California Mediation and Arbitration

Delegation, Unconscionability: First District Div. 2 Affirms Order Denying Petition To Compel Arbitration

On-Line Gaming Was The Context For The Case.

        The world of on-line gaming presents challenges to companies wishing to bind players to arbitration. As our next case illustrates, gamers are likely to be treated as unsophisticated consumers with unequal bargaining power. Pavel Gostev v. Skillz Platform, Inc., A164407 (1/2  2/28/23) (Miller, Stewart, Richman).

        Gostev, a gamer, alleged that Skillz Platform, Inc.'s game amounted to gambling and that it engaged in predator practices. By establishing an account, tapping next, and clicking on a hyperlink to Terms of Service, Gostev allegedly agreed that disputes would be delegated to an arbitrator to decide. Skillz moved to compel arbitration, and Gostev argued that the agreement failed to delegate decisions to an arbitrator by clear and unmistakeable evidence, and that the arbitration agreement was unconscionable. The trial court agreed with Gostev, and the Court of Appeal affirmed.

        The problem with the delegation argument was that language that delegated decisions concerning disputes about Terms, Services, and Product was not clear enough. It could mean that the threshold dispute was delegated to the arbitrator to decide, or it could mean that only substantive disputes about the Terms, Services, and Product were delegated. The agreement also referenced the rules of the AAA which have sometimes been applied successfully to make a delegation argument. But the Court of Appeal explained that here, where the consumer was likely to be in a position of unequal bargaining power and sophistication, it would not accept reference to AAA rules as good enough to establish effective delegation.

        The agreement was a take-it-or leave-it agreement, and hence, there was some degree of procedural unconscionability. Also the agreement was one-sided to substantively favor the company: plaintiff's monetary damages were limited to $50, arbitration was to be held in San Francisco, though the consumer was located in Washington, there was a one-year limitations period for bringing a claim, and a split of arbitration fees and costs limited consumer rights under the California Consumer Legal Remedies Act. Given the procedural and substantive unconscionability, the court agreed the arbitration agreement was unenforceable.

Consumers, Employment, FAA: Second Dist. Div. 1 Holds CA Statutes Protecting Employee From "Procedural Limbo" In Arbitration Are Not Preempted By Federal Law

Business That Dilly-Dally About Paying Arbitration Fees Face Consequences.

        In a case of first impression, the California Court of Appeal asks whether California Code of Civil Procedure, §§ 1281.97, 1281.98, and 1281.99 are preempted by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. Sunny Gallo v. Wood Ranch, USA, B311067 (2/1  7/25/22) (Hoffstadt, Ashmann-Gerst, Chavez). Those statutory provisions were enacted in California to protect employees and consumers from falling into a state of "procedural limbo" when a business that has drafted an arbitration agreement fails to pay arbitration fees within 30 days after the fees are due. This failure to pay fees can lead to delay and "procedural limbo" in an arbitration. The consequences are significant under the recent California statutes because the "drafter" can end up paying all the fees, or lose the right to arbitrate, or even face sanctions such as termination, evidence preclusion, monetary payment, and even contempt.

        The court holds that the California statutes are not preempted, "because the procedures they prescribe further—rather than frustrate—the objectives of the FAA to honor the parties’ intent to arbitrate and to preserve arbitration as a speedy and effective alternative forum for resolving disputes." 

        COMMENT: Businesses with arbitration provisions should not dilly-dally about paying their share of arbitration fees in employment and consumer disputes, given the severe consequences. Consumers and employees should also be alert to whether fees are timely paid, as the failure by the "drafter" to make timely payment creates options for the consumer or employee.

Arbitration, Unconscionability, Existence Of Agreement, Internet Commerce: Three Recent Cases Affirm Orders Denying Motions To Compel Arbitration

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.

 

 

 

 

 

 

 

Arbitration, Unconscionability: Two Trial Courts Deny Motions To Compel Arbitration, Two Courts Of Appeal Affirm

Elders In Both Cases . . . 

Arbitration And An Elder Abuse Act Case.

        Dougherty v. Roseville Heritage Partners, et al., C087224 (3rd Dist. 3/30/20) (Krause, Murray, Hoch) is another of the many elder care facility cases in which the enforceability of an arbitration clause is at issue. Here, the trial court denied the defendants’ motion to compel arbitration of claims brought on behalf of a 89-year old man, and the Court of Appeal affirmed.

        The arbitration provision was held to be procedurally unconscionable, and a contract of adhesion, because the provision was part of 70 pages of documentation presented to the patient’s daughter at the time of admission, she was hurried, and she conveyed to the facility’s administrator that her father, who was suffering from dementia, had no alternative to the facility. 

