Click to Arbitrate: Illinois Courts Rule on Digital Arbitration Clauses

Written by: Donald Patrick Eckler and Taylor Rathwell, Freeman Mathis & Gary LLP, Chicago

Illinois courts have historically favored arbitration as an efficient method for resolving disputes. Courts, however, are increasingly scrutinizing arbitration agreements for clarity, fairness, and party intent. In the Fourth District, the recent cases of Nord v. Residential Alternatives of Illinois, Inc. and Mikoff v. Unlimited Development, Inc. showcase this more nuanced approach. In Nord, the court held that the death of a nursing home resident terminated the contract, including its arbitration clause, due to the absence of survival language. The court emphasized that arbitration agreements are governed by standard contract principles and must clearly articulate their terms. As the drafter, the nursing home bore the consequences of ambiguous language. Nord v. Residential Alts. of Ill., Inc., 2023 IL App (4th) 220669.

In contrast, Mikoff granted the defendants’ motion to dismiss and compel arbitration for a Survival Act claim as the terms of the delegation clause of the arbitration agreement left it up to an arbitrator to determine if the discharge terminated the agreement. Mikoff v. Unlimited Dev., Inc., 2024 IL App (4th) 230513, ¶ 53. The court reaffirmed that under the Federal Arbitration Act (“FAA”), arbitration is a matter of consent. Mikoff clarified that delegation clauses assign arbitrability questions to the arbitrator, and courts must honor this unless the validity of the arbitration agreement itself is directly challenged.

While Illinois courts have long applied these delegation clause and contract formation principles to arbitration agreements, recent cases have added a new layer of complexity as courts grapple with digital and online contracts. These technological developments signal a shift toward a more rigorous judicial review of arbitration clauses.

Peterson v. Devita

In Peterson v. Devita, 2023 IL App (1st) 230356, the plaintiff, Andrew Peterson, sustained permanent injuries after falling from an elevated porch at a rental property booked by a friend through Airbnb. Peterson, 2023 IL App (1st) 230356, ¶ 2. Peterson sued Airbnb and Airbnb moved to stay proceedings and compel arbitration, arguing that Peterson had accepted its terms of service, including a mandatory arbitration clause, when he created an account on their online platform years earlier, despite never booking a property himself. Id. ¶ 2.

The circuit court denied Airbnb’s motion and Airbnb filed an interlocutory appeal. Id. ¶ 3. The appellate court affirmed, holding that the arbitration agreement did not apply to Peterson’s claims. Id. ¶ 4. The court reasoned that Peterson’s injuries did not arise from his use of Airbnb’s platform, and he was neither a party to the booking, not bound by agency through his friend booking the property or equitably estopped from refusing to arbitrate the claims. Id. ¶ 4.

In its appeal, Airbnb contended that the trial court erred because Peterson agreed to mandatory arbitration when he created an account through Airbnb and accepted its terms of service and neither the trial court nor the appellate court has authority to rule on arbitrability because the arbitration agreement delegates to an arbitrator. Id. ¶ 3.

The court acknowledges the delegation clause but held that before determining the issue of whether the arbitrator is to decide issues of arbitrability, the court must first address whether the defendant’s terms of service relate to the allegations in the plaintiff’s complaint. Peterson, 2023 IL App (1st) 230356, ¶ 21. To analyze this, the court uses the provisions of the Federal Arbitration Act (“FAA”) and not state law. Id. ¶ 22. The FAA emphasizes the fundamental principle that arbitration is a matter of contract. Id. (citing Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010)). Using decisions regarding Airbnb from other jurisdictions, the court here reasoned that “a plaintiff’s tort claims should not be subject to the arbitration provision in the absence of evidence they ‘ever utilized Airbnb’s services.’” Id. ¶ 35 (quoting Airbnb, Inc. v. Rice, 518 P.3d 88, 93 (2022)). It further stated, “the arbitration provision should apply only when the claims arise from a plaintiff’s use of the Airbnb platform and not on the fortuity of a plaintiff having created an account.” Id. ¶ 35.

The court held this was important because holding otherwise would lead to absurd results and a contract, not fate, dictates arbitrability. Id. ¶ 35. It uses the hypothetical of a member of a hotel chain using its Internet site with an arbitration clause like Airbnb. It’s argued that this person could attend a wedding at one of the chain’s hotels years later, sustain an injury from a falling chandelier, and have to arbitrate, regardless of the time passed or the location of the incident. Peterson, 2023 IL App (1st) 230356, ¶ 36. It was further argued that under the agency argument, even if the wedding guest had never made an account with the hotel chain, if the wedding host had an account, they would still have to arbitrate. Id.

