JIM ROSE and ANITA GIAN v. Mercedes-Benz USA, LLC

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 24-1042
JIM R OSE and A NITA GIAN ,
Plaintiffs-Appellants,
v.
M ERCEDES-BENZ USA, LLC, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:22-cv-6099 — Mary M. Rowland, Judge.
____________________
A RGUED O CTOBER 21, 2024 — DECIDED F EBRUARY 13, 2026
____________________
Before R OVNER , SCUDDER , and LEE, Circuit Judges.
LEE, Circuit Judge. Plaintiffs Jim Rose and Anita Gian each
purchased a Mercedes-Benz car equipped with “mbrace,” a
subscription-based, 3G wireless communication system.
Eventually, 4G and 5G cellular technology replaced 3G, ren-
dering the mbrace systems largely obsolete. Rose and Gian
requested that their dealerships replace the outmoded sys-
tems at no cost but to no avail. And so, they filed this class
action lawsuit against Mercedes-Benz USA, LLC and

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2 No. 24-1042
Mercedes-Benz Group AG (collectively, “Mercedes”) alleg-
ing, among other things, breach of warranty under federal
and state law.
In response, Mercedes moved to compel arbitration under
the Federal Arbitration Act, 9 U.S.C. § 4, citing the mbrace
Terms of Service. The district court granted the motion and,
because neither party requested a stay under 9 U.S.C. § 3, dis-
missed the case without prejudice. Plaintiffs appeal, arguing
that they did not agree to arbitrate their claims. We affirm.
I
Mercedes’s mbrace subscription service enabled Plaintiffs’
cars to access certain safety, security, and entertainment fea-
tures. These features included smartphone integration and
roadside assistance utilizing a 3G cellular network. Although
Plaintiffs’ recollections of the activation process are hazy, each
recall activating a free, limited-time subscription to the
mbrace service. And, when the free subscription expired, each
subscribed to the service at a monthly fee.
The mbrace Terms of Service provide that they constitute
a “Binding Agreement” between subscribers to the mbrace
service and the service provider (here, Verizon Telematics,
Inc.); the document also expressly lists Mercedes as a third-
party beneficiary under the Agreement. Furthermore, the
Agreement states (in all capital letters), “You will have agreed
to these terms of service … by speaking with a customer ser-
vice representative … and confirming that you wish to sign
up for the service.” It also provides (again in all capital letters)
that the parties “agree that, to the fullest extent provided by
law … any controversy or claim arising out of or relating to …
any product or service provided under or in connection with

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No. 24-1042 3
these terms of service … will be settled by independent arbi-
tration.”
During the relevant time, Thomas Grycz, Mercedes’s Su-
pervisor of Product Technical Support, was responsible for
the mbrace subscription service. According to Grycz, to acti-
vate the subscription, the car owner must either enroll at a
Mercedes dealership or contact the mbrace call center. And,
when a person contacts the mbrace call center, Grycz attests,
an mbrace representative informs the caller of the Terms of
Service and directs the caller to the Agreement for review.
Furthermore, once a car owner has activated the mbrace
subscription, Grycz states, Mercedes sends the new sub-
scriber a Welcome Kit and a Welcome Email that reminds the
subscriber that the service is subject to the Agreement. More-
over, the email provides the subscriber with a hyperlink to a
copy of the Agreement. Additionally, when a subscription is
about to expire, Grycz notes, Mercedes sends the subscriber a
renewal email, which also references the Agreement.
For his part, Rose recalls, to the best of his recollection, that
he subscribed to the mbrace service by contacting the call cen-
ter on the day he purchased his car. Gian, on the other hand,
does not remember precisely how she subscribed to the ser-
vice. She believes that her subscription may have been active
when the dealership delivered the car to her residence shortly
after her purchase, but Gian does not meaningfully dispute
Mercedes’s evidence that she in fact activated her mbrace sub-
scription two days after she purchased her car at the dealer-
ship. And, once their respective free subscriptions ended, they
both continued the service by paying a monthly fee. Neither
recall being informed of the Agreement, however.

