitration clauses embedded in online terms that may be changed immediately and without notice. If Nevada treats such modification authority as making the promise to arbitrate illusory, courts may refuse to enforce similarly drafted clauses unless they contain meaningful limits.
The decision also underscores that a delegation clause does not send the threshold question of whether an arbitration agreement was ever formed to the arbitrator. Until Nevada’s high court responds, the Ninth Circuit has not affirmed or reversed the order compelling Paxson to arbitrate.