Doe v. TruthFinder, LLC

Background

Robert Williams sued TruthFinder, LLC, on behalf of himself and several proposed classes. The complaint asserted claims under the federal Fair Credit Reporting Act, the California Investigative Consumer Reporting Agencies Act, and the California Unfair Competition Law. The opinion says TruthFinder provides online background-check services. Williams alleged that his girlfriend bought a TruthFinder report that identified him as a convicted sex offender; Williams denied that allegation was true.

Williams had agreed to TruthFinder’s Terms of Use and Conditions of Sale when he became a TruthFinder customer in May 2020. The terms required arbitration of claims, including statutory claims, and stated that an arbitrator—not the court—would decide whether a dispute was arbitrable. The terms also incorporated the American Arbitration Association’s rules and procedures and stated that the Federal Arbitration Act governed.

Court’s analysis

TruthFinder moved to compel arbitration or, alternatively, to dismiss the complaint for failure to state a claim. Williams did not deny agreeing to the terms. The court found that TruthFinder had established an agreement to arbitrate because Williams did not make a plausible challenge to contract formation, the arbitration clause, or TruthFinder’s supporting evidence.

Williams’s only objection was that the lawsuit concerned his girlfriend’s activity on TruthFinder rather than his own activity. The court treated that objection as a question of arbitrability. Because the arbitration clause expressly delegated arbitrability questions to an American Arbitration Association arbitrator, and Williams did not challenge the validity of that delegation, the court sent that question to arbitration.

Ruling and effect

The court ordered the case to an arbitrator to decide whether Williams’s claims are arbitrable. If the arbitrator finds that they are arbitrable, the case will remain in arbitration; if not, it will return to the federal court. Pending further order, the court stayed the entire federal action and administratively closed it. The parties were directed to promptly advise the court of the arbitrator’s decision and to file joint status reports every 90 days beginning August 1, 2022. Judge James Donato did not decide the underlying consumer-reporting claims in this order.