In Peterson, Justice Lavin dissented, arguing that Peterson did agree to arbitrate disputes with Airbnb. Id. ¶ 50. The dissent argues that Peterson, by creating and maintaining an Airbnb account, accepted Airbnb’s terms of service, which included an arbitration clause. Id. ¶ 51. The dissent emphasizes that Peterson’s ability to use Airbnb’s platform constituted consideration for the contract, even if he did not book a property himself because Airbnb offered Peterson use of the platform and Peterson accepted that offer. Id. ¶ 53.

Furthermore, the dissent argues that the plaintiff’s friend acted as an agent for Peterson when booking the property, binding Peterson to the arbitration agreement. Id. ¶ 54. The dissent argues it is common for friends or family to book travel plans for others, creating an agency relationship where the person booking can bind others to terms including arbitration clauses. Peterson, 2023 IL App (1st) 230356, ¶ 54.

The majority rejected this view, warning against the “absurd consequence” of binding individuals to arbitration merely for having an account, regardless of their involvement in the transaction. As the court notes, “a contract, and not fate, dictates arbitrability.” Id. ¶ 36.

Geller v. Uber Technologies

In Geller v. Uber Technologies, Inc., 2025 IL App (1st) 241458-U, the First District addressed the enforceability of delegation clauses within phone app arbitration agreements in the context of a wrongful death claim. The appellate court reversed the circuit court’s denial of Uber’s motion to compel arbitration, emphasizing that the arbitration agreement between the parties clearly delegated the issue of arbitrability to the arbitrator. Geller, 2025 IL App (1st) 241458-U, ¶ 1.

The plaintiff’s claims stemmed from the death of her husband, Mark Geller, in an automobile accident in which he was a passenger in an uber driver’s vehicle. Id. ¶ 2. The plaintiff’s complaint alleged survival claims on behalf of both her husband’s estate and her own claims under the Wrongful Death Act 740 ILCS 180/0.01 et seq. (West 2022) for the loss of her husband. Id. ¶ 4. Uber made a motion to compel arbitration, based on the fact that both the plaintiff and her husband had independently agreed to Uber’s terms of use when initially signing up for the Rider App, which included mandatory arbitration provisions. Id. ¶ 6. The Plaintiff did not dispute that such an arbitration agreement existed in Uber’s terms of use, but she challenged its enforceability, arguing it was unconscionable and that her husband’s agreement did not bind her personally or as administrator of his estate. Id. ¶ 7.

On appeal, Uber argued that the circuit court lacked authority to determine arbitrability because the plaintiff’s arbitration agreement included a delegation clause requiring the arbitrator, not the court, to decide whether her wrongful death claims fell within the scope of the agreement. The appellate court agreed. Id. ¶ 9.

Central to Uber’s argument was the delegation clause, which stated, “the Arbitrator shall also be responsible for determining all threshold arbitrability issues, including issues relating to whether the Terms are applicable, unconscionable or illusory and any defenses to arbitration, including waiver, delay, laches or estoppel. If there is a dispute about whether this Arbitration Agreement can be enforced or applies to a dispute, you and Uber agree that the arbitrator will decide that issue.” Peterson, 2023 IL App (1st) 230356, ¶ 9. Despite this clause, the circuit court ruled that while the estate’s survival claims were subject to arbitration under the decedent’s agreement, the plaintiff’s wrongful death claims were not, as they did not arise from her own use of Uber. The court did not address the delegation clause. Id. ¶ 10.

On appeal, the plaintiff argued that her arbitration agreement, including the delegation clause, was unconscionable. Id. ¶ 18. Uber argued that the delegation clause meant it was not up for the court to decide. Id. ¶ 9. The appellate court clarified that delegation clauses assign threshold issues, such as whether an arbitration agreement covers a particular controversy, to the arbitrator, but the court noted a critical limitation to this. Id. ¶ 20. If the arbitration agreement itself is challenged as unconscionable, courts must first resolve this issue before enforcing a delegation clause. Id. ¶ 20. In its reasoning, the court cited U.S. Supreme Court case, Coinbase, Inc. v. Suski, 602 U.S. 143 (2024), in which the court held that judicial review is required first when there are challenges to the validity of an arbitration agreement, even if different terms in the delegation clause exists. Peterson, 2023 IL App (1st) 230356, ¶ 20. Therefore, it was within its right to address the unconscionability argument. Id. ¶ 20.

