As usual, the appellate courts have issued rulings that impact arbitration, specifically the enforcement of arbitration agreements. We have a separate section focusing on arbitration in the labor and employment context. But, here we discuss 2024 opinions impacting arbitration outside of labor and employment claims. The opinions focus on enforceability of arbitration provisions in websites, the enforceability of arbitration agreements by non-signatories, and enforceability of arbitration agreements signed by a representative or agent of a party.

Court of Appeal holds that a cable company’s arbitration agreement was unenforceable in an action by a cable subscriber’s against the cable company’s purported deceptive practices which sought only public injunctive relief

In Ramsey v. Comcast Cable Communications, LLC Charles Ramsey, a subscriber to Comcast Cable Communications, LLC’s (“Comcast”) Xfinity services, filed a lawsuit against Comcast for violations of California’s consumer protection statutes. He alleged that Comcast engaged in unfair, unlawful, and deceptive business practices under the Consumers Legal Remedies Act (“CLRA”) and the unfair competition law (“UCL”). Ramsey’s complaint sought injunctive relief, not monetary damages.

Comcast filed a petition to compel arbitration pursuant to the arbitration provision in the parties’ subscriber agreement which required the parties to arbitrate all disputes and permitted the arbitrator to grant only individual relief. The trial court denied the petition based on the Supreme Court’s decision in McGill v. Citibank which held that a pre-dispute arbitration provision that waives a plaintiff’s right to seek public injunctive relief in any forum is unenforceable under California law. Comcast appealed.

On appeal, Comcast argued that the trial court erred in concluding that Ramsey was seeking public injunctive relief. Comcast further argued that the Federal Arbitration Act (“FAA”) preempts McGill. The Court of Appeal held that Ramsey’s complaint seeks public injunctive relief only, and that McGill is not preempted, thus affirming the trial court’s order.

Ninth Circuit holds that consumers were bound by arbitration provision in defendants’ websites’ “terms of use” because they had inquiry notice of the terms and, by completing their orders, agreed to be bound by them

In Patrick v. Running Warehouse, LLC several lawsuits were brought by plaintiffs, consumers of defendant Running Warehouse, LLC who purchased goods online from the defendants and had their personal information stolen during a data breach on the defendants' websites. The defendants moved to compel arbitration based on the arbitration provision in their terms of use posted on their websites. The district court granted the motion, and plaintiffs appealed.

The Ninth Circuit affirmed the district court’s order to compel arbitration and dismiss the complaints without prejudice. The Court held that the plaintiffs had sufficient notice of the arbitration provision contained within the terms of use and that the arbitration clause was not invalid under California law. Specifically, the arbitration provision was not unconscionable and did not prohibit public injunctive relief. Furthermore, the parties agreed to delegate the question of arbitrability to an arbitrator according to the commercial rules and procedures of JAMS, a private alternative dispute resolution provider.

Court of Appeal holds that defendants failed to show that their evidence of a valid arbitration agreement was uncontradicted because there was evidence the 81-year old plaintiff who signed the agreement did not understand the agreement she signed

Jones v. Solgen Construction involved a dispute between an 81-year old homeowner and companies involved in selling and installing home solar energy systems. Solgen Construction employs sales agents to go door to door and attempt to make sales of home solar energy systems. GoodLeap, LLC (“GoodLeap”) works with Solgen to provide loans for Solgen’s customers. Solgen’s sales representatives help customers obtain loans from GoodLeap. A contract for the installation of a home solar energy system with Solgen and a 25-year loan contract for $52,564.28 with GoodLeap were created. Both contracts bear what purports to be Jones’s electronic signature and contain arbitration provisions. Jones purportedly signed the 21-page agreements on a cellphone via DocuSign in 38 seconds. Jones denied that she knowingly signed the contract with the arbitration provisions.

Jones filed a lawsuit against defendants alleging fraudulent misrepresentation, fraudulent concealment, negligence, and violations of various consumer protection laws. In particular, she contended that she had been misled into believing she was signing up for a free government program to lower her energy costs, not entering into a 25-year loan agreement for solar panels. Defendants moved to compel arbitration based on an arbitration provision in the agreement between the parties. The trial court denied the motion on various grounds including that no valid agreement to arbitrate existed since the signature on the DocuSign was inadmissible hearsay. Defendants appealed.

