Anyasulu v. Tempur Sealy International, Inc.

Background

Harriet Genevieve Anyasulu and Alina Zhuravel alleged that Tempur Sealy International, Inc., Sealy Ecommerce, LLC, Tempur-Pedic North America, LLC, Sealy Technology LLC, and The Stearns & Foster Bedding Company used misleading sale prices and countdown timers on their website. They alleged that the website displayed “35% off” sales and timers that reset after counting down, creating the impression that the sales were ending soon. They brought claims under California’s Consumers Legal Remedies Act and Unfair Competition Law and sought to represent a class of people who, while in California, bought discounted products from the website within four years before the complaint.

Motion to Compel Arbitration

Tempur Sealy argued that the plaintiffs accepted the website’s Terms of Use, which included arbitration, a class-action waiver, and other dispute-resolution provisions. The Terms were available through a “TERMS OF USE” hyperlink in a small, non-underlined banner at the bottom of the website. A user could place an order without scrolling to the banner.

The court applied California law, which requires notice of contractual terms and conduct showing agreement. It found that Tempur Sealy had not shown that either plaintiff had actual knowledge of the arbitration agreement. It also found that the website did not provide reasonably noticeable information about the Terms and that the plaintiffs did not clearly agree to them. Because the link was difficult to find and was not next to a button or statement telling users that placing an order would bind them to the Terms, merely using the website or placing an order did not establish agreement to arbitrate. The court therefore found that the parties had not formed an arbitration agreement and denied the motion to compel arbitration.

Motion to Dismiss

Tempur Sealy alternatively argued that the complaint failed to meet Federal Rule of Civil Procedure 9(b), which requires fraud allegations to describe the relevant circumstances in particular detail, including who made the statements, what was said, when and where it was said, and how it was misleading.

The court found that the plaintiffs pleaded those details sufficiently. The complaint identified the alleged advertiser, the plaintiffs, and the proposed class; described the mattresses, purchase dates, locations, prices, and website; and explained that the plaintiffs believed the mattresses were being sold at temporary discounts because of the countdown timers. The court also found that the complaint adequately alleged injury by stating that the plaintiffs would not have bought the mattresses had they known they were not receiving genuine sale prices.

The court further held that the complaint plausibly alleged that a reasonable consumer could be misled. The website allegedly displayed bold sale prices next to crossed-out prices and advertised a “35% off sale,” without using “compare to” or “compare at” language. The court concluded that reasonable consumers could understand the crossed-out prices as regular prices reduced by the advertised discount. It denied Tempur Sealy’s motion to dismiss.

Disposition

The court denied Tempur Sealy’s motion to compel arbitration or, alternatively, to dismiss the action. It ordered the defendants to file an answer within 21 days after the order and set a case-management conference for October 25, 2024, with a joint case-management statement due October 18, 2024.