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4 No. 24-1042
After Plaintiffs filed this lawsuit, Mercedes informed them
that they were bound by the arbitration provision in the
Agreement and requested that they resolve the dispute
through arbitration. Plaintiffs refused.
II
When considering a district court’s ruling on a motion to
compel arbitration under the Federal Arbitration Act (FAA),
“we review findings of fact for clear error and rulings on ques-
tions of law de novo.” Kass v. PayPal Inc., 75 F.4th 693, 700 (7th
Cir. 2023) (citation omitted).
Congress enacted the FAA “to ensure the enforcement of
arbitration agreements according to their terms so as to facil-
itate streamlined proceedings.” AT&T Mobility LLC v. Concep-
cion, 563 U.S. 333, 344 (2011). “When a party neglects or re-
fuses to arbitrate despite a valid written agreement to do so,
§ 4 authorizes a district court to issue an order compelling ar-
bitration.” Garage Door Sys., LLC v. Blue Giant Equip. Corp., 134
F.4th 953, 957 (7th Cir. 2025).
That said, “arbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which
he has not agreed so to submit.” AT&T Tech., Inc. v. Commc’n
Workers of Am., 475 U.S. 643, 648 (1986) (internal quotation
marks omitted). Accordingly, the party seeking to compel ar-
bitration bears the burden to establish: “(1) an agreement to
arbitrate, (2) a dispute within the scope of the arbitration
agreement, and (3) a refusal by the opposing party to proceed
to arbitration.” Zurich Am. Ins. Co. v. Watts Indus., Inc., 466 F.3d
577, 580 (7th Cir. 2006).
Plaintiffs focus on the first element, arguing that Mercedes
has failed to establish the existence of an arbitration

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No. 24-1042 5
agreement. “Whether an agreement to arbitrate has been
formed is governed by state-law principles of contract for-
mation.” Domer v. Menard, Inc., 116 F.4th 686, 694 (7th Cir.
2024). Here, both parties rely on Illinois law, and so, we shall
as well.
Illinois courts use an objective approach to determine
whether parties have mutually agreed to the formation of an
agreement. Sgouros v. TransUnion Corp., 817 F.3d 1029, 1034
(7th Cir. 2016). Under this approach, the parties need not
“share the same subjective understanding as to the terms of
the contract.” Midland Hotel Corp. v. Reuben H. Donnelley Corp.,
515 N.E.2d 61, 65 (Ill. 1987). However, “there must be a meet-
ing of the minds or mutual assent as to the terms of the con-
tract.” Id.
To this end, in the context of a sale, we ask whether a seller
has “adequately communicate[d] all the terms and conditions
of the agreement, and whether the circumstances support the
assumption that the purchaser receive[d] reasonable notice of
those terms.” Sgouros, 817 F.3d at 1034. In other words, we ask
whether “a reasonable person in [the purchaser’s] shoes
would have realized that he was assenting to” the terms of the
contract. Id. at 1035.
While the FAA “does not expressly identify the eviden-
tiary standard a party seeking to avoid compelled arbitration
must meet,” we have “analogized the standard to that re-
quired of a party opposing summary judgment under Rule
56(e) of the Federal Rules of Civil Procedure.” Tinder v. Pink-
erton Sec., 305 F.3d 728, 735 (7th Cir. 2002). It follows that “a
party cannot avoid compelled arbitration by generally deny-
ing the facts upon which the right to arbitration rests; the