Ultimately the court found the plaintiff’s arbitration agreement was neither procedurally nor substantively unconscionable. Id. ¶ 29. It reasoned that the terms of use prominently disclosed the arbitration provision in bold, capitalized text, and the agreement was not hidden in fine print. Id. ¶ 24. The court emphasized that “consumers have a duty to read contracts to which they agree.” Id. (citing Reazuddin v. Gold Coast Exotic Imports, LLC, 2022 IL App (1st) 210763-U, ¶ 76). The court reasoned that whether or not the plaintiff actually read the terms of use when she signed the Rider App, the arbitration agreement is not so confusing or obscure as to render it procedurally unconscionable. Id. ¶ 24. Regarding substantive unconscionability, the court held the agreement was not oppressively one-sided, as it required both parties to arbitrate and did not limit the plaintiff’s potential recovery. Peterson, 2023 IL App (1st) 230356, ¶¶ 28-29 (citing Hwang v. Pathway LaGrange Property Owner, LLC, 2024 IL App (1st) 240534, ¶ 20; Turner, 2023 IL App (1st) 221721, ¶ 35).

Having found the agreement enforceable, the court turned to the delegation clause issue. Peterson, 2023 IL App (1st) 230356, ¶ 34. Under the FAA, parties can agree to arbitrate gateway issues of arbitrability. Id. ¶ 35. (citing Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 67-68 (2019). If an arbitration agreement delegates issues of arbitrability to an arbitrator, a court may not decide those issues. Id. ¶ 35 Here, the delegation clause in this case clearly assigned such issues to the arbitrator. The court emphasized that because the plaintiff had not successfully challenged the delegation clause, all arbitrability disputes, including whether her wrongful death claims fell within the scope of the agreement, must be decided by the arbitrator. Id. ¶ 36. As the U.S. Supreme Court held, when a “contract contains an arbitration clause with a delegation provision, then, absent a successful challenge to the delegation provision, courts must send all arbitrability disputes to arbitration.” Id. ¶ 37 (citing Coinbase, Inc., 602 U.S. at 152).

Finally, although the plaintiff argued that her late husband’s arbitration agreement did not bind her in her capacity as administrator of his estate, a potentially valid argument (see Carter v. SSC Odin Operating Co., LLC, 2012 IL 113204, ¶ 60), it was not the question presented to the court. Peterson, 2023 IL App (1st) 230356, Id. ¶ 38. The sole question presented was who determines whether her wrongful death claims fall within the scope of her own arbitration agreement. The delegation clause provided the clear answer that the arbitrator decides. Id. ¶ 38. The Supreme Court of Illinois has since granted a petition for leave to appeal on September 24, 2025.

Costello v. Urban Air Adventure Park North Riverside

In Costello v. Urban Air Adventure Park North Riverside, 2025 IL App (1st) 250219-U, the First District addressed the enforceability of arbitration agreements entered into online. The circuit court denied without prejudice the defendant’s motion to dismiss and compel arbitration, and the appellate court affirmed. Costello, 2025 IL App (1st) 250219-U, Id.¶ 1.

The defendants, who operated Urban Air Adventure Park, sought to compel arbitration based on three electronically signed agreements allegedly executed by the plaintiff prior to her visit. Id. ¶ 3. The plaintiff had filed suit alleging negligence after sustaining injuries while using a trampoline at the facility in 2021. The defendants attached two Release and Indemnification Agreements and a Membership and Annual Pass Agreement to their motion purported to be signed by the plaintiff, each containing arbitration clauses. Id. ¶ 4. However, they failed to include affidavits authenticating the agreements or verifying the plaintiff’s electronic signature. Id. ¶ 4.

Each release agreement stated that claims, including those for personal injury, “shall be settled by binding arbitration.” Id. ¶ 5. The last page of each of the release agreements contained an electronic signature with the plaintiff’s name, date of birth, and contact information. Id. ¶ 5. The circuit court allowed the plaintiff to conduct discovery before she responded to the motion. Costello, 2025 IL App (1st) 250219-U, ¶ 6. The plaintiff deposed the defendants’ corporate representative who described the online registration process, which includes the customers electronically signing agreements, and individually submitting payment, ID, and participant photos. Id. ¶ 6. He testified he did not know whether any security measures were in place to verify the identity of the person electronically signing the agreements. Id. ¶ 6. He also could not confirm whether the plaintiff had signed her agreements. Id. ¶ 6.