The Court of Appeal affirmed the trial court’s decision not to compel arbitration. The defendants argued that Jones had signed contracts containing arbitration clauses, but the Court found that defendants had failed to meet their burden of demonstrating the existence of a valid arbitration agreement. In so doing, the Court relied on the fact that the contract was 21 pages, the review period was 38 seconds and through a cell phone, and plaintiff was 81-years old with virtually no technological ability. Furthermore, plaintiff’s income was limited; she was careful with her money; the solar panel contract was for $52,000 with a 25-year repayment period. The Court also held that the contract was unenforceable due to being unconscionable.

In addition, the Court rejected defendants’ arguments that an evidentiary hearing should have been held and that the trial court had erred in its interpretation of the evidence and the law. It found that the trial court had not abused its discretion and that its finding that the defendants failed to meet their burden of proof was not erroneous as a matter of law.

Ninth Circuit holds that a California company sufficiently served notice to confirm arbitral award by mailing motion papers to Mexican company’s counsel

Voltage Pictures, LLC v. Gussi, S.A. de C.V. arose from disputes relating to a distribution and license agreement entered into between the parties. The agreement incorporated the Independent Film & Television Alliance (“IFTA”) Rules for International Arbitration, including a provision that the parties agreed to accept service in accordance with the IFTA Rules and, specifically, the applicable law provision of the IFTA Rules, which states that “the laws of the State of California” “shall apply … to all arbitrations conducted under these rules.”

Voltage prevailed in the arbitration. It then sought to serve Gussi with a petition to confirm the arbitral award and mailed a notice of motion to confirm the arbitral award and the accompanying motion papers to the attorneys who had represented Gussi in the underlying arbitration. In response, Gussi filed a motion to quash service of the petition. Gussi argued that because Voltage’s petition was pending in federal court, federal procedural law – specifically FRCP Rule 4 – and not California law governed service of process. Gussi sought to dismiss Voltage’s motion to confirm the arbitral award.

In adjudicating the motion, the United States District Court for the Central District of California found that service of the motion to confirm by mail was improper under the agreement, in which “the parties agreed to service as allowed under California law,” which in turn did not permit service by mail on counsel with no return receipt. The District Court therefore ordered Voltage to complete service of the motion within 60 days. The next day, Voltage mailed its notice of motion and accompanying papers to Gussi’s address in Mexico via Federal Express, return receipt requested. A few days later, Voltage received a returned receipt, signed by Silvia Torres, who had been designated by Gussi as its representative for service of process during the underlying arbitration. Voltage also personally served the papers upon Gussi, Inc., a Delaware corporation registered to do business in California that was owned by the same Mexican holding company as Gussi, and whose employees negotiated the agreement on behalf of Gussi.

Following Voltage’s efforts to re-serve Gussi, Gussi filed a second motion to quash service, arguing again that Federal Rules of Civil Procedure 4(h)(2) and 4(f) – not California law – applied to service of process, and that Voltage’s second effort to serve Gussi did not comply with Rule 4(h)(2).

The District Court disagreed, reaffirming its holding that California law governed service of the motion and finding that Voltage served Gussi pursuant to California state law when Voltage served Gussi Inc. Specifically, the District Court found that Gussi, Inc. was deemed to be Gussi’s “general manager” pursuant to California Code of Civil Procedure section 416.10(d) and California Corporations Code section 2110, and so service on Gussi, Inc. was sufficient. The District Court entered judgment confirming the arbitral award in all respects, and Gussi appealed.

The Ninth Circuit first held that because Voltage filed its confirmation motion in federal court, it was required to comply with federal law governing service, not California state law. The Ninth Circuit then held that Voltage’s service did, in fact, comply with federal law since service on counsel was proper under Federal Rule of Civil Procedure 5(b).

Ninth Circuit holds that defendant airline was entitled to enforce third-party booking website’s arbitration provision under the doctrine of equitable estoppel

In Herrera v. Cathay Pacific Airways Ltd. plaintiffs, Winifredo and Macaria Herrera, filed a class action against Cathay Pacific (“Cathay”) alleging that Cathay breached its contract by failing to issue a refund following flight cancellations for tickets they purchased through a third-party booking website, ASAP Tickets (“ASAP”). Cathay moved to compel arbitration based on agreement between plaintiffs and ASAP. The district court denied the motion because Cathay was not a signatory to the arbitration agreement, refusing to apply the doctrine of equitable estoppel which can operate to allow a non-signatory to enforce an arbitration agreement under certain circumstances.

