McDaniel v. Home Box Office Inc.

Background

Angel McDaniel and Constance Simon sued Home Box Office, Inc. (HBO), alleging violations of the Video Privacy Protection Act. They brought the case individually and on behalf of a proposed class. McDaniel initially subscribed to HBO Max through Amazon Prime Channels, and Simon subscribed through AT&T. After Amazon Prime Channels stopped offering HBO Max, McDaniel purchased a subscription directly from WarnerMedia. The plaintiffs continued using their HBO Max accounts through at least June 2022.

To register for an HBO Max account, users were shown a sign-up page with a bold hyperlink to the HBO Max terms of use and privacy policy. Before June 2021, users had to check a box stating that they agreed to those terms. After June 2021, users were told that continuing the registration process meant they consented to the terms. The terms included an arbitration agreement covering broadly defined disputes and a waiver of the right to bring class actions in court or arbitration.

HBO moved to compel arbitration, dismiss the class claims, and stay the case while arbitration proceeded. The plaintiffs opposed that motion and separately moved to appoint interim class counsel.

Arbitration Agreement

The court held that the plaintiffs agreed to the terms of use. The plaintiffs did not dispute that they agreed to the terms or that the arbitration clause covered their Video Privacy Protection Act claims. Instead, they argued that they had already paid third-party providers before seeing HBO’s terms and therefore had not assented to the arbitration agreement.

The court rejected that argument. It explained that the plaintiffs were given an opportunity to review the terms when they registered for HBO Max accounts. The terms were conspicuously presented through a bold hyperlink, and a user’s failure to read terms does not prevent consent when a reasonably careful user would have been alerted to them. The court also concluded that this reasoning applied even though the plaintiffs had first purchased subscriptions from third parties.

The plaintiffs continued renewing their subscriptions after receiving notice of the terms. McDaniel also purchased a new subscription through WarnerMedia after Amazon Prime Channels stopped offering HBO Max and again agreed to the terms during registration. The court concluded that these later transactions supported a finding that the plaintiffs accepted the terms.

The plaintiffs also argued that the terms, including the arbitration agreement, were unconscionable, meaning unfairly one-sided or imposed in an improper way. The court stated that those arguments challenged whether the contract was enforceable, rather than whether a contract was formed. Under the arbitration agreement, the court therefore left those issues for the arbitrator. The court noted that even if it considered the unconscionability arguments itself, the result would be the same.

Class Claims

The court separately considered the class-action waiver. It treated the waiver as distinct from the arbitration agreement because it required the plaintiffs to give up particular procedures for pursuing claims in court. The court rejected the plaintiffs’ argument that they had not agreed to the waiver because it was not shown before their initial third-party subscription purchase. The plaintiffs had opportunities to review and reject the waiver during account registration and later subscriptions.

The court held that the class waiver was enforceable and granted HBO’s motion to dismiss the class claims with prejudice. Because the plaintiffs could not maintain a class action, the court concluded that there was no class for interim counsel to represent and denied the plaintiffs’ motion to appoint interim class counsel as moot.

Disposition

Judge Valerie Caproni granted HBO’s motion to compel arbitration, dismiss the class claims with prejudice, and stay the case. She denied the plaintiffs’ motion to appoint interim class counsel as moot. The parties were required to provide joint updates on the status of arbitration every six months, beginning July 15, 2023. The Clerk of Court was directed to stay the case and terminate the two open motions.