Houtchens v. Google LLC

Background

Plaintiffs Jenny Houtchens and Samantha Ramirez sued Google LLC individually and on behalf of similarly situated people. They alleged violations of multiple states’ consumer-protection statutes, California’s Business and Professions Code and Consumers Legal Remedies Act, Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, and the Magnuson-Moss Warranty Act. They also alleged breach of implied warranties and unjust enrichment.

The claims concerned Fitbit smartwatches and activity trackers. Google acquired Fitbit in January 2021. The plaintiffs purchased Fitbit devices and created Fitbit accounts. The account-registration process required users to check a box stating that they agreed to Fitbit’s Terms of Service, which included an arbitration provision. The provision covered disputes arising from or relating to the Terms of Service, Fitbit’s service, or Fitbit products or services. It also incorporated the American Arbitration Association’s rules and provided an opportunity to opt out within 30 days of first accepting the terms.

Google moved to compel arbitration and asked the court to dismiss the case for lack of subject-matter jurisdiction or, alternatively, to stay the proceedings while arbitration occurred. Google also moved to dismiss for failure to state a claim.

Agreement to Arbitrate

The court found that the online Terms of Service were a “clickwrap” agreement, meaning that users accepted the terms by checking a box while a link to the terms was available. The court concluded that the sign-up screens gave reasonably conspicuous notice because the link was near the required acceptance box and was displayed in blue or bold, underlined text.

The plaintiffs did not recall seeing or agreeing to the Terms of Service. The court held that their lack of recollection and possible failure to read the terms did not overcome Google’s evidence that they had been required to check the acceptance box. The court also held that the absence of the Terms of Service from the device packaging did not negate the notice provided during account creation.

The court rejected the plaintiffs’ argument that the words “certain” and “any” made the arbitration provision ambiguous. It also treated the plaintiffs’ argument about the Terms of Service’s subject matter as a dispute about the provision’s scope, rather than contract formation. Because the agreement incorporated the American Arbitration Association’s rules, the court held that the parties had delegated questions about the scope of arbitration to the arbitrator. The court therefore found that the parties agreed to arbitrate.

Enforceability

The plaintiffs argued that the arbitration provision was unconscionable, meaning unfairly oppressive or one-sided under contract law. Under California law, a provision must be both procedurally and substantively unconscionable to be unenforceable. The court found no procedural unconscionability because the provision gave users a meaningful opportunity to opt out by email within 30 days. Because both forms of unconscionability were required, the court did not decide whether the provision was substantively unconscionable.

The plaintiffs also argued that the provision violated the California Supreme Court’s rule concerning waivers of the right to seek public injunctive relief, known as the McGill rule. The court held that the agreement’s incorporation of the American Arbitration Association’s rules delegated that issue to the arbitrator and declined to decide whether the provision was invalid under the McGill rule.

Waiver

The plaintiffs argued that Google waived arbitration through conduct involving defective products, warranty disputes, replacement products, and consumers’ speech about burn injuries. The court found that Google had not waived its right to arbitrate. It emphasized that Google sought arbitration in its first substantive motion, shortly after the plaintiffs filed the lawsuit, and had not substantially used the court’s litigation process. The court also found little or no prejudice to the plaintiffs from the timing of Google’s motion.

Disposition

The court held that outright dismissal was not appropriate because it was not certain that the plaintiffs’ claims would remain in arbitration. It therefore GRANTED Google’s Motion to Compel Arbitration and STAYED the case pending the outcome of arbitration. The parties were ordered to report on the initiation of arbitration within 60 days and on its conclusion within 10 days.

The court TERMINATED Google’s Motion to Dismiss, which had been submitted in the same filing. The court stated that Google could re-notice that motion if the case returned to court. The order did not decide the merits of the plaintiffs’ underlying claims.