        The Court of Appeal also held that the provision was substantively unconscionable because it limited discovery. While a limitation of discovery is not per se substantively unconscionable, the Court explained that it could be where statutory rights were at issue, as with the Elder Abuse Act, which provides for attorney’s fees and costs for a winning plaintiff, and which also requires proof by clear and convincing evidence. 

        The most  important teachings to be gleaned from this case are that a single factor that may not establish unconscionability in all contexts may do so when combined with other factors, and that the denial of discovery where statutory rights are involved may support substantive unconscionability.

Arbitration And A Consumer Case.

        In Dennison v Rosland Capital LLC, B295350 (2/8  4/1/20) (Grimes, Bigelow, Stratton), an 82-year old man, responded to a television ad, eventually purchased nearly $200,000 of gold and silver from Rosland Capital, but allegedly the purchases were worth considerably less than the price paid. The seller moved to compel arbitration, the trial court denied the motion, and the Court of Appeal affirmed.

        The most interesting issue concerned whether there was an effective delegation to an arbitrator of decisions about the scope or applicability of the arbitration agreement, such that the court should have been the decision maker. The Court of Appeal explained that the contract contained a severability clause providing that a court of competent jurisdiction might excise an unconscionable provision. Given that provision, there is no clear and unmistakable delegation of authority to the arbitrator to determine if the provision is unconscionable.

        The seller of precious metals argued that with a lifetime of experience and years in the military, Mr. Dennison could have negotiated the contract. To which the Court of Appeal replied:  “An 82-year-old consumer who calls a telephone number displayed in a television ad to make his first-ever investment in the highly volatile precious metals market, no matter how sophisticated he may be in other matters, cannot reasonably be expected to consider negotiating the terms of a form contract in such tiny print it cannot be read without a magnifying glass.” Besides, in the context of consumer contracts, our Supreme Court has never required a complainant to first show that it tried to negotiate the contract as a prerequisite to establishing unconscionability.

Federal Arbitration Act, Consumers, Arbitration: First Amendment Challenge To Arbitration Clause Fails In Ninth Circuit

Does The Federal Arbitration Act Implicate "State Action"?  

        "No" is the short answer.  However, read on if you want to know about the novel argument made by consumer plaintiffs in Roberts v. AT&T Mobility, No. 16-16915 (9th Cir.  12/11/17) (Tallman, Hawkins, Fletcher).

        In Roberts, AT&T moved to compel arbitration against putative class action consumer plaintiffs, based on the ruling in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).  At first blush, one might consider the issue of the validity of AT&T's arbitration clause to have been settled by Concepcion, which held that the Federal Arbitration Act (FAA) preempted state law deeming AT&T's arbitration to be unconscionable.  However, the plaintiffs in Roberts tried a different tack, challenging AT&T's arbitration clause on the constitutional ground that it violated the First Amendment Petition Clause.

        The Petition Clause guarantees that we can petition the government to redress grievances without fear of retribution.  Essentially, the plaintiffs argued that judicial and legislative encouragement of arbitration is so strong, through the enactment of the FAA and Supreme Court enforcement of the FAA to compel arbitration, that the government deprived the plaintiffs of the right to petition by depriving them of their ability to have a court adjudicate their claims.

        The threshold question in deciding the First Amendment Petition Clause claim is whether state action is even involved.  The district court did not find state action, and the Ninth Circuit agreed.  The Court of Appeals concluded that AT&T's conduct is not attributable to the state, and, quoting Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 937 (1982),  "private parties [do not] face constitutional litigation whenever they seek to rely on some [statute] governing their interactions with the community surrounding them."

Consumers/Fees/Settlement Agreements: Defendants Contesting Fee Award Lose On Appeal Because In Settlement Agreement, They Agreed To Fee Entitlement

Reasonableness Of Award Did Not Need To Be Addressed, Because Entitlement, Which Parties Agreed To, Was The Real Issue.

        Once a case is settled, some issues need not be litigated, even though the parties may want to do so.  Such was the case in Medina v. South Coast Car Company, Inc., D069820 (4/1  9/19/17) (Benke, Nares, Aaron) (unpublished).

        Medina sued South Coast Car Company, Inc. (SCCC) and Veros Credit, LLC (Veros) in connection with the sale to him of an Audi.  The seller, SCCC, assigned the retail installment sales contract to Veros.  As part of a settlement, defendants agreed they would not dispute the basis for fee entitlement, that Medina would be deemed the prevailing party, and that the defendants could dispute the reasonableness of the attorneys' fees, costs, and prejudgment interest claimed to have been incurred by Medina.

