PATRICK V. RUNNING WAREHOUSE, LLC, No. 22-56078 (9th Cir. 2024)
Annotate this CaseThe United States Court of Appeals for the Ninth Circuit affirmed the lower court's order to compel arbitration and dismiss without prejudice a series of lawsuits against several sports goods e-commerce companies (the defendants). The lawsuits were brought by several plaintiffs, who were consumers that purchased goods online from the defendants and had their personal information stolen during a data breach on the defendants' websites. The defendants moved to compel arbitration based on the arbitration provision in their terms of use. The appellate court held that the plaintiffs had sufficient notice of the arbitration provision and that the arbitration clause was not invalid under California law, was not unconscionable, and did not prohibit public injunctive relief. Furthermore, the parties agreed to delegate the question of arbitrability to an arbitrator according to the commercial rules and procedures of JAMS, a private alternative dispute resolution provider.
Court Description: Arbitration The panel affirmed the district court’s order granting Defendants’ motions to compel arbitration and dismissing without prejudice Plaintiffs’ six putative class actions asserting claims arising out of a data breach of Defendants’ websites.
Plaintiffs purchased goods online from Defendants, and their personal information was stolen by hackers who breached Defendants’ websites.
The panel held that Plaintiffs had sufficient notice of the arbitration provision. The district court determined that all Plaintiffs other than Craig Arcilla acknowledged seeing a hyperlink to the websites’ Terms of Use and therefore had inquiry notice of the arbitration provision. Plaintiffs’ failure to challenge this finding on appeal waived any assertion of error. As for Arcilla, the panel agreed with the district court’s finding that Defendant Running Warehouse’s website provided sufficient information to put him on inquiry notice. The website provided reasonably conspicuous notice of the Terms, and Arcilla manifested assent to the Terms by clicking the “Place Order” button to complete his purchase.
The panel held that the arbitration provision was not invalid under McGill v. Citibank, N.A., 393 P.3d 85 (Cal.
2017) (holding that under California law, a clause prohibiting a party from seeking public injunctive relief was invalid and unenforceable), because the arbitration provision did not bar the arbitrator from awarding public injunctive relief.
The panel held that the arbitration clause was not unconscionable under California law. The district court correctly found that the “mere presence” of a unilateral modification clause did not render the arbitration clause, a separate provision, substantively unconscionable.
Finally, the panel held that the parties agreed to delegate the threshold question of arbitrability by agreeing to an arbitration provision that incorporated JAMS arbitration rules.
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