Wesley Hunter v. Pre-Paid Legal Services, Inc.

Background

Wesley Hunter became a LegalShield Associate on December 12, 2024, and was fired on January 22, 2025. He later filed a proposed class action alleging that LegalShield violated California wage and labor laws by treating Associates as independent contractors rather than employees. LegalShield removed the case to federal court and moved to compel individual binding arbitration and dismiss Hunter’s class claims.

LegalShield presented evidence that Associates enrolled online by clicking a “CONTINUE” button accompanied by a statement that clicking it accepted all the terms. The enrollment page linked to an Associate Terms page, which linked to a two-page Policies and Procedures document. That document contained an arbitration clause covering disputes between LegalShield and an Associate, required arbitration in Oklahoma City, selected Oklahoma law, and prohibited Associates from pursuing claims as part of a class action.

Choice of Law and Assent

The court applied California law rather than the agreement’s Oklahoma choice-of-law provision. Although LegalShield had a substantial relationship with Oklahoma, the court found that California had a greater interest in protecting a California resident from allegedly illegal employment practices involving work performed in California. The court also found that applying Oklahoma law would conflict with California Labor Code section 925, which limits certain employment provisions requiring California employees to litigate outside California or give up California-law protections.

The court concluded that Hunter assented to the Associate Agreement, including its arbitration clause. It treated the online agreement as a “clickwrap” agreement, meaning an agreement accepted by clicking an acceptance button while the terms are made available through a link. The court held that LegalShield did not need to prove that Hunter actually opened or read the linked document because he had a reasonable opportunity to review it and affirmatively accepted the terms.

The court also denied Hunter’s evidentiary objections to a reply declaration from LegalShield’s Vice President of Associate Marketing and Incentives, finding that the declaration had sufficient foundation and properly responded to Hunter’s arguments.

Unconscionability

Hunter argued that the arbitration clause was unconscionable, meaning unfairly formed or unfair in its terms. The court found a low level of procedural unconscionability because Associates could not opt out of the clause, but found no unfair surprise. The links to the relevant documents were conspicuous, and the arbitration clause appeared in a two-page document.

The court rejected Hunter’s challenges to several provisions. It held that the non-compete provision did not affect the arbitration clause’s enforceability; the provision allowing either party to seek temporary court relief did not give LegalShield rights beyond those available under California law and was not one-sided; LegalShield’s ability to modify the agreement was subject to reasonable-notice and good-faith limits; and the arbitration-cost provisions did not unfairly shift costs to Hunter. The court noted that the incorporated American Arbitration Association employment rules required the employer to pay costs unique to arbitration, and it ordered LegalShield to pay Hunter’s legal fees unique to arbitration.

The court did find substantively unconscionable—the term was unfair in its actual operation—the provisions requiring Oklahoma law and arbitration in Oklahoma City. Hunter had plausibly alleged that he and other Associates were employees, and requiring him to arbitrate California employment claims in Oklahoma under Oklahoma law would conflict with California Labor Code section 925 and California public policy.

Severability and Disposition

The agreement contained a severability provision allowing an invalid term to be reformed or removed while leaving the rest of the agreement in effect. The court found no evidence that LegalShield had engaged in a broader scheme to impose arbitration as an inferior forum. It therefore severed and struck the Oklahoma choice-of-law provision and the language requiring arbitration in Oklahoma City. The remainder of the agreement remained valid.

LegalShield’s motion to compel binding arbitration was GRANTED. LegalShield’s motion to dismiss Hunter’s class claims was DENIED AS MOOT. The parties were ordered to proceed to binding arbitration in the Northern District of California under the Associate Agreement as modified. The case was stayed pending arbitration. The parties must file a joint status report every 180 days and another report within 14 days after arbitration ends.