        On appeal, SCCC argued that Medina was not entitled to attorney's fees, and Veros was not liable to pay any fees and costs, "as it was merely the 'holder' of the RISC . . . "

        "Because defendants' myriad challenges on appeal to the award of attorney fees, costs and prejudgment interest are limited to the issue of entitlement, as opposed to their amount, explained Justice Benke, "we have no reason to review the reasonableness of such an award."

        COMMENT:  It is not unusual for a settlement agreement to resolve all issues, reserving the determination of fees to the Court.  However, if fee entitlement and reasonableness of the fees are both contested, then the settlement agreement must be drafted with care, so as to reserve the genuinely contested issues to the Court, instead of stipulating away a genuinely contested issue.  An additional consideration is that reserving the issue of fee entitlement for the court to decide could make it more difficult to settle the case.

Arbitration, Enforceability, Consumers, Existence Of Agreement, Nonsignatories: Assignee Of Credit Card Account Agreement Could Enforce Arbitraiton Provision Against Credit Card Holder

Existence Of Agreement Was Established With Affidavit Of A Person With First-Hand Knowledge Of Procedures.

Early Example Of Credit Card.

        Plaintiff Yenko filed a putative class action lawsuit against Crown Asset Management, LLC, a debt buyer that purchased plaintiff's alleged charged-off credit card debt.  The trial court held that Crown, as the assignee of a Credit Card Account Agreement (CCAA), was entitled to enforce an arbitration provision contained therein.  The First Appellate District, Div. One, agreed.  Yenko v. Crown Asset Management, LLC, A148536 (1/1  8/1/17) (Margulies, Dondero, Banke) (unpublished).

        A tricky part in such cases where an assignee such as Crown, purchases debt and obtains paper, is finding a declarant who can authenticate the key documents.  Here, Crown did so with the affidavit of the manager of litigation support for the company that issued plaintiff her J.C. Penney credit card.  Obviously the affiant did not have first-hand knowledge of the individual transaction, but she did have knowledge of the company's business practices.  And she was able to testify, based on her personal knowledge of operations and records kept in the ordinary course of business with which she was familiar, that the company sent the CCAA to plaintiff; that it was the company's practice to send the CCAA with the credit card; and, that the effective agreement as of the date of the transaction was attached to her credit card.  Plaintiff admitted she had received the credit card and made purchases with it.  The evidence satisfied the trial court, and the Court of Appeal. 

        Plaintiff also argued that the arbitration agreement could not be enforced, because the assignee was only assigned a "receivable" and not an "account", and argument that had no traction with the Court of Appeal.  The Court stated, "We observe courts in many other jurisdictions have determined the assignment of accounts receivable transfers underlying contractual rights, including the right to arbitrate."

    

Arbitration, Consumers, Delegation, Gateway Issues, Unconscionability: Fifth District Vacates Parts Of Trial Court Order About Unconscionability And Arbitrability, And Upholds Delegation Clause Sending Consumer Dispute To JAMS Arbitrator

Enforceable Delegation Provision Means The Buck Does Not Stop With Court, But Gets Passed To Arbitrator.

        Aanderud v. Superior Court (Vivint Solar Developer, LLC, Real Party In Interest), F073277 (5th Dist.  7/26/17) (Gomes, Hill, Meehan), is worth reading for its analysis of how a delegation provision is applied to a consumer arbitration, where the individual stakes are low, but the cost of entry to arbitration may be high for the consumer. 

        The Aanderuds brought individual and class action claims against Vivint Solar, in connection with their entry into a 20-year solar power purchase agreement with Vivint Solar.  The trial court granted Vivint Solar's petition to compel arbitration, ordered the Aanderuds to submit their individual claims to arbitration, and dismissing class claims without prejudice.

        The Court of Appeal disagreed in part with the trial court's order, because a delegation clause, if enforceable, required the arbitrator, not the trial court, to resolve substantive issues.  Therefore, the Court of Appeal addressed the dispositive issue: whether the delegation of issues to the arbitrator was valid.  The Aanderuds contended that the delegation clause was not enforceable, because it was not clear and unmistakable and because it was unconscionable.  The Court of Appeal, however, disagreed, finding the delegation clause enforceable.

