Kaplan et al v. The Athletic Media Company, No. 4:2023cv00229 - Document 46 (N.D. Cal. 2023)
Court Description: ORDER GRANTING 26 DEFENDANT'S MOTION TO COMPEL ARBITRATION entered by Judge Jon S. Tigar. Signed December 8, 2023.
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Kaplan et al v. The Athletic Media Company Doc. 46 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 REBECCA KAPLAN, et al., 7 Plaintiffs, 8 v. 9 THE ATHLETIC MEDIA COMPANY, 10 Defendant. 11 United States District Court Northern District of California Case No. 23-cv-00229-JST ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION Re: ECF No. 26 12 Before the Court is Defendant The Athletic Media Company’s (“The Athletic”) motion to 13 14 compel arbitration. ECF No. 26. The Court will grant the motion. 15 I. 16 BACKGROUND Plaintiffs Rebecca Kaplan, John Murphy, Johnny Pappas, Michael Tisa, Charlene Egizi, 17 and Jeff Tibayan purchased subscriptions to The Athletic—“a subscription based-online sports 18 news outlet.” ECF No. 27 ¶ 3; see ECF No. 21 ¶¶ 49, 55, 61, 67, 73, 79; see also ECF No. 27 ¶ 5. 19 The Athletic automatically renews a user’s subscription on a monthly or annual basis depending 20 on whether the subscriber purchased a monthlong or yearlong subscription in the first instance. 21 See ECF No. 21 ¶ 2. The Athletic updated its Terms of Service on August 5, 2021 (“2021 Terms 22 of Service”), as well as its Privacy Policy. ECF No. 27 ¶ 44. Subscribers, including Plaintiffs, 23 were notified of this update through an overlay on The Athletic’s mobile application and website 24 that appeared on top of the content being viewed. Id. An image of the overlay appears below: 25 26 27 28 Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 ECF No. 27-22 at 2. An identical overlay appeared on The Athletic’s website. Id. at 3. 13 Subscribers could not access any content without clicking on the “I Accept” button. ECF No. 27 14 ¶ 44. Each Plaintiff clicked the button. Id. ¶ 47. The 2021 Terms of Service contains an arbitration agreement that provides, in relevant 15 16 17 18 19 20 21 22 part, The parties shall use their best efforts to settle any dispute, claim, question, or disagreement arising out of or relating to the subject matter of these Terms directly through good-faith negotiations, which shall be a precondition to either party initiating arbitration. If such negotiations do not resolve the dispute, it shall be finally settled by binding arbitration in San Francisco, California. The arbitration will proceed in the English language, in accordance with the JAMS Streamlined Arbitration Rules and Procedures (the “Rules”) then in effect, by one commercial arbitrator with substantial experience in resolving intellectual property and commercial contract disputes. 23 ECF No. 27-20 at 11. In turn, the JAMS Streamlined Arbitration Rules and Procedures provide, 24 in relevant part, “Jurisdictional and arbitrability disputes . . . shall be submitted to and ruled on by 25 the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as 26 27 a preliminary matter.” ECF No. 26-2 at 8. Plaintiffs subsequently filed suit, alleging that The Athletic’s “automatic renewal scheme” 28 2 1 fails to comply with California’s Automatic Renewal Law (“ARL”), Cal. Bus. & Prof. Code 2 § 17600 et seq. ECF No. 21 ¶¶ 2–3 (internal quotation marks omitted). As individuals and on 3 behalf of a putative class, Plaintiffs bring claims for (1) violations of California’s Unfair 4 Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; (2) conversion; (3) violations of 5 California’s False Advertising Law, Cal. Bus. & Prof. Code § 17500 et seq.; (4) violations of 6 California’s Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq.; (5) unjust enrichment; 7 (6) negligent misrepresentation; and (7) fraud. Plaintiffs filed the instant motion on May 19, 2023. ECF No. 26. The Court took the 8 9 10 motion under submission without a hearing on August 4, 2023. ECF No. 37. II. The Court has jurisdiction under 28 U.S.C. § 1332(d). United States District Court Northern District of California 11 12 13 JURISDICTION III. LEGAL STANDARD The Federal Arbitration Act (“FAA”) applies to written contracts “evidencing a transaction 14 involving commerce.” 9 U.S.C. § 2. The parties agree that the FAA governs the contract at issue 15 in this case. Under the FAA, arbitration agreements “shall be valid, irrevocable, and enforceable, 16 save upon such grounds as exist at law or in equity for the revocation of any contract.” Id. This 17 provision reflects “both a liberal federal policy favoring arbitration, and the fundamental principle 18 that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 19 (2011) (quotation marks and citations omitted). 