Broomes v. FullBeauty Brands Operations

Background

FullBeauty Brands Operations, LLC moved to compel arbitration and stay this proposed class action. Amanda Broomes filed the action in June 2024. During the following months, FullBeauty filed a motion to dismiss that challenged Broomes’s claims on their merits and participated in discovery. The complaint was later amended to add five named plaintiffs: Uht, Fitch, Hillis, Robinson, and Christina Thiele-Yancy. The amended complaint also expanded the products involved in the litigation.

Waiver as to Broomes and the New Plaintiffs

The court held that FullBeauty waived its right to compel arbitration of Broomes’s claims. It reasoned that FullBeauty knew, or should have known, about its arbitration provision because it argued that every person purchasing through its websites had been required to agree to that provision since at least 2023. The court also found that FullBeauty acted inconsistently with an intent to arbitrate by filing a merits-based motion to dismiss and participating in the litigation. Adding the new plaintiffs did not change the waiver analysis for Broomes because her claims had not materially changed.

The court did not find a class-wide waiver. It explained that FullBeauty had not litigated the merits of the proposed class claims on a class-wide basis. It also found no waiver as to the five new plaintiffs because they had been added only about one month before FullBeauty filed its arbitration motion, and FullBeauty had not litigated their claims on the merits in this case.

Formation of Arbitration Agreements

The court determined that it, rather than an arbitrator, had to decide whether an arbitration agreement was formed. Under the applicable legal standard, a website must provide reasonably noticeable information about its terms, and the consumer must take an action that clearly shows agreement to those terms.

The court found that FullBeauty did not meet that standard for Uht, Fitch, Hillis, or Robinson. The account-creation and purchase pages placed text near the relevant buttons, but the text did not indicate that “Terms and Conditions” was a hyperlink to a separate agreement. The words were not underlined or otherwise visually distinguished, and a separate link at the bottom of the page also did not provide adequate notice. The court therefore found no agreement to arbitrate these four plaintiffs’ claims under the FullBeauty Terms.

The court reached a different conclusion for Thiele-Yancy. She created an Eloquii account before FullBeauty acquired Eloquii. The account-creation page stated that clicking the account-creation button meant the user acknowledged reading and agreeing to the privacy policy and terms and conditions. The words “terms and conditions” were underlined and displayed in a different color. The court found this notice reasonably noticeable and held that FullBeauty had shown an arbitration agreement with Thiele-Yancy under the Eloquii Terms.

Delegation of Arbitrability

The Eloquii Terms incorporated the rules of Judicial Arbitration Mediation Services, Inc., commonly called JAMS. Applying Ninth Circuit precedent, the court held that this incorporation clearly showed an agreement to delegate the threshold question of whether a dispute must be arbitrated to the arbitrator. The court rejected the argument that the Eloquii Terms’ Ohio court-selection provision made that delegation unclear. It concluded that the court-selection provision addressed disputes not covered by, or not enforceable under, the arbitration provision.

Disposition

The court granted in part and denied in part FullBeauty’s motion to compel arbitration and stay the action. It granted the motion as to Thiele-Yancy’s claims and denied it in all other respects. The case was stayed as to Thiele-Yancy’s claims only, pending arbitration. The parties must file a joint status report every 180 days about the arbitration and another report within 14 days after the arbitration ends.