Stewart v. Acer Inc.
- Vince Chhabria
- 3:22-cv-04684
- U.S. District Court · Northern District of California
- 3
In Stewart v. Acer, Judge Chhabria granted Acer’s motion to compel arbitration based on the computer’s license agreement and delegated scope questions to the arbitrator.
Stephen Stewart and Acer Inc.; the order requires the parties’ dispute to proceed under the arbitration provision in the End User License Agreement, with arbitrability questions assigned to the arbitrator.
What happened
In Stewart v. Acer Inc., Acer asked the court to require Stephen Stewart to use arbitration under an end-user license agreement shown when the computer was first started. The agreement required users to accept it before using the computer and prominently mentioned mandatory, binding arbitration.
The court ruled that the agreement gave Stewart sufficient notice of the arbitration requirement. It rejected Stewart’s arguments that his nephew started the computer and that the agreement covered only software disputes. The court said the agreement clearly assigned questions about whether a dispute could be arbitrated to the arbitrator, so it did not decide those scope questions or Acer’s separate argument based on the warranty agreement.
Judge Vince Chhabria granted Acer’s motion to compel arbitration. The order did not separately state whether the court stayed or dismissed the case.
The detailed version
- Stewart v. Acer Inc. · No. 3:22-cv-04684
- Vince Chhabria
- Jan. 20, 2023
Background
Acer moved to compel arbitration based on an arbitration provision in its End User License Agreement. Users encountered that agreement in a split-screen scrollwrap process when starting their computers and had to select “Accept” before using them. The agreement’s first sentence stated that it contained a mandatory and binding arbitration provision requiring the user and Acer to resolve disputes through binding arbitration.
Acer also argued, alternatively, that Stewart agreed to arbitration when he bought the computer after reviewing the Acer Limited Warranty Agreement. Because the court found Stewart bound by the license agreement, it did not reach Acer’s warranty-agreement arguments.
Court’s Analysis
The court held that the license agreement adequately placed users on “inquiry notice”—notice that would lead a reasonably prudent internet user to investigate the agreement’s existence and contents—because the arbitration warning was prominent. Stewart argued that his nephew started the computer for him. The court said that argument did not allow Stewart to avoid the agreement and referred to agency-law principles. It also noted that Stewart appeared to abandon the argument at the hearing.
Stewart argued that the license agreement applied only to software disputes, while his claims concerned only hardware. The court did not decide that scope question. Instead, it held that the agreement expressly delegated questions of arbitrability to the arbitrator. Arbitrability means whether a particular dispute is covered by an arbitration agreement or otherwise must be decided in arbitration.
Stewart also argued that the agreement’s severability provision conflicted with its delegation provision. A severability provision generally states that if one provision is invalid, the remaining provisions continue in effect. Relying on the Ninth Circuit’s decision in Mohamed v. Uber Technologies, Inc., the court held that the provisions were not impermissibly conflicting. The possibility that a court might later invalidate part of the agreement did not make the express delegation of arbitrability questions unclear.
Disposition
The court granted the motion to compel arbitration. It did not separately rule on the warranty-agreement theory, the software-versus-hardware scope issue, or whether the case should be stayed or dismissed.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.