20 On a motion to compel arbitration, the Court’s role under the FAA is “limited to 21 determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the 22 agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 23 F.3d 1126, 1130 (9th Cir. 2000). In determining whether an arbitration agreement exists, “district 24 courts rely on the summary judgment standard of Rule 56 of the Federal Rules of Civil 25 Procedure.” Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 670 (9th Cir. 2021). Thus: 26 27 28 In considering a motion to compel arbitration which is opposed on the ground that no agreement to arbitrate was made, a district court should give to the opposing party the benefit of all reasonable doubts and inferences that may arise. Only when there is no genuine issue of material fact concerning the formation of an arbitration 3 agreement should a court decide as a matter of law that the parties did or did not enter into such an agreement. 1 2 Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (citations omitted) (cited 3 with approval in Hansen, 1 F.4th at 670). If the court “concludes that there are genuine disputes 4 of material fact as to whether the parties formed an arbitration agreement, the court must proceed 5 without delay to a trial on arbitrability and hold any motion to compel arbitration in abeyance until 6 the factual issues have been resolved.” Hansen, 1 F.4th at 672. If a valid arbitration agreement 7 exists, “the party resisting arbitration bears the burden of proving that the claims at issue are 8 unsuitable for arbitration.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000). If the court is “satisfied that the making of the agreement for arbitration or the failure to United States District Court Northern District of California 9 10 comply therewith is not in issue, the court shall make an order directing the parties to proceed to 11 arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. Where the claims 12 alleged in a complaint are subject to arbitration, the Court “shall on application of one of the 13 parties stay the trial of the action until such arbitration has been had in accordance with the terms 14 of the agreement, providing the applicant for the stay is not in default in proceeding with such 15 arbitration.” Id. § 3. “[N]otwithstanding the language of § 3, a district court may either stay the 16 action or dismiss it outright when . . . all of the claims raised in the action are subject to 17 arbitration.” Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). 18 IV. 19 DISCUSSION The parties largely dispute whether Plaintiffs agreed to versions of The Athletic’s terms of 20 service that predated the 2021 Terms of Service. Because Plaintiffs all pressed the “I Accept” 21 button the overlay corresponding to the 2021 Terms of Service, the Court first turns to the 22 question of whether Plaintiffs entered into a valid, binding contract with The Athletic to arbitrate 23 the instant dispute. The Athletic argues that Plaintiffs formed a contract to arbitrate and that the 24 arbitration agreement in the 2021 Terms of Service delegates the question of arbitrability to the 25 arbitrator. Plaintiffs argue that the 2021 Terms of Service do not apply because Plaintiffs’ claims 26 “were implicated at the time Plaintiffs signed up” for the subscription, that the arbitration 27 agreement does not delegate the question of arbitrability to the arbitrator, that the agreement is 28 procedurally and substantively unconscionable, and that the agreement does not cover the dispute 4 1 at hand. ECF No. 30 at 23 (emphasis omitted). 2 A. 3 The parties first dispute whether The Athletic and Plaintiffs formed a contract to arbitrate.1 4 Such “challenges to the very existence of the contract are, in general, properly directed to the 5 court.” Kum Tat Ltd. v. Linden Ox Pasture, LLC, 845 F.3d 979, 983 (9th Cir. 2017). This is 6 because “arbitration is a matter of contract and a party cannot be required to submit any dispute 7 which [it] has not agreed so to submit.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 8 U.S. 643, 648 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 9 U.S. 574, 582 (1960)). The parties agree that California law applies to the question of contract formation in this 10 United States District Court Northern District of California Existence of a Contract 11 case. ECF No. 26 at 16–17; ECF No. 30 at 11–12. To form a contract under California law, there 12 must be “actual or constructive notice of the agreement” and a “manifest[ation of] mutual assent.” 