In an amended opinion, the Ninth Circuit reversed. The Court ruled that when a non-signatory, in this case Cathay, seeks to enforce an arbitration provision, an order denying a motion to compel arbitration based on the doctrine of equitable estoppel is reviewed de novo. Applying California contract law, the Court held that the plaintiffs’ allegations that Cathay breached its General Conditions of Carriage were intimately intertwined with ASAP’s alleged conduct under its Terms and Conditions. Thus, it was appropriate to enforce the arbitration clause contained in ASAP’s Terms and Conditions.

Accordingly, the Court reversed the district court’s denial of Cathay Pacific’s motion to compel arbitration and remanded with instructions to either dismiss or stay the action pending arbitration of the plaintiffs’ breach-of-contract claim.

Court of Appeal holds that trial court exceeded its jurisdiction by dismissing plaintiffs’ claims for failure to prosecute after it had already granted defendants’ motion to compel arbitration

In Lew-Williams v. Petrosian plaintiffs accused the Petrosian defendants of embezzling approximately $11.5 million from a corporation’s bank accounts. The trial court compelled the case to arbitration pursuant to a contract between the parties, but the plaintiffs failed to initiate arbitration proceedings. As a result, the trial court dismissed the plaintiffs’ claims against the Petrosian defendants.

The plaintiffs appealed, arguing that they did not have the funds to initiate the arbitration and that the trial court erred in compelling arbitration. In opposition, the Petrosian defendants argued that the claims were properly dismissed because the plaintiffs had the funds to arbitrate and should not be allowed on appeal to challenge the trial court’s order compelling arbitration before first arbitrating their claims.

The Court of Appeal reversed holding that once a trial court has compelled claims to contractual arbitration, the court has “very limited authority with respect to [the] pending arbitration.” If a party fails to diligently prosecute an arbitration, the appropriate remedy is for the opposing party to seek relief in the arbitration proceeding. Therefore, the Court held that the trial court exceeded its jurisdiction when it dismissed the plaintiffs’ claims against the Petrosian defendants for failure to prosecute.

In a consumer protection action, Ninth Circuit holds that its holding in “Blair v. Rent-A-Center, Inc.” was not abrogated by the SCOTUS decision in Viking River because Viking River only addressed PAGA claims, and not consumer protection claims

In McBurnie v. RAC Acceptance East LLC plaintiffs filed a putative class action against RAC Acceptance East, LLC (“RAC”) arguing that two fees imposed by RAC, operators of retail stores that lease household and electronic items through rent-to-own contracts, violated California consumer protection laws. RAC sought to compel arbitration, citing an arbitration agreement with the plaintiffs. The district court denied RAC’s motion, and RAC appealed the decision.

On appeal, RAC argued that a recent Supreme Court decision, Viking River Cruises, Inc. v. Moriana, implicitly abrogated a prior Ninth Circuit decision, Blair v. Rent-A-Center, Inc., which held that RAC’s arbitration agreement was unenforceable under California law. The Ninth Circuit disagreed, stating that Viking River was not irreconcilable with Blair, and that Viking River dealt with different claims (PAGA claims) from those at issue in this case. Therefore, Blairremained binding.

Court of Appeal affirms order denying motion to compel arbitration based on “browsewrap” terms of use on defendant’s website, which required no affirmative assent by the consumer

In Weeks v. Interactive Life Forms, LLC an online business, Interactive Life Forms, LLC (“Interactive”), was sued by a customer, Brinan Weeks, who alleged that the company falsely advertised a product he purchased. In response, Interactive filed a motion to compel arbitration based on a clause found in the terms of use on its website claiming that these terms bound customers irrespective of whether they clicked on the link or provided any affirmative assent. These provisions are generally referred to as “browsewrap” provisions. Interactive argued that by using the website and making a purchase, Weeks had agreed to the terms of use, which included a provision mandating arbitration for any disputes.

The trial court denied the motion to compel arbitration, finding that the company failed to show the parties agreed to arbitrate their dispute. The court held that the link to the terms of use was insufficient to put a reasonable user on notice of the terms of use and the arbitration agreement.

