Pemberton v. Restaurant Brands International, Inc.

Background

Daniel Pemberton sued Restaurant Brands International, Inc. and Restaurant Brands International US Services LLC on behalf of a proposed California class. He alleged that, after he used the Burger King website’s cookie settings to opt out of the sale or sharing of his personal information and to reject nonessential cookies, the defendants nevertheless caused third-party cookies and user data to be transmitted. The complaint asserted claims including invasion of privacy, intrusion upon seclusion, alleged violations of the California Invasion of Privacy Act, fraud or misrepresentation, unjust enrichment, and trespass to chattels.

The website’s Terms of Service contained an arbitration provision. Pemberton stated that he did not see or follow a link to the Terms of Service, did not know that continued website use was subject to arbitration, and understood that continued use would not be tracked. He also stated that he had not ordered online from Burger King, downloaded its app, or joined its rewards program. According to the opinion, the cookie-consent screens did not mention or incorporate the Terms of Service.

Pemberton filed an arbitration demand while disputing that he had agreed to arbitrate. The arbitrator ruled that a federal court had to decide whether an arbitration agreement existed and placed the arbitration on hold. Pemberton then filed this lawsuit. The defendants moved to compel arbitration and, alternatively, requested limited discovery before the court decided that motion.

Arbitration Agreement

Under the Federal Arbitration Act, the court had to determine whether a valid arbitration agreement existed and, if so, whether it covered the dispute. Because the defendants sought to compel arbitration, they had the burden to prove that an agreement existed. The court applied California contract-formation principles, which require notice of the contract offer and mutual assent.

The court concluded that no reasonable factfinder could find that Pemberton had actual knowledge of the Terms of Service and assented to the arbitration provision. The court also concluded that Pemberton lacked constructive notice. The Terms of Service were not presented through a clickwrap agreement requiring a user to click an acceptance button or check a box. Instead, they were available through a browsewrap arrangement, in which a website provides terms through a hyperlink and treats continued use as assent.

The court found that the Terms of Service link was not reasonably conspicuous. A user had to open a small menu and then select the Terms of Service link from among other links. The link used the same color, font, and size as surrounding text and was not underlined, bold, or italicized. The court therefore held that Pemberton did not have constructive notice of the arbitration offer.

Waiver and Equitable Estoppel

The defendants argued that Pemberton waived his right to challenge the arbitration agreement by initiating arbitration. The court rejected that argument. Pemberton had challenged the existence of an agreement from the beginning, continued to maintain that no agreement had been formed, and did not proceed to arbitration on the merits. The arbitration proceeding addressed only whether an agreement existed and did not decide Pemberton’s claims.

The court also rejected equitable estoppel. Equitable estoppel can prevent a party from accepting a contract’s benefits while avoiding its burdens, but the court found that Pemberton had not initiated arbitration to enforce the Terms of Service. Instead, he had initiated it to prevent enforcement of the arbitration provision and had consistently denied that an agreement existed. The defendants therefore did not establish waiver or equitable estoppel.

Limited Discovery

The defendants requested discovery into whether Pemberton actually knew about the Terms of Service before visiting the website. The court explained that discovery connected to a motion to compel arbitration must be limited to determining whether the parties agreed to arbitrate and enforcing such agreements.

The court found that the defendants’ suspicions about the truthfulness of Pemberton’s allegations concerned the merits of his claims rather than whether an arbitration agreement existed. The defendants also did not explain why Pemberton would have known about the defendants’ arbitration provision. The court therefore denied the request for limited discovery.

Disposition

Judge Jacqueline Scott Corley denied the defendants’ motion to compel arbitration and denied their motion for limited discovery before resolution of that motion. The court postponed ruling on the defendants’ separate motion to dismiss until after the defendants decided whether to appeal the order denying arbitration. The parties were ordered to provide a joint status update by October 30, 2025.