13 Oberstein v. Live Nation Ent., Inc., 60 F.4th 505, 512–13 (9th Cir. 2023). The party seeking to 14 compel arbitration has the burden to prove, by preponderance of the evidence, that a contract to 15 arbitrate exists. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citing 16 Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 413 (1996)). The Athletic does not attempt to show that Plaintiffs had actual notice of the 2021 Terms 17 18 of Service. To determine whether Plaintiffs had constructive notice, the Court must consider “the 19 design and content of the website and the agreement’s webpage.” Nguyen v. Barnes & Noble Inc., 20 763 F.3d 1171, 1177 (9th Cir. 2014). “[A]n enforceable agreement may be found where ‘(1) the 21 website provides reasonably conspicuous notice of the terms to which the consumer will be 22 bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that 23 unambiguously manifests his or her assent to those terms.’” Oberstein, 60 F.4th at 515 (quoting 24 25 26 27 28 1 The parties dispute the proper characterization of the agreements at issue in this case. The Court need not resolve this dispute because, as the Ninth Circuit has clarified, so long as the website “provide[s] sufficient notice for constructive assent . . . there [i]s a binding arbitration agreement.” Lee v. Ticketmaster, LLC, 817 F. App’x 393, 394 (9th Cir. 2020); see Oberstein v. Live Nation Ent., Inc., 60 F.4th 505, 515 (9th Cir. 2023) (holding that users were afforded sufficient notice even though the textual notices “lie somewhere in between” clickwrap and browsewrap). 5 1 2 3 1. Reasonably Conspicuous Notice For a notice to be reasonably conspicuous, it “must be displayed in a font size and format 4 such that the court can fairly assume that a reasonably prudent . . . user would have seen it.” Id. 5 (quoting Berman, 30 F.4th at 856). “[C]onsumers cannot be expected to ferret out hyperlinks to 6 terms and conditions to which they have no reason to suspect they will be bound.” Nguyen, 763 7 F.3d at 1179. Thus, if there is a hyperlink, “the fact that a hyperlink is present must be readily 8 apparent.” Berman, 30 F.4th at 857. 9 United States District Court Northern District of California Berman v. Freedom Fin. Network, LLC, 30 F.4th 849, 856 (9th Cir. 2022)). Here, the overlay disclosing the 2021 Terms and Conditions appeared on subscribers’ 10 screens, shaded out the rest of the webpage in black, and prevented users from accessing content 11 on the website and mobile application until users hit the “I Accept” button. The overlay is 12 sufficiently large, all of the language in the overlay pertains to agreement to the Terms of Service 13 and Privacy Policy, and the overlay features a hyperlink in bolded text. The font and format of the 14 overlay are such that any reasonably prudent user necessarily would have seen it. Accordingly, 15 the overlay is reasonably conspicuous. 16 17 2. Unambiguous Manifestation of Assent A user’s click of a button can be construed as an unambiguous manifestation of assent only 18 if the user is explicitly advised that the act of clicking will constitute assent to the terms and 19 conditions of an agreement.” Oberstein, 60 F.4th at 515 (quoting Berman, 30 F.4th at 857). 20 “[A]ll that is required” is that the text of the notice “explicitly alert the user that by . . . proceeding 21 to the next page, the user ‘agrees to our Terms of Use.’” Id. 22 The overlay bears express contractual language that would indicate to a user that the user is 23 agreeing to the 2021 terms of use: “By clicking the button below,” which reads “I Accept,” “you 24 acknowledge and consent to our updated policies.” ECF No. 27-22 at 2. Accordingly, Plaintiffs 25 unambiguously manifested their assent to the 2021 Terms of Service, and the Court concludes that 26 a valid contract exists. 