The Court of Appeal affirmed holding that Interactive failed to establish that a reasonably prudent user would be on notice of the terms of use. The Court rejected Interactive’s argument that it should depart from precedent which generally considers “browsewrap” provisions unenforceable. (See, e.g. Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 461; Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855; and Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1175.) The Court also rejected Interactive’s claim that the Federal Arbitration Act (“FAA”) preempts California law adverse to browsewrap provisions. The Court concluded there were no grounds to deviate from this precedent, and that the FAA did not preempt California law concerning browsewrap provisions. The Court emphasized that the company had the onus to put users on notice of the terms to which it wished to bind consumers.

California Supreme Court holds that a health care agent’s power of attorney over principal’s health care decisions did not include authority to bind the principal to a separate, optional arbitration agreement presented with other admissions paperwork

In Harrod v. Country Oaks Partners, LLC Charles Logan executed a power of attorney for health care pursuant to California’s Health Care Decisions Law (Prob. Code, § 4600 et seq.). Logan appointed his nephew, Mark Harrod, as his “health care agent” to make “health care decisions” should Logan’s primary physician find Logan unable to make those decisions himself. Following an accident, Logan was admitted to the Country Oaks Care Center (“Country Oaks”), a skilled nursing facility, to obtain living assistance and rehabilitative treatment. Harrod signed two agreements with the facility on Logan’s behalf. The first was an admission agreement that entitled Logan to care at the facility and specified the services to be rendered, payment terms, and facility rules. The second agreement Harrod signed was an arbitration agreement. Logan filed a lawsuit against Country Oaks and its principals alleging negligent care during his admission.

Defendants moved to compel arbitration. The trial court denied the motion on the grounds that Harrod’s power to make health care decisions for Logan as his health care agent did not encompass the power to sign the optional arbitration agreement.

The Court of Appeal affirmed, agreeing that a health care decision does not encompass optional, separate arbitration agreements presented alongside mandatory facility admissions paperwork. Defendants filed a petition for review with the California Supreme Court.

Resolving a split of authority among the Courts of Appeal, the Supreme Court concluded that the execution of the arbitration contract was not a “health care decision” within the authority of the health care agent. Therefore, the facility’s owners and operators could not rely on the agent’s execution of the arbitration agreement to compel arbitration of claims arising from the principal’s alleged maltreatment.

Ninth Circuit holds that Terms of Service, hyperlinked on game’s start screen, was reasonably conspicuous, putting users who downloaded the game app on notice to terms requiring arbitration of claims

In Keebaugh v. Warner Bros. Entertainment Inc. a group of individuals, including a minor, filed a class action lawsuit against Warner Bros. Entertainment, Inc. (“Warner Bros.”) for alleged misrepresentations related to the mobile application Game of Thrones: Conquest (“GOTC”). The plaintiffs claimed that Warner Bros. engaged in false and misleading advertising within the game. In response, Warner Bros. moved to compel arbitration of all claims based on the GOTC Terms of Service, which users agree to by tapping a “Play” button located on the app’s sign-in screen. The district court denied Warner Bros.’ motion, finding that the notice of the Terms of Service was insufficiently conspicuous to bind users to them. The district court focused on whether the context of the transaction put the plaintiffs on notice that they were agreeing to the Terms of Service, concluding that the app did not involve a continuing relationship that would require some terms and conditions.

The Ninth Circuit reversed holding that the district court erred in finding that Warner Bros. failed to provide reasonably conspicuous notice. The Court found that the context of the transaction and the placement of the notice were both sufficient to provide reasonably conspicuous notice. The Court also rejected the plaintiffs’ argument that the arbitration agreement was unconscionable due to its ban on public injunctive relief. The Court concluded that the unenforceability of the waiver of one’s right to seek public injunctive relief did not make either this provision or the arbitration agreement unconscionable or otherwise unenforceable.

Court of Appeal holds that trial court erred by denying nursing facility’s petition to compel arbitration as to decedent’s parents’ wrongful death causes of action

In Holland et al. v. Silverscreen Healthcare, Inc. Skyler A. Womack (“Skyler”) died while a patient at Silverscreen Healthcare, Inc. (“Silverscreen”), a skilled nursing facility. Skyler’s parents, Jonie A. Holland (“Holland”) and Wayne D. Womack (“Wayne”), filed a lawsuit against Silverscreen alleging dependent adult abuse and negligence on behalf of Skyler (i.e. survival claim), as well as their own claim for wrongful death. Silverscreen moved to compel arbitration of the entire complaint based on an arbitration agreement between Skyler and Silverscreen.