The circuit court found a material factual dispute regarding the existence of a valid arbitration agreement and denied the motion. On appeal, the defendants argued that the agreements and deposition testimony sufficiently established that the plaintiff was bound to arbitration. The plaintiff again countered that the defendants failed to meet their burden under Illinois law and did not support the motion with the required affidavit establishing the authenticity of the agreements or verify her electronic signature. The appellate court agreed with the plaintiff. Id. ¶ 10.

Both parties cited the Illinois Uniform Electronic Transactions Act (“IUETA”), 815 ILCS 333/1, which governs electronic records and signatures. Costello, 2025 IL App (1st) 250219-U, ¶ 11. Under IUETA, an electronic signature is attributable to a person if it was their act, and this may be shown through the efficacy of any security procedure used to verify identity. IUETA 815 ILCS 333/9(a); Costello, 2025 IL App (1st) 250219-U, ¶ 11. The defendants argued that their registration process satisfied IUETA’s requirements. However, the plaintiff emphasized the absence of any security protocol to confirm her identity. Costello, 2025 IL App (1st) 250219-U, ¶ 12. The appellate court found no Illinois precedent interpreting the IUETA on this issue and looked to Friedmann v. Jefferson Cnty. Bd. of Educ., 647 S.W.3d 181, 189-90 (Ky. 2022), where the Kentucky Supreme Court held that electronic signatures were not adequately verified when only basic, publicly available information was collected. Costello, 2025 IL App (1st) 250219-U, ¶¶ 13-14.

The court here held that under Section 2-619(a)(9), a motion to dismiss based on an affirmative matter must be supported by an affidavit if the matter is not apparent from the face of the complaint. Id. ¶ 15. Further, the affidavit must include facts upon which the defense is based, attach authenticated documents upon which the movant relies and establish that the affiant can testify competently to the information contained in the affidavit. Id. ¶ 15; Ill. Sup. Ct. R. 191(a). The court held that the defendants failed to meet this standard, as they did not provide any affidavit or evidence authenticating the agreements or verifying the plaintiff’s electronic signature and the corporate representative’s testimony did not overcome this deficiency. Costello, 2025 IL App (1st) 250219-U, ¶ 16. Accordingly, the appellate court held the defendants did not meet their burden to establish a valid agreement to arbitrate and affirmed the circuit court’s denial of the motion. Id. ¶ 18.

Johnson v. Human Power of N Company

In Johnson v. Human Power of N Company, 767 F.Supp.3d 845 (N.D. Ill., 2025), the U.S. District Court for the Northern District of Illinois addressed whether a consumer had validly assented to an arbitration agreement embedded in online messaging terms. Johnson, 767 F.Supp.3d at 848. The plaintiff, Luke Johnson, alleged that Human Power of N Company violated the Telephone Consumer Protection Act (“TCPA”) 47 U.S.C. §§ 227 et seq., by continuing to send him promotional text messages after he had unsubscribed. Johnson, 767 F.Supp.3d at 849. The defendant moved to compel arbitration based on a clause in its Messaging Terms and Conditions. The court denied the motion, holding that the plaintiff had not unambiguously manifested assent to the arbitration provision and that the defendant failed to provide reasonably conspicuous notice of the terms. Id. at 848.

In this case, the dispute centered on a pop-up advertisement on the defendant’s website offering 15% off in exchange for signing up for promotional text messages. After clicking the pop-up, the plaintiff was redirected to a separate webpage to enter personal information and consent to receive messages. Id. at 848-849. Although the pop-up included a hyperlink labeled “View Terms,” the court found that it did not clearly indicate that clicking the button was equivalent to agreement to the hyperlinked terms, including the arbitration clause. Id. at 851.

Applying the FAA, the court held that arbitration is a matter of contract and must satisfy three elements: (1) an enforceable agreement to arbitrate; (2) a dispute within the scope of the agreement; and (3) a refusal to arbitrate. Id. at 849 (citing Scheurer v. Fromm Family Foods LLC, 863 F.3d 748, 752 (7th Cir. 2017)). The plaintiff here disputed only the first element, and the burden was on the defendant to prove the existence of a valid agreement. Johnson, 767 F.Supp.3d at 850.