27 28 Plaintiffs challenge the existence of a contract on grounds unrelated to the foregoing inquiry. First, in connection with their argument as to the existence of a contract, Plaintiffs argue 6 United States District Court Northern District of California 1 that the terms of the 2021 Terms of Service are not binding because Plaintiffs’ “claims were 2 implicated at the time Plaintiffs signed up” for the subscription. ECF No. 30 at 23. This argument 3 is irrelevant to the threshold question of whether a valid contract exists. In substance, Plaintiffs 4 are arguing that the 2021 Terms of Service do not cover the dispute at hand, which goes to the 5 question of arbitrability, not contract formation. More to the point, the caselaw does not recognize 6 the distinction that Plaintiffs are attempting to draw. See Whalen v. Facebook, Inc., No. 20-cv- 7 06361-JST, 2022 WL 19934419, at *2–4 (N.D. Cal. Apr. 11, 2022). To the contrary, “courts have 8 . . . consistently applied arbitration agreements retroactively where the agreements explicitly 9 subsume prior agreements or facially apply to disputes arising prior to the agreement.” DeVries v. 10 Experian Info. Sols., Inc., No. 16-CV-02953-WHO, 2017 WL 733096, at *8 (N.D. Cal. Feb. 24, 11 2017). The 2021 Terms of Service expressly provides that it supersedes prior agreements: “You 12 and The Athletic agree that these Terms are the complete and exclusive statement of the mutual 13 understanding between you and The Athletic, and that it supersedes and cancels all previous 14 written and oral agreements, communications, and other understandings relating to the subject 15 matter of these Terms.” ECF No. 27-20 at 13. Plaintiffs first argument is thus without merit. 16 Second, Plaintiffs argue that the 2021 Terms of Service does not comply with the ALR’s 17 notice requirements and is thus unenforceable. Plaintiffs cite no authority in support of extending 18 the notice requirements of the ALR to arbitration agreements, and the Court is aware of none. 19 B. Delegation 20 “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the 21 parties have agreed to arbitrate or whether their agreement covers a particular controversy.” Rent- 22 A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010) (quoting Howsam v. Dean Witter Reynolds, 23 Inc., 537 U.S. 79, 83–85 (2002)). “Just as the arbitrability of the merits of a dispute depends upon 24 whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary power to 25 decide arbitrability’ turns upon what the parties agreed about that matter.” First Options of Chi., 26 Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (emphasis in original) (citations omitted). Whether the 27 Court or the arbitrator decides arbitrability is “an issue for judicial determination unless the parties 28 clearly and unmistakably provide otherwise.” Howsam, 537 U.S. at 83 (alteration omitted) 7 1 (quoting AT&T Techs., 475 U.S. at 649). “Clear and unmistakable evidence of an agreement to 2 arbitrate arbitrability ‘might include . . . a course of conduct demonstrating assent . . . or . . . an 3 express agreement to do so.’” Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) 4 (ellipses in original) (quoting Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011)). United States District Court Northern District of California 5 The Ninth Circuit has held that incorporation of rules such as the JAMS rules “constitutes 6 clear and unmistakable evidence that [the] contracting parties agreed to arbitrate arbitrability.” 7 Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015); see Shierkatz Rllp v. Square, Inc., 8 No. 15-cv-2202-JST, 2015 WL 9258082, at *6 (N.D. Cal. Dec. 17, 2015). However, after noting 9 that “[t]he issue of the sophistication of the parties was raised at oral argument” and explaining 10 that “[o]ur holding today should not be interpreted to require that the contracting parties be 11 sophisticated or that the contract be ‘commercial’ before a court may conclude that incorporation 12 of the . . . rules constitutes ‘clear and unmistakable’ evidence of the parties’ intent,” the Ninth 13 Circuit “limit[e]d [its] holding to the facts of the present case, which do involve an arbitration 14 agreement ‘between sophisticated parties.’” Id. at 1131 (quoting Oracle Am., Inc., v. Myriad 15 Group A.G., 724 F.3d 1069, 1075 & n.2 (9th Cir. 2013)). The Ninth Circuit stated that its holding 16 did “not foreclose the possibility that this rule could also apply to unsophisticated parties or to 17 consumer contracts,” but it explicitly left that question open. Id. at 1130–31. 