The trial court granted Silverscreen’s motion to compel arbitration for the survival claim but denied the motion for the wrongful death cause of action. The court reasoned that the parents did not have an enforceable arbitration agreement with Silverscreen. The court’s decision was heavily influenced by the case Avila v. Southern California Specialty Care, Inc.

Silverscreen appealed arguing that pursuant to Ruiz v. Podolsky the parents are bound by the arbitration agreement signed by Skyler, and therefore, the parents’ wrongful death claim should be subject to arbitration. The Court of Appeal agreed with Silverscreen holding that Ruiz governs the matter. Consequently, pursuant to Ruiz and Code of Civil Procedure section 1295, the parents’ wrongful death claim must go to arbitration along with Skyler’s survivor claims.

Note: In August of 2024, the California Supreme granted the petition for review of the Court of Appeal’s opinion. The Supreme Court stated that the Court of Appeal opinion “may be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 456 to choose between sides of any such conflict.

Court of Appeal holds that a website’s “clickwrap agreement” did not create an enforceable arbitration agreement because it did not provide reasonably conspicuous notice of its terms to user’s clicking to accept the agreement

In Herzog et al. v. Superior Court five diabetic patients, Henry J. Hebert, Traci Moore, Aliya Campbell Pierre, Tiffanie Tsakiris, and Brenda Bottiglier, were prescribed the Dexcom G6 Continuous Glucose Monitoring System (“Dexcom G6”) to manage their diabetes. The device allegedly malfunctioned, failing to alert them of dangerous glucose levels, resulting in serious injuries and, in Hebert’s case, death. The patients and Hebert’s daughters filed separate product liability actions against Dexcom, Inc. (“Dexcom”), the manufacturer of the device. Dexcom moved to compel arbitration, arguing that each patient had agreed to arbitrate disputes when they installed the G6 App on their devices and clicked “I agree to Terms of Use.” This kind of agreement is commonly referred to as a “clickwrap agreement”

The trial court granted Dexcom’s motions to compel arbitration in all five cases. The plaintiffs filed an appeal. The Court of Appeal consolidated the cases and issued an order directing Dexcom to show cause why the relief sought should not be granted.

Ultimately, the Court of Appeal reversed the decision of the trial court. According to the Court, although a clickwrap agreement, where an internet user accepts a website’s terms of use by clicking an “I agree” or “I accept” button, is generally enforceable, Dexcom’s G6 App clickwrap agreement was not. The Court found that Dexcom undid whatever notice it might have provided of the contractual terms by explicitly telling the user that clicking the box constituted authorization for Dexcom to collect and store the user’s sensitive, personal health information. For this reason, Dexcom could not meet its burden of demonstrating that the same “click” constituted unambiguous acceptance of the Terms of Use, including the arbitration provision. Consequently, the Court held that arbitration agreements were not formed with any of the plaintiffs.

SCOTUS holds that whether a subsequent contract containing a forum selection clause superseded an earlier arbitration agreement, the question of “arbitrability” was for courts to decide

In Coinbase v. Suski Coinbase, Inc. (“Coinbase”), a cryptocurrency exchange platform, and Coinbase users executed two contracts. In the first contract, the Coinbase User Agreement, the parties agreed that an arbitrator would decide all arbitrability disputes. In the second contract, the Official Rules for a “Dogecoin” sweepstakes, the parties agreed to a forum selection clause that gave sole jurisdiction over sweepstakes-related disputes to California courts. Once the sweepstakes concluded, the tension between these two contracts came to a head.

In particular, plaintiffs filed a class action complaint in the United States District Court for the Northern District of California, alleging that the sweepstakes violated various California laws. Coinbase moved to compel arbitration, relying on the arbitration clause in the first contract. The district court denied Coinbase’s motion, holding that the court should decide which contract governed and that the Official Rules’ forum selection clause controlled the parties’ sweepstakes-related dispute under California contract law. The Ninth Circuit affirmed on all grounds.

The United States Supreme Court (“SCOTUS”) agreed that courts, not arbitrators, decide whether a subsequent contract supersedes an earlier arbitration agreement that includes a delegation clause. The Court explained that courts cannot assume that parties have agreed to arbitrate absent clear and unmistakable evidence. SCOTUS reasoned that before referring disputes to arbitrators, courts must determine what the parties had agreed to, including, as here, whether the parties had agreed to arbitrate arbitrability for sweepstakes-related disputes.