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6 No. 24-1042
party must identify specific evidence in the record demonstrat-
ing a material factual dispute for trial.” Id. (emphasis added).
In Plaintiffs’ view, none of Mercedes’s communications
provided them with sufficient notice of the terms of the
Agreement. Accordingly as they see it, their activation of the
mbrace service and continued use cannot constitute assent to
the Agreement or its terms. In support, they rely primarily on
three district court cases.
First is Melvin v. Big Data Arts, LLC, 553 F. Supp. 3d 447
(N.D. Ill. 2021). There, the only evidence of the plaintiff’s as-
sent to an arbitration provision was that he had clicked on a
“Place Your Order” button on a website when ordering a
DNA analysis report from the provider. Id. at 450–51. Finding
lack of assent, the district court noted that the provider had
failed to describe where or how the terms of use were availa-
ble on the website. Nor was there any evidence from which a
reasonable factfinder could conclude that the plaintiff had no-
tice of the terms of use. See id. at 451.
Second is Gilbert v. I.C. System, Inc., No. 19-CV-04988, 2021
WL 292852 (N.D. Ill. Jan. 28, 2021). In that case, a collection
agency for Sprint moved to compel arbitration based entirely
on a declaration attesting that the plaintiff had activated a
Sprint account and that Sprint had provided the terms of ser-
vice upon activation. See id. at *7. Because the declaration
lacked any description of the account activation process or a
customer’s opportunity to review the terms of service, the
court held that the defendant had not satisfied its burden to
show mutual assent. See id. at *8.
Finally, we have Wilson v. Redbox Automated Retail, LLC,
448 F. Supp. 3d 873 (N.D. Ill. 2020). There, the court held that

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No. 24-1042 7
distracting visual clutter on a kiosk screen and inconspicuous
coloring of a hyperlink to the terms of service failed to pro-
vide customers with adequate notice that they were assenting
to the terms when pressing the “Pay Now” button. See id. at
884–85. As such, the court held that a subsequent email to cus-
tomers explaining that the terms of service included an arbi-
tration provision did not establish an agreement to arbitrate
in the first instance. See id. at 886.
The record here is markedly different. As Grycz described
(and Plaintiffs do not dispute), when a car owner contacts the
mbrace call center, a representative informs the caller of the
Agreement and where to locate and review the Agreement,
which is accessible via Mercedes’s website. Such information
would place a reasonable person on notice that initiating a
subscription would trigger the Terms of Service and that it
would be prudent to review the Agreement before subscrib-
ing. See Sgouros, 817 F.3d at 1035; Hubbert v. Dell Corp., 835
N.E.2d 113, 121–22 (Ill. App. Ct. 2005) (holding that the state-
ment “‘All sales are subject to Dell’s Term[s] and Conditions
of Sale’” and conspicuous blue hyperlinks to those terms pro-
vided adequate notice). Indeed, nothing prevented those who
contacted the call center from hanging up, reviewing the
Agreement, and recontacting the call center to subscribe. Ra-
ther than doing so, however, Plaintiffs elected to activate their
subscriptions. This evidence, in and of itself, is sufficient to
establish notice that an mbrace subscription was subject to the
Agreement and its terms.
Furthermore, as Grycz explains, once a customer sub-
scribes, he or she receives a Welcome Kit and a Welcome
Email, both of which refer the customer to the Agreement. Cit-
ing Wilson, Plaintiffs counter that these communications were

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8 No. 24-1042
insufficient to constitute notice, but here, unlike in Wilson,
Plaintiffs received notice that their subscriptions would be
subject to the Agreement prior to commencing their subscrip-
tions.
Plaintiffs next contend that they have raised a genuine is-
sue of material fact regarding whether the call center repre-
sentative in fact provided them information about the Agree-
ment. But Grycz described in detail the protocol that call cen-
ter representatives followed during the relevant period in
question when they fielded inquiries from potential mbrace
subscribers. This is enough to create a rebuttable presumption
that the information was provided to car owners who wanted
to subscribe to the service. See Kass, 75 F.4th at 704. Of course,
Plaintiffs can rebut this presumption by attesting that they
never received information about the Agreement during their
sign-up process, see id. (noting that plaintiff “expressly” de-
nied receiving the communication), but they fall short of that
here. Rather, both Rose and Gian state only that they “do not
recall” whether anyone from Mercedes provided the infor-
mation to them. Such statements are not enough to rebut the
presumption of notice given this record. See Tinder, 305 F.3d
at 735–36.
Simply put, Mercedes has presented unrebutted evidence
that mbrace subscribers receive notice of the arbitration pro-
vision in the Agreement prior to initiating their subscriptions.
And Plaintiffs assented to the Agreement by subscribing to
the service.
* * *
For the foregoing reasons, the judgment is AFFIRMED.

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