18 “Where at least one party is unsophisticated, judges in this district routinely find that the 19 incorporation of the . . . rules is insufficient to establish a clear and unmistakable agreement to 20 arbitrate arbitrability.” Magill v. Wells Fargo Bank, N.A., No. 4:21-cv-01877 YGR, 2021 WL 21 6199649, at *5 (N.D. Cal. June 25, 2021) (citing Eiess v. USAA Fed. Sav. Bank, 404 F. Supp. 3d 22 1240, 1253 (N.D. Cal. 2019); Ingalls v. Spotify USA, Inc., No. 16-0353 WHA, 2016 6679561, at 23 *3–4 (N.D. Cal. Nov. 14, 2016)). This Court has thrice before declined to extend Brennan to a 24 case involving an unsophisticated party. Hooper v. Jerry Ins. Agency, LLC, --- F.Supp.3d ----, No. 25 22-cv-04232-JST, 2023 WL 3992130, at *7 (N.D. Cal. June 1, 2023); Meadows v. Dickey’s 26 Barbecue Rests. Inc., 144 F. Supp. 3d 1069, 1077–79 (N.D. Cal. 2015); Vargas v. Delivery 27 Outsourcing, LLC, No. 15-cv-03408-JST, 2016 WL 946112, at *7–8 (N.D. Cal. Mar. 14, 2016). 28 The Athletic “does not dispute that the Court can consider these particular Plaintiffs to be 8 United States District Court Northern District of California 1 ‘unsophisticated.’” ECF No. 38 at 3. Accordingly, the Court concludes that the incorporation of 2 the JAMS rules into the 2021 Terms of Service is insufficient to establish the parties’ clear and 3 unmistakable agreement to arbitrate arbitrability. 4 C. Unconscionability 5 A contract may be invalidated by “generally applicable contract defenses, such as fraud, 6 duress, or unconscionability.” Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68 (2010) 7 (quoting Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). Unconscionability 8 “refers to an absence of meaningful choice on the part of one of the parties together with contract 9 terms which are unreasonably favorable to the other party.” Sanchez v. Valencia Holding Co., 10 LLC, 61 Cal. 4th 899, 910 (2015) (quoting Sonic-Calabasas A, Inc. v. Moreno, 57 Cal. 4th 1109, 11 1133 (2013)). An agreement may be found to be “invalid if it is both procedurally and 12 substantively unconscionable.” Sanchez v. Carmax Auto Superstores California LLC, 224 Cal. 13 App. 4th 398, 402 (2014). “Procedural unconscionability focuses on oppression and surprise due 14 to unequal bargaining power, and substantive unconscionability turns on overly harsh or one-sided 15 results.” Id. The unconscionability inquiry “employs a sliding scale—the more substantively 16 oppressive the contract term, the less evidence of procedural unconscionability is required to come 17 to the conclusion that the term is unenforceable, and vice versa.” Armendariz v. Found Health 18 Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000). “As the party opposing arbitration,” Plaintiff 19 “bears the burden of proving . . . unconscionability.” Sonic-Calabasas, 57 Cal. 4th at 1145 20 (quoting Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 21 (2012)). 22 “Procedural unconscionability analysis focuses on oppression or surprise.” Nagrampa v. 23 MailCoups, Inc., 469 F.3d 1257, 1280 (9th Cir. 2006). “Oppression occurs where a contract 24 involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable 25 provision is hidden within a … form.” Kho, 8 Cal. 5th at 126 (quoting Pinnacle Museum Tower 26 Assn. v. Pinnacle Market Dev. (US), LLC, 55 Cal. 4th 223, 247 (2012)) (emphases in original). 27 “Oppression can be established ‘by showing the contract was one of adhesion or by showing from 28 the ‘totality of the circumstances surrounding the negotiation and formation of the contract’ that it 9 1 was oppressive.’” Lim v. TForce Logistics, LLC, 8 F.4th 992, 1000 (9th Cir. 2021) (quoting 2 Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1260 (9th Cir. 2017). An adhesive contract is a 3 standardized form offered by the party with superior bargaining power “on a take-it-or-leave-it 4 basis,” id. (quoting Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1245 (2016)), but such a 5 contract is not “per se unconscionable,” Poublon, 846 F.3d at 1260. Other circumstances to be 6 considered include but are not limited to: 7 8 9 10 United States District Court Northern District of California 11 12 (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney. Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc., 232 Cal. App. 4th 1332, 1348 (2015)). “Substantive unconscionability examines the fairness of a contract’s terms.” Lim, 8 F.4th 13 at 1001. The doctrine “is concerned not with a simple old-fashioned bad bargain but with terms 14 that are unreasonably favorable to the more powerful party.” Poublon, 846 F.3d at 1261 (citation 15 omitted). “California law seeks to ensure that contracts, particularly contracts of adhesion, do not 16 impose terms that are overly harsh, unduly oppressive, or unfairly one sided.” Lim, 8 F.4th at 17 1002. “[S]ubstantive unconscionability exists when a fee-shifting clause creates for employees a 18 ‘greater financial risk in