The Court also rejected the argument that the severability principle — under which a party seeking to avoid arbitration must directly challenge the arbitration or delegation clause, rather than the contract as a whole — would alter the analysis. The Court reasoned that because plaintiffs’ challenge applied “equally” to the whole contract, including the delegation provision, the severability principle was satisfied.

SCOTUS declined to address whether the lower courts were wrong to hold that the Official Rules’ forum selection clause superseded the first contract’s delegation provision as outside the scope of the question presented. The Court also rejected the idea that its decision would invite “chaos” by inviting challenges to delegation clauses.

Court of Appeal holds that an arbitrator may exclude evidence from consideration if it properly determined a party engaged in discovery abuse throughout the process

In Valencia v. Mendoza the plaintiffs, Miguel and Lizette Valencia, purchased a home from the defendants, Armando Mendoza, Coastal Holdings, LLC, and Class A Realty, Inc. (“Defendants”). After discovering undisclosed defects in the home, the Valencias initiated an arbitration proceeding against the defendants as required by the sales contract. The arbitrator ruled in favor of the Valencias, awarding them damages for repairs, loss of use, statutory penalties, and inspection fees, as well as punitive damages and attorneys’ fees.

The Valencias filed a petition with the trial court to affirm the arbitrator’s ruling. Defendants also filed a motion to vacate the arbitration award contending that the arbitrator committed legal error by excluding key evidence from the arbitration hearing. The trial court affirmed the arbitration award, finding that the Defendants’ petition to vacate the award was untimely and that they failed to show that the arbitrator erred in its rulings excluding evidence. Defendants appealed.

On appeal the Defendants again argued that the trial court erred in not considering the evidence they submitted with their late-filed petition to vacate the arbitration award. The Court of Appeal affirmed the trial court’s decision, holding that the Defendants failed to meet their burden of establishing the existence of error in the arbitration award. The Court also found that the trial court did not abuse its discretion in confirming the award without considering the Defendants’ untimely evidence.

Court of Appeal holds that arbitration agreements signed by relatives in purportedly representative capacity are not enforceable because no agency relationship, actual or ostensible, existed between the relatives and the signatories

In Hearden v. Windsor Redding Care Center, LLC several residents at a skilled nursing facility died from coronavirus infections. Family members of the deceased sued the facility and its alleged alter egos, asserting claims including elder abuse, negligence, and wrongful death. The defendants moved to compel arbitration based on agreements signed by family members rather than the decedents. The trial court denied the motion, finding no evidence that the family members had authority to sign on behalf of the decedents, and that the agreements did not bind the family members in their individual capacities. For one agreement where a family member had power of attorney, the court exercised its discretion to deny arbitration to avoid conflicting results.

The Court of Appeal affirmed holding that the defendants failed to establish that the family members were authorized agents of the decedents. The Court also found that the family members did not sign the agreements in their individual capacities and, thus, were not bound by them. Furthermore, the Court upheld the trial court’s discretion to deny arbitration for the claim involving a power of attorney to avoid conflicting rulings.

Court of Appeal holds that a grocery store could not compel a consumer’s claims to arbitration by invoking the terms of service in the consumer’s agreement with Instacart, the service that delivered the groceries from the grocery store to the consumer

In Mahram v. The Kroger Co. Payam Mahram used Instacart to purchase groceries from Ralph’s grocery store. The contract between the parties included an arbitration provision. Mahram later sued Ralph’s, alleging it had cheated him on price. Ralph’s, not a party to the Instacart contract, moved to compel arbitration based on the arbitration agreement between Mahram and Instacart. The trial court denied the motion, and Ralph’s appealed.

The Court of Appeal affirmed holding that while Mahram did agree to arbitration with Instacart by signing up for its service Ralph’s was not a third-party beneficiary of that agreement since the contract’s motivating purpose was not to benefit Ralph’s. The Court also held that the trial court, rather than an arbitrator, was the proper authority to decide the threshold questions of arbitrability because the contract did not clearly indicate that Mahram had agreed to arbitrate with anyone other than Instacart.

