Ghazizadeh v. Coursera, Inc.

Background

Iman Ghazizadeh filed a proposed class action against Coursera, Inc. He asserted one claim under the Video Privacy Protection Act, alleging that Coursera disclosed users’ video-viewing histories and personally identifiable information to Meta Platforms. Coursera moved to compel arbitration under the Federal Arbitration Act. The court had not yet ruled on Coursera’s earlier motion to dismiss.

Waiver

Ghazizadeh argued that Coursera waived its right to arbitrate by filing and maintaining a motion to dismiss. The court explained that waiver required showing Coursera knew about its arbitration right and intentionally acted inconsistently with that right by actively litigating the case for a prolonged period.

The court found that Coursera knew of the right to arbitrate, but Ghazizadeh did not establish the required inconsistent conduct. Coursera indicated its intent to seek arbitration about six months after the complaint was filed. Its motion to dismiss raised Article III standing, a constitutional requirement that a plaintiff have a sufficient personal stake in the dispute, as its first basis for dismissal. No discovery had occurred, the court had not ruled on the motion to dismiss, and there had been no other significant litigation activity. The court therefore found no waiver.

Delegation and contract formation

The court held that it, rather than an arbitrator, had to decide whether an arbitration agreement was formed because Ghazizadeh challenged the existence of an agreement containing an arbitration clause. The court then considered Coursera’s two theories of assent.

First, Coursera argued that Ghazizadeh agreed to the 2015 Terms of Use when he created his account. The sign-up screen stated, directly below the “Sign Up” button, “By creating an account, I accept Coursera’s Terms of Service and Honor Code.” The linked 2015 terms also stated that continued use of Coursera’s services would constitute binding acceptance of revised terms.

Applying California contract law and the Ninth Circuit’s online-contract rules, the court found the notice reasonably conspicuous. Although the hyperlink was not blue, underlined, or capitalized, it was bolded, appeared directly below the sign-up button, and was displayed on a simple, uncluttered screen. The court also found that clicking “Sign Up” unambiguously manifested assent because the notice explained that creating an account meant accepting the terms, and the sign-up button was the way to complete that action.

Coursera later sent Ghazizadeh a December 18, 2020 email about the 2021 terms. The email identified an update to the Terms of Use, linked to the updated terms in blue text, and specifically described “Updated arbitration language.” The court found that Coursera established that the email was delivered to Ghazizadeh’s email address. Combined with Ghazizadeh’s prior acceptance of the 2015 terms and his continued use of Coursera’s services, the notice and continued use showed assent to the updated terms containing the arbitration agreement.

The court found the banner notices insufficient or inadequately supported as a separate basis for notice. It could not evaluate the 2021 banner without an image, and it found the 2022 banner insufficiently conspicuous. Coursera, however, did not rely on the banners alone.

Second, Coursera argued that Ghazizadeh agreed to the arbitration clause when he purchased a certification in 2022. The court found that the 2022 checkout page provided conspicuous notice because the blue, underlined links to the terms appeared directly below the “Pay Now” button. But the court was not persuaded that the checkout page, by itself, showed unambiguous assent because it did not expressly tell the user that clicking “Pay Now” would constitute agreement to the terms. Thus, the 2022 checkout process alone did not establish assent.

Ghazizadeh did not otherwise challenge the arbitration clause’s enforceability or argue that his claims fell outside its scope. The court concluded that Coursera had established formation of an enforceable arbitration agreement through the 2015 sign-up process and the later 2021 email notice.

Discovery request and ruling

Ghazizadeh requested limited discovery about the complete website flows, whether the screenshots reflected the screens he saw, whether he received or opened the email notices, and how those emails appeared in an inbox. The court agreed with Coursera that the requested discovery would not provide useful information for deciding contract formation.

The court granted Coursera’s motion to compel arbitration. It ordered that the entire case be stayed and administratively closed, required the parties to notify the court within 10 days after a final resolution in arbitration, and set a status conference for October 24, 2024. The order did not decide whether Coursera violated the Video Privacy Protection Act.