arbitrating claims than they would face if they were to litigate those same 19 claims in federal court.’” Id. (quoting Pokorny v. Quixtar, Inc., 601 F.3d 987, 1004 (9th Cir. 20 2010), disapproved of on other grounds by Poublon, 846 F.3d at 1265–66). When the contract 21 contains a forum-selection clause, the clause is substantively unconscionable if it is 22 “‘unreasonable’ in that ‘the forum selected would be unavailable or unable to accomplish 23 substantial justice.’” Id. (quoting Poublon, 846 F.3d at 1265). In considering such clauses, “the 24 court] must take into account the respective circumstances of the parties.” Id. (quoting Nagrampa 25 v. Mailcoups, Inc., 469 F.3d 1257, 1288 (9th Cir. 2006)). 26 Plaintiffs have not established that the contract is procedurally unconscionable. Although 27 the there is “is a degree of procedural unconscionability” in contracts of adhesion, Lag Shot LLC 28 v. Facebook, Inc. 545 F. Supp. 3d 770, 779 (N.D. Cal. 2021) (quoting Sanchez v. Valencia 10 United States District Court Northern District of California 1 Holding Co., LLC , 61 Cal. 4th 899, 915 (2015)), “an arbitration agreement is not adhesive if there 2 is an opportunity to opt out of it,” id. (quoting Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1211 3 (9th Cir. 2016)). The arbitration agreement in the 2021 Terms of Service allows subscribers to opt 4 out by mailing written notice within 30 days of acceptance. ECF No. 27-20 at 12. The Ninth 5 Circuit has held that an arbitration agreement was not adhesive and therefore not procedurally 6 unconscionable where the agreement allows individuals to “opt out of arbitration by delivery 7 notice of their intent to opt out . . . within 30 days either in person or by overnight delivery 8 service,” Mohamed, 848 F.3d at 1206, 1210, and this Court reached the same holding with respect 9 to an arbitration agreement that allowed individuals to opt out “by mail within a 30-day period.” 10 Lag Shot, 545 F. Supp. 3d at 779. Accordingly, the arbitration agreement is not procedurally 11 unconscionable.2 And “because both procedural and substantive unconscionability must be 12 present for an agreement to be unenforceable,” the Court “need not reach the question whether the 13 agreement[] here w[as] substantively unconscionable.” Mohamed, 848 F.3d at 1211. 14 D. Arbitrability 15 Plaintiffs argue that the 2021 Terms of Service do not apply to their claims because their 16 claims “have nothing to do with any aspect of the Terms.” ECF No. 30 at 28. The Court 17 disagrees. The arbitration agreement in the 2021 Terms of Service applies to “any dispute, claim, 18 question, or disagreement arising out of or relating to the subject matter of these Terms.” ECF 19 No. 27-20 at 10. The Terms, in turn, contain neighboring sections titled “Subscriptions,” “Auto- 20 Renewal for Subscriptions,” and “Reaffirmation of Authorization,” ECF No. 27-20 at 6–7, that 21 expressly describe the “automatic renewal scheme” that underpins all of Plaintiffs’ claims, ECF 22 No. 21 ¶ 1. The arbitration agreement in the 2021 Terms of Service thus clearly applies to 23 Plaintiffs’ claims. Accordingly, the Court will compel Plaintiffs to arbitrate. 24 25 26 27 28 2 Plaintiffs assert that the arbitration agreement at issue is procedurally unconscionable because Plaintiffs “are not sophisticated users.” ECF No. 30 at 27 (internal quotation marks omitted). The Ninth Circuit has expressly rejected this argument. See Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1200 (9th Cir. 2002). 11 1 E. Stay or Dismiss 2 The parties agree that a stay rather than a dismissal is appropriate. The Court will stay the 3 case consistent with the Ninth Circuit’s “preference for staying an action pending arbitration rather 4 than dismissing it.” See MediVas, LLC v. Marubeni Corp., 741 F.3d 4, 9 (9th Cir. 2014) CONCLUSION 5 6 7 these proceedings. The Clerk shall administratively close the file. This order shall not be 8 considered a dismissal or disposition of this action against any party. If further proceedings 9 become necessary, any party may initiate them in the same manner as if this order had not been 10 11 United States District Court Northern District of California For the foregoing reasons, the Court grants The Athletic’s motion to compel and stays 12 13 14 entered. IT IS SO ORDERED. Dated: December 8, 2023 _________ ____________ ____ __________ JON S. TIGAR United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12
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