Court of Appeal remands trial court’s denial of motion to compel arbitration to determine threshold issues, e.g., whether the holder of a durable power of attorney validly executed arbitration agreement on behalf of the deceased

In Maxwell v. Atria Management Co., LLC Trudy Maxwell, a 93-year-old resident of Atria Park of San Mateo died after ingesting an industrial strength cleaner mistakenly served to her by an Atria employee. Trudy’s eight surviving children, including James Maxwell III (“James III”), filed a lawsuit against Atria Management Company (“Atria”) and related entities, alleging negligence, wrongful death, and elder abuse. The trial court denied Atria’s motion to compel arbitration, concluding that James III, who signed the arbitration agreement, was not authorized to do so under his durable power of attorney (“DPOA”) because he was not authorized to make health care decisions for Trudy. Instead, Trudy’s daughter, Marybeth, held the power of attorney for health care.

The Atria defendants appealed, arguing that James III had the authority to sign the arbitration agreement and that all of Trudy’s heirs were bound to arbitrate their wrongful death claims. They also contended that California’s Code of Civil Procedure section 1281.2(c), which allows an exception to arbitration when third-party claims may be affected, was preempted by the Federal Arbitration Act (“FAA”).

The Court of Appeal reversed the trial court’s order and remanded the case for further proceedings. The Court instructed the trial court to reconsider the validity of the arbitration agreement in light of the California Supreme Court’s recent decision in Harrod v. Country Oaks Partners, LLC which held that agreeing to an optional arbitration agreement is not a health care decision. The Court also directed the trial court to determine whether the DPOA was valid and whether James III had the authority to agree to arbitration despite Marybeth holding the health care power of attorney. Lastly, the Court noted that the wrongful death claims of Trudy’s children were not subject to arbitration as they were not parties to the arbitration agreement.

Court of Appeal affirms trial court’s ruling that plaintiffs were not required to arbitrate their consumer law and public injunctive relief claims against cryptocurrency company

In Kramer v. Coinbase, Inc. plaintiffs, who are users of Coinbase’s cryptocurrency platform, filed a complaint against Coinbase alleging violations of the Consumer Legal Remedies Act (“CLRA”), the California False Advertising Law (“FAL”), and the California Unfair Competition Law (“UCL”). Plaintiffs only sought public injunctive relief, claiming Coinbase misrepresented its security features to the public. Coinbase’s user agreement, which plaintiffs accepted, included an arbitration clause.

Coinbase moved to compel arbitration, arguing the plaintiffs sought private injunctive relief, which is subject to arbitration. The trial court denied Coinbase’s motion to compel arbitration, finding that the plaintiffs sought public injunctive relief, which is not subject to arbitration under California law. The court noted that the complaint exclusively sought public injunctive relief and did not request any relief that would solely benefit the plaintiffs or existing Coinbase customers. The court also referenced a related federal case, Aggarwal I, where plaintiffs sought individual relief, supporting the conclusion that the current complaint sought public injunctive relief. Coinbase appealed.

The Court of Appeal affirmed holding that the plaintiffs’ complaint indeed sought public injunctive relief only. The Court explained that public injunctive relief under the CLRA, FAL, and UCL is intended to prohibit unlawful acts that threaten future injury to the public, rather than redress individual wrongs. The Court found that the plaintiffs’ allegations and requests for relief were aimed at preventing Coinbase from continuing its allegedly deceptive practices, which primarily benefit the public. Consequently, Coinbase could not rely on the arbitration provision in its user agreement to compel arbitration of the plaintiffs’ claims for public injunctive relief.

Court of Appeal holds that the trial court properly declined to enforce arbitration provision, where plaintiff with dementia did not ratify the agreement and likely lacked the capacity to execute the agreement in the first place

In West v. Solar Mosaic, LLC a salesperson from Elite Home Remodeling, Inc. (“Elite”) visited the home of Harold and Lucy West, both in their 90s and suffering from dementia, to discuss solar panel installation and home renovation. The salesperson, Ilai Mitmiger, allegedly obtained Harold’s electronic signature on a loan agreement with Solar Mosaic LLC (“Mosaic”) through Deon, the Wests’ daughter, who provided her email for the documents. The loan agreement was signed electronically in Harold’s name within seconds, despite Harold’s apparent lack of understanding and technical ability. The loan agreement contained an arbitration provision. When defendants started demolishing the Wests’ home (resulting in the Wests bathing in the kitchen sink), the Wests sued Elite and Mosaic for a variety of causes of action. Mosaic moved to compel arbitration which was denied by the trial court on the grounds that Mosaic failed to prove the existence of an agreement to arbitrate. The court determined that Mosaic did not establish that Harold signed the loan documents or that Deon had the authority to bind Harold to the agreement. Mosaic appealed.

