Fuller v. Bloom Institute of Technology
- Alex Tse
- 3:23-cv-01440
- U.S. District Court · Northern District of California
- 3
In Fuller v. Bloom Institute of Technology, Judge Tse ordered arbitration, granted defendants’ motion, and dismissed the case without prejudice.
The named plaintiffs and Bloom Institute of Technology and the other defendants; the dispute must proceed to arbitration rather than in the dismissed court case.
What happened
In Fuller v. Bloom Institute of Technology, the plaintiffs had signed an agreement requiring arbitration of disputes connected to their Income Share Agreement. They argued that their claims fit an exception for court proceedings seeking equitable relief, and some also argued that no valid arbitration agreement existed. Defendants disagreed.
The court ruled that the agreement clearly assigned an arbitrator—not the court—to decide whether the arbitration exception applied and whether the arbitration agreement was valid. The court reached that conclusion because the agreement incorporated the American Arbitration Association’s rules, which give arbitrators authority to decide those questions.
Judge Tse ordered the parties to arbitrate, granted defendants’ motion to compel arbitration, and dismissed the case without prejudice. The plaintiffs may file a new action to confirm or challenge any arbitration award if necessary.
The detailed version
- Fuller v. Bloom Institute of Technology · No. 3:23-cv-01440
- Alex Tse
- Jan. 9, 2024
Background
When the plaintiffs enrolled in defendants’ coding bootcamp, they signed an arbitration agreement as part of an Income Share Agreement. The agreement required arbitration of disputes arising from the Income Share Agreement but excluded proceedings seeking an injunction, restraining order, or other equitable remedy, as well as proceedings in small claims court.
The plaintiffs argued that their claims fell within that exclusion and therefore belonged in court. Several named plaintiffs also argued that the arbitration agreement was invalid under the California Education Code. Defendants argued that the exclusion did not apply.
Court’s Analysis
The court explained that questions about whether an arbitration agreement applies to a dispute, and whether the agreement is valid, are called gateway questions of arbitrability. Ordinarily, a court would decide those questions. But the parties may assign them to an arbitrator if their agreement shows that intent clearly and unmistakably.
Here, the agreement incorporated the American Arbitration Association’s (AAA) Consumer Arbitration Rules. One incorporated rule gives the arbitrator authority to decide objections concerning the existence, scope, or validity of the arbitration agreement and the arbitrability of claims. The court held that this language clearly and unmistakably delegated those gateway questions to the arbitrator.
The court declined to decide whether the plaintiffs were sufficiently “sophisticated” to make that delegation enforceable. The court held that sophistication was not required and that the delegation clause was enforceable. The court therefore did not decide whether the equitable-remedy exclusion applied or whether the arbitration agreement was invalid under the California Education Code.
Disposition
The court ordered the parties to arbitrate their dispute, granted defendants’ motion to compel arbitration, and dismissed the case without prejudice. The court stated that the plaintiffs could file a new action to confirm or vacate an arbitration award if necessary.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.