Three Recent Cases Affirm Orders Denying Motions To Compel Arbitration.
Anthony De Leon v. Pinnacle Property Management Services, LLC et al., No. 059801 (4/3 Dec. 8, 2021) -- Unconscionability.
Superior Court Judge Marks, sitting by assignment, authors the opinion, agreeing with the trial judge's denial of a motion to compel arbitration, on the grounds that the agreement was procedurally and substantively unconscionable, and that it was proper not to sever objectionable provisions.
Roseana Garcia v. Expert Staffing West, No. B307371 (2/6 12/29/21) -- Employment, Nonsignatories.
Writing for the court, Justice Tangeman affirms the trial judge's order denying a motion to compel arbitration on the grounds that no agreement to arbitrate existed.
Plaintiff Garcia was added to a class action wage and hour dispute against Expert Staffing West, Essential Seasons, and Cool-Pak, LLC. Essential Seasons, which provided contract-based labor services for agricultural and foodservice companies, hired Garcia in 2017, placing her with Cool-Pak, LLC, a company that labeled, packed, and shipped produce. In 2019, Garcia applied to Expert Staffing West, and the application included an arbitration provision applying to disputes with Expert Staffing West and all related entities. Expert Staffing West provided payroll services and staffing to the other defendants, and claimed to be related, though apparently in the case of Garcia, it only provided payroll services. An important fact is that Expert Staffing West rejected Garcia's application.
"We conclude that the arbitration clause between a job applicant and her prospective employer does not apply to disputes between the applicant and her former employers based on the existence of a business relationship between the prospective employer and the applicant’s past employers," wrote Justice Tangeman.
Sellers v. JustAnswer LLC, No. D077868 (4/1 12/30/21) -- Internet Commerce.
In a case of first impression, the California Court of Appeal addresses the enforceability of an internet "sign-in wrap" agreement with an arbitration provision, holding that, under the specific circumstances of the case, the arbitration provision was not enforceable: "[W]e hold that none of the textual notices on the JustAnswer website were sufficiently conspicuous to bind Plaintiffs to the arbitration provision set forth in the terms of service."
The long opinion, authored by Justice Do, is interesting for several reasons. First, it addresses that annoying practice of "automatically renewing" contracts on the internet. Here, the plaintiff signed up for a service expected to cost five dollars. However, by proceeding on the website without having to read the hyperlinked terms of a lengthy agreement, and without having to click "I accept," the plaintiff nevertheless automatically accepted the terms of that agreement.
Second, California has a new Automatic Renewal Law, Business & Professions Code §§ 17600 et seq. This law seeks to protect consumers against unfair automatic renewal practices, and requires that there be clear and conspicuous notice that the consumer is being bound to the terms of the contract. Justice Do takes the "clear and conspicuous" statutory requirements into account.
Third, the opinion reviews other cases that have examined whether internet-based contracts are binding, and educates us about the typology for such contracts: browserwraps (browsing the website results in acceptance of the contract); clickwraps (clicking "I accept" with a link to the terms results in acceptance); scrollwraps (like a clickwrap, except that the consumer must first scroll through the entire contract before clicking "I accept"), and finally "sign-in wraps" (one signs up to use the service, and is notified that continuing on the website leads to an acceptance of the terms, without having to click "I accept", and in the Seller case, without having to go to the hyperlinked terms). The courts have often refused to enforce browserwraps, while enforcing scrollwraps. The "sign-in wrap" evidently falls somewhere between the extremes.
Finally, we do not read the case as necessarily saying that all "sign-in wraps" are non-binding. However, here, where the notice was not clear and conspicuous, a binding contract was not formed.
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