In re Juul Labs, Inc. Antitrust Litigation

Background

Juul Labs, Inc. (JLI) filed a second motion to compel arbitration involving the newly named direct purchaser plaintiffs (DPPs) Jonathan Burgher and Anthony Lana. JLI argued that Burgher and Lana had constructively assented to JLI’s Terms and Conditions and the arbitration policy within them by purchasing products or using JLI’s website.

The court had previously granted JLI’s first motion to compel arbitration as to then-named DPPs Anthony Martinez, Jessica McGee, and Mallory Flannery. That earlier ruling concerned changes JLI made to its website pages as of August 9, 2018. The present order addressed Burgher and Lana, who first created accounts on JUULvapor.com in 2017.

Earlier Website Designs

JLI argued that the 2017 JUULvapor.com checkout screen included an affirmative checkbox. But JLI did not provide evidence showing how that screen appeared to users or showing that the checkbox was next to a link to terms containing a specific arbitration policy. The court therefore could not find that creating an account on that site established the required constructive assent—that is, agreement inferred from a website design that reasonably puts a user on notice of the terms.

Lana also completed online transactions in March 2018. The court found that the March 2018 login and signup page did not establish constructive assent. In May 2019, Burgher purchased a product and Lana logged into his account. The page then placed a checkbox and terms disclosure in the signup section below the separate login section. The court found no evidence that returning users had to check the box to proceed and concluded that the placement did not reasonably notify returning users that logging in would bind them to the terms.

April 2021 Website Design

JLI later modified the landing page. On the version in place when Burgher and Lana logged in in May and September 2021, a gray box stated, “By proceeding, you agree to our Terms and Conditions.” The disclosure appeared immediately above the “LOG INTO MY ACCOUNT” button and linked to the Terms and Conditions.

The court held that the placement and the broad “By proceeding” language were sufficient to put a reasonably prudent user on inquiry notice of the Terms and Conditions, including the arbitration policy. The court therefore found constructive assent based on Burgher’s and Lana’s use of the website after the April 2021 modification.

Scope of Arbitration

The parties disputed whether the 2021 assent required arbitration of claims involving purchases made before 2021. JLI relied on broad language covering “any claim” arising out of or relating to the terms, website use, or the purchase or use of JUUL products.

The court found that Burgher’s and Lana’s earlier uses and purchases were arguably covered, but held that the ultimate question of the arbitration policy’s scope—including whether it reaches claims based on when those claims accrued—would be decided by the arbitrator. The court did not finally resolve that scope question.

Disposition

The court stated: “The motion to compel as to the two new DPPs Jonathan Burgher and Anthony Lana is GRANTED.” The effect of this order and the August 2021 order was stayed for 30 days. During that period, the DPPs could substitute a class representative whose claims against JLI and the director defendants would not be subject to arbitration and could notify the court whether the claims of Martinez, McGee, Flannery, Burgher, and Lana should be dismissed or stayed pending arbitration. The DPPs were also ordered to file a Second Amended Consolidated Class Action Complaint within 30 days.