        The most interesting part of the analysis addressed the Aanderud's contention that the delegation clause was unconscionable in the context of consumer arbitration, because it was prohibitively expensive for the Aanderuds to arbitrate their consumer claim.  The Court of Appeal, however, believed that under JAMS rules for consumer arbitrations, "the Aanderuds' fees will most likely be limited to $250 . . . "  (Query: Does "most likely" contain a negative pregnant?)  The Aanderuds, however, argued that because the arbitration did not satisfy all 10 requirements under JAMS rules for JAMS to arbitrate a consumer dispute, JAMS might proceed under other than consumer rules, requiring the parties to pay pro rata costs, including a $1,200 filing fee, a  $5,000 retainer, and arbitrator's fees ranging from $5,000 to $8,500 per day.

        The Court of Appeal, however, concluded that the merits of the Aanderuds' contention regarding the sharing of expenses are for the arbitrator to decide, "as their contentions go to the 'scope and applicability' of the arbitration provision."  

        The upshot is a disposition that grants in part and denies in part the Aanderuds' petition to the Court of Appeal.  Because the delegation clause is held to be effective, the Court of Appeal vacates parts of the trial court's order finding the arbitration agreement was not unconscionable, finding all claims are arbitrable, and finding the Aanderuds could only arbitrate in their individual capacity.  However, the case will go to arbitration, and now the arbitrator will have to decide issues the trial court should not have decided.

        COMMENT:  The Court of Appeal agreed that the arbitration agreement was procedurally unconscionable, but did not believe that substantive unconscionability existed.  The Court's reasoning regarding the Aanderuds' contention that the delegation clause was invalid, in part because the allocation of expenses was unfair, seems somewhat circular.  By leaving it up to the arbitrator to decide the issue, the Court of Appeal seems to be punting, leaving it up to the arbitrator to address an aspect of unconscionability.  And, the enforceability of the delegation clause turns on whether it is unconscionable, such that if it is unconscionable, then decisions could not be delegated to the arbitrator.  Here, the Court of Appeal has finessed the issue by the the deft application of labels, explaining that "[t]he merits of the Aanderuds' contention [regarding arbitration expenses] are for the arbitrator, not us, to decide, as their contentions go to the  'scope and applicability' of the arbitration  provision."  Thus, the Court of Appeal views the argument about the potential for unfair application of the cost rules not as an issue of ambiguity or of unfairness, but as an issue concerning the "scope and applicability" of the arbitration  provision.  Problem solved?

 

 

 

        

Arbitration/Waiver/Public Policy/FAA: California Supreme Court Rules That Arbitration Provision Eliminating Any Forum For Obtaining “Public Injunctive Relief” Is Unenforceable

Nor Is There Federal Arbitration Act Preemption.

    In a long-awaited and important decision, the California Supreme Court addresses the validity of a provision in a predispute arbitration agreement that waives the right to seek "public injunctive relief" as a statutory remedy in any forum. McGill v. Citibank, N.A., No. S224086 (Sup. Ct. 4/6/17). Reversing the Court of Appeal, the Court unanimously holds, in an opinion authored by Justice Chin,"such a provision is contrary to California public policy and is thus unenforceable under California law." The Court further holds "that the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) does not preempt this rule of California law or require enforcement of the waiver provision."

    The plaintiff had brought claims against Citibank under California Unfair Competition Law, under the California Consumer Legal Remedies Act, under false advertising statutory provisions, and under the Insurance Code, in connection with Citibank's alleged violation of a "consumer protection" plan intended to protect credit card holders who missed payments because of certain qualifying events, such as long-term disability, or unemployment. One element of relief sought by the plaintiff was public injunctive relief, namely, injunctive relief that would benefit not only the plaintiff, but the public. A very broad arbitration provision, however, swept just about every conceivable claim under the arbitration rug.

    The parties in McGill agreed that the arbitration provisions, as drafted, prevented the plaintiff from seeking public injunctive relief in arbitration, because the plaintiff would only be able to seek relief as to her own claim, and not obtain any broader injunctive relief that would benefit other persons.

    The Court invokes California Code of Civil Procedure section 3513, providing: "Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement." As interpreted by the Supreme Court, the UCL, the CLRA and the false advertising statutory provisions (Bus. & Prof. Code § 17500) are established for a public purpose, and thus a waiver of the right to obtain public injunctive relief under those statutes is contrary to California public policy.

    So why isn't this result preempted and precluded by the Federal Arbitration Act, which generally requires the enforcement of arbitration clauses? The answer is that the FAA only requires that arbitration provisions be placed on an equal footing with other contracts, and the California Supreme Court explains that such a waiver of the right to obtain public injunctive relief would