Knutson v. Sirius XM Radio, No. 12-56120 (9th Cir. 2014)
Annotate this CasePlaintiff filed a putative class action suit against Sirius XM after he received three unauthorized phone calls from Sirius XM on his cellphone during his trial subscription. Plaintiff had purchased a vehicle from Toyota that included a 90-day trial subscription to Sirius XM satellite radio. The district court dismissed the action and granted Sirius XM's motion to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. 2. The court, applying well-settled principles of contract law, concluded that no valid agreement to arbitrate exists between plaintiff and Sirius XM because plaintiff never assented to the Customer Agreement. A reasonable person in plaintiff's position could not be expected to understand that purchasing a vehicle from Toyota would simultaneously bind him or her to any contract to Sirius XM, let alone one that contained an arbitration provision without any notice of such terms. Nothing in the record indicated that Sirius XM's offer was clearly and effectively communicated to plaintiff by mailing him the Customer Agreement and his continued use of the service after his receipt of the Customer Agreement did not manifest his assent to the provisions of the Customer Agreement. Further, the Customer Agreement is not a valid "shrinkwrap" agreement. Because the arbitration clause in the Customer Agreement is unenforceable for lack of mutual assent, the court need not decide whether the arbitration provision in the Customer Agreement is unconscionable. Accordingly, the court reversed and remanded.
Court Description: Arbitration. The panel reversed the district court’s order dismissing a putative class action under the federal Telephone Consumer Protection Act, and granting Sirius XM Radio Inc.’s motion to compel arbitration pursuant to the Federal Arbitration Act. The plaintiff purchased a vehicle from Toyota that included a 90-day trial subscription to Sirius XM satellite radio. About a month after his trial subscription was activated, plaintiff received a “welcome kit” from Sirius XM that contained a Customer Agreement with an arbitration clause. The panel held that Sirius XM failed to prove by a preponderance of the evidence the existence of an agreement to arbitrate. The panel held that a reasonable person in plaintiff’s position could not be expected to understand that purchasing a vehicle from Toyota would simultaneously bind him or her to any contract with Sirius XM. The panel further held that plaintiff’s continued use of the satellite radio service after his receipt of the Customer Agreement did not manifest his assent to the provisions in the Customer Agreement. Because the arbitration clause in the Customer Agreement was unenforceable for lack of mutual assent, the panel held it need not decide whether the arbitration provision in the Customer Agreement was unconscionable. The panel remanded for further proceedings.
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