Stevenson v. Sirius XM Radio Inc.

Background

Ayana Stevenson, David Ambrose, and Liza Ramirez sued Sirius XM Radio Inc. on behalf of a proposed class of California Sirius XM subscribers. They alleged that Sirius XM falsely advertised music plans at prices lower than the amounts actually charged because it did not disclose a “U.S. Music Royalty Fee.” They asserted claims involving false advertising and sought public injunctive relief, declaratory relief, and restitution under the California Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law.

Each plaintiff accepted Sirius XM’s Customer Agreement. The agreement generally required disputes to be resolved through binding arbitration, while allowing customers to opt out of arbitration by sending a timely notice. None of the plaintiffs opted out. The agreement also contained a Class Action Waiver stating that customers could not act as class representatives or participate in class claims, and that the arbitration agreement would become void if the waiver were limited, invalidated, or found unenforceable.

Legal standard

The court applied the Federal Arbitration Act and California contract-law principles. It considered whether a valid arbitration agreement existed and whether the plaintiffs’ claims fell within its scope. The plaintiffs did not dispute that they accepted the Customer Agreement or that their claims fell within the arbitration clause if it was enforceable.

Challenges to the Class Action Waiver

The plaintiffs raised two challenges. First, they argued that the waiver unlawfully barred customers who had opted out of arbitration from pursuing class litigation in court. The court held that the plaintiffs lacked standing—the legal ability to challenge a provision based on an affected legal interest—to raise this argument because none of them opted out. The challenged provision did not apply to them, so they could not use it to activate the agreement’s provision making the arbitration clause void.

Second, the plaintiffs argued that the Class Action Waiver unlawfully prevented them from seeking public injunctive relief. Public injunctive relief is an order primarily intended to stop conduct that threatens future harm to the general public. The court held that the agreement did not prohibit that remedy in arbitration.

The court followed the Ninth Circuit’s decision in DiCarlo v. MoneyLion, Inc., which interpreted California law to allow a person pursuing an individual arbitration to seek public injunctive relief without acting on behalf of the general public. The court declined to follow a contrary California appellate decision because the Ninth Circuit’s interpretation controlled. It also found that the agreement in Jack v. Ring, LLC used more restrictive language than the Sirius XM agreement.

Disposition

The court concluded that the Class Action Waiver did not prevent the plaintiffs from seeking public injunctive relief in arbitration. The agreement’s provision voiding arbitration if the waiver were invalid therefore was not triggered. The court granted Sirius XM’s motion to compel arbitration and dismissed the case. The court also denied the plaintiffs’ motion for leave to file a supplemental brief because the proposed brief raised allegations about Sirius XM’s arbitration proceedings with other consumers that did not concern the legal issues before the court.