Martinez v. Choose Your Horizon, Inc.

Background

Karen Martinez and Eli Silva brought this proposed class action against Choose Your Horizon, Inc. (CYH), alleging three California privacy-law violations involving CYH’s interception and disclosure of personally identifying information (PII) and personal health information (PHI). The claims arise under the California Invasion of Privacy Act, the California Confidentiality of Medical Information Act, and the California Constitution.

CYH sells prescription oral ketamine treatments through its website. Customers complete health questionnaires, meet with CYH medical professionals, and, if approved, purchase treatment. Martinez purchased ketamine treatments. Both plaintiffs alleged that they later received advertisements from CYH and other ketamine-related advertisements through Facebook without their consent.

CYH is incorporated in Delaware and has its principal place of business in Texas. It provides ketamine therapy in twenty-one states, including California, and receives thirteen percent of its revenue from California. In April 2024, customers were required to check boxes agreeing to CYH’s terms of service and privacy policy before completing a purchase and before scheduling a required consultation.

Personal Jurisdiction

CYH moved to dismiss for lack of personal jurisdiction, meaning that it argued the federal court could not exercise legal authority over CYH. The plaintiffs relied on specific personal jurisdiction, which concerns the relationship among the defendant, the forum state, and the lawsuit.

The court applied the Ninth Circuit’s three-part test: whether CYH purposefully directed activities toward California or purposefully conducted business there; whether the claims arose from or related to those California activities; and whether exercising jurisdiction was reasonable.

The court held that the first requirement was met because CYH knowingly served California customers, conducted business with them, required and facilitated their communications with California medical clinicians, and allegedly intercepted their PII. The court rejected CYH’s argument that its national business model and lack of California-specific advertising defeated jurisdiction. The court explained that a company may purposefully direct conduct toward a state even when it operates nationally, when its contacts with that state result from its own choices rather than random or isolated events.

The second requirement was met because the plaintiffs’ claims arose from or related to CYH’s contacts with California customers, including the alleged interception of their PII. The court also found that exercising jurisdiction in California was reasonable. It therefore denied CYH’s motion to dismiss for lack of personal jurisdiction.

Arbitration

CYH alternatively moved to compel arbitration of Martinez’s claims. The terms of service required binding arbitration of “[a]ny controversy, dispute or claim arising out of, or relating in any way to” the terms or the customer’s use of CYH’s website or services. The agreement also barred class or representative arbitration. CYH did not argue that Silva was bound by the arbitration agreement.

Martinez raised three objections: that the clause did not apply to information collected before she accepted the terms; that her privacy claims concerned privacy breaches rather than ketamine treatment; and that the clause was unconscionable. Unconscionability is a contract defense based on unfairness. Under California law, procedural unconscionability concerns oppression or surprise, while substantive unconscionability concerns overly harsh or one-sided terms.

The court rejected the procedural-unconscionability argument. It found that the terms were presented through conspicuous blue hyperlinks and that Martinez had to affirmatively check boxes stating that she agreed to the terms before completing her purchase and scheduling her consultation. The arbitration clause appeared in a section titled “Disputes,” which was the third section of the terms and was listed in a side panel of linked sections.

The court also rejected the substantive-unconscionability argument concerning arbitration fees. Martinez argued that the agreement did not specify what she might have to pay and might require administrative fees of up to $15,000 under American Arbitration Association rules. CYH characterized that argument as speculative and disavowed any intention to require those fees. The court concluded that Martinez had not shown substantive unconscionability.

The court held that the arbitration clause covered Martinez’s privacy claims because they involved alleged interception of information during business transactions governed by CYH’s terms of service and privacy policy. It also held that the clause applied even though some alleged collection occurred before Martinez accepted the terms, because the clause had no temporal limitation and covered claims arising from or relating to use of CYH’s site or services.

Disposition

The court denied CYH’s motion to dismiss for lack of personal jurisdiction, granted CYH’s motion to compel arbitration of Martinez’s claims, and stayed Martinez’s case pending arbitration. The order resolved ECF No. 39. The opinion does not state that Silva’s claims were compelled to arbitration.