The Court of Appeal affirmed holding that the evidence presented, including Harold’s dementia and lack of technical skills, created a factual dispute about the authenticity of Harold’s electronic signatures. The Court also found that Mosaic did not prove Deon had the authority to act as Harold’s agent or that Harold ratified the agreement during a recorded phone call with Mosaic. The Court concluded that the recorded call did not demonstrate Harold’s awareness or understanding of the loan agreement, thus failing to establish ratification.

In Sherman Act case, Ninth Circuit holds that an arbitration agreement to be conducted under New Era’s Expedited/Mass Arbitration rules was unconscionable under California law

In Heckman v. Live Nation Entertainment Inc. plaintiffs brought a putative class action against Live Nation Entertainment, Inc. (“Live Nation”), and Ticketmaster LLC, alleging anticompetitive practices in violation of the Sherman Act. The plaintiffs had purchased tickets through Ticketmaster’s website, which required them to agree to Ticketmaster’s Terms of Use. These terms included an arbitration agreement mandating that disputes be resolved by an arbitrator from New Era ADR, using expedited/mass arbitration procedures. Defendants filed a motion to compel arbitration which was denied by the district court on the grounds that the clause delegating the authority to determine the validity of the arbitration agreement to the arbitrator was unconscionable under California law, both procedurally and substantively. The Court also held that the entire arbitration agreement was unconscionable and unenforceable. Defendants appealed.

The Ninth Circuit affirmed holding that the delegation clause and the arbitration agreement as a whole were unconscionable under California law. The Court found that the delegation clause was part of a contract of adhesion and that the terms on Ticketmaster’s website exhibited extreme procedural unconscionability. Additionally, the Court identified several features of New Era’s arbitration rules that contributed to substantive unconscionability, including the mass arbitration protocol, lack of discovery, limited right of appeal, and arbitrator selection provisions.

The Ninth Circuit also held that the application of California’s unconscionability law to the arbitration agreement was not preempted by the Federal Arbitration Act (“FAA”). As an alternate and independent ground, the Court held that the FAA does not preempt California’s prohibition of class action waivers in contracts of adhesion in large-scale small-stakes consumer cases, as established in Discover Bank v. Superior Court. The Court concluded that Ticketmaster’s Terms and New Era’s Rules were independently unconscionable under Discover Bank. The decision of the district court was affirmed.

Court of Appeal holds that an interim arbitration award was not final because the arbitrator expressly reserved the right to make a final determination

In Ortiz v. Elmcrest Care Center, LLC Jose de Jesus Ortiz was admitted to Elmcrest Care Center (“Elmcrest”) suffering from Parkinson’s disease, dysphagia, and dementia. Four years later he was found nonresponsive and later died in the hospital. Decedent’s estate (“Estate”) filed a civil action against Elmcrest and its staff for elder abuse, neglect, negligence, willful misconduct, and fraud, alleging that their failure to provide necessary care led to his death. Elmcrest filed a motion to compel arbitration based on an agreement signed upon the decedent’s admission.

The arbitrator issued a First Interim Award on March 30, 2022, finding that the Estate did not meet its burden of proof on any claims. The award allowed for further submissions to address any omitted issues. The Estate requested an amendment, arguing the arbitrator had omitted damages for pre-death loss of dignity. The arbitrator issued a Second Interim Award on May 26, 2022, awarding $100,000 in damages for pre-death pain and suffering. Elmcrest moved to vacate this award arguing the First Interim Award was final. The arbitrator denied the motion, stating the First Interim Award was not final and had omitted a necessary issue.

Estate filed a petition with the trial court to vacate the First Interim Award, ruling it was not final. The trial court vacated the Final Award and confirmed the First Interim Award, finding the First Interim Award had resolved all necessary issues. The Estate appealed.

The Court of Appeal reversed the trial court’s order, holding that the First Interim Award was not final as it expressly reserved jurisdiction for further proceedings. The Court directed the trial court to confirm the Final Award issued on September 30, 2022, which included the damages for pre-death pain and suffering.