The court emphasized that “while the issues raised here—unwanted text messages and hyperlinked terms containing arbitration agreements—are thoroughly modern problems, courts must consider them through the lens of traditional contract interpretation.” Id. at 850. Under Illinois law, mutual assent requires a “meeting of the minds,” and websites must provide users with reasonable notice that clicking a button constitutes agreement to terms. Id. at 850 (citing Sgouros v. TransUnion Corp., 817 F.3d 102, 1036 (7th Cir. 2016)). The court found that the defendant’s disclosure merely informed users of its website that they were agreeing to receive messages, not that they were assenting to the terms. The hyperlink to the terms was labeled “View Terms” without any indication that clicking the button constituted agreement. Id. at 851-852. The court noted that the defendant could have used clearer language where the disclosures explicitly stated that clicking a button constituted agreement to terms, especially because the defendant has complete control over the language of its own website and could have written the disclosure in any way. Id. at 852.

Further, the court held that the website did not provide reasonably conspicuous notice. Id. at 852. The court evaluated notice from the objective perspective of the “reasonable online shopper—that is a person who is neither an expert nor a novice with technology.” Johnson, 767 F.Supp.3d at 852 (citing Domer, 116 F.4th at 695). It stated that the Seventh Circuit instructs courts to consider five factors when deciding whether a disclosure has afforded fair notice: “(1) the simplicity of the screen; (2) the clarity of the disclosure; (3) the size and coloring of the disclosure’s font; (4) the spatial placement of the hyperlink; and (5) the temporal relationship to the user’s action.” Id. at 853 (citing Domer, 116 F.4th at 695). Evaluating the factors, the court found that the hyperlink was not sufficiently prominent or proximate to the user’s action and the registration and hyperlink were on separate pages. Id. at 853-854.

In its holding, the appellate court denied the defendant’s motion to compel arbitration, finding that the plaintiff had not agreed to the arbitration clause in the Messaging Terms and Conditions. Id. at 854.

Practical Implications for Illinois Practitioners

These recent decisions from Illinois courts signal a heightened judicial scrutiny of arbitration agreements when they are entered into digitally. Practitioners should take note of the following:

Online Contract Formation: Johnson and Peterson emphasize the importance of clear and conspicuous notice in online agreements. Websites must explicitly inform its users that clicking a button constitutes assent to terms, including arbitration clauses. Vague or broad disclosures will not suffice.

Delegation Clauses: Courts continue to enforce delegation clauses, as in Geller, but only when the arbitration agreement itself is not challenged. Practitioners must be prepared to litigate unconscionability or formation issues before arbitrability is delegated.

Affidavit Requirements: As seen in Costello, motions to compel arbitration under Section 2-619(a)(9) must be supported by affidavits authenticating the agreement and verifying an electronic signature. Failure to do so may result in denial of arbitration, even if the agreement appears otherwise valid.

Conclusion

Illinois courts are adapting their traditional contract principles to address issues with digital agreements. While arbitration remains a favored method for dispute resolution, courts are demanding greater clarity, procedural fairness, and evidentiary support before enforcing arbitration clauses, especially those embedded within websites and apps.

About the Authors

Donald Patrick Eckler is a partner at Freeman Mathis & Gary LLP, handling a wide variety of civil disputes in state and federal courts across Illinois and Indiana. His practice has evolved from primarily representing insurers in coverage disputes to managing complex litigation in which he represents a wide range of professionals, businesses and tort defendants. In addition to representing doctors and lawyers, Mr. Eckler represents architects, engineers, appraisers, accountants, mortgage brokers, insurance brokers, surveyors and many other professionals in malpractice claims.

Taylor Rathwell is an Associate in Freeman Mathis & Gary’s Chicago office. She is a member of the Insurance Coverage Practice Section. Ms. Rathwell earned a Bachelor of Arts in political science with a minor in human behavior and social services from Michigan State University. Ms. Rathwell received a Juris Doctor from Loyola University Chicago School of Law, where she served as co-president of the ADR Society, was a member of the ABA Negotiation Team and a 2024 National Finals quarterfinalist, and was the content and research editor for the Children’s Legal Rights Journal.

About the IDC

The Illinois Defense Counsel (IDC) is the premier association of attorneys in Illinois who devote a substantial portion their practice to the representation of business, corporate, insurance, professional and other individual defendants in civil litigation. For more information on the IDC, visit us on the web at www.IDC.law or contact us at PO Box 588, Rochester, IL 62563-0588, 217-498-2649, 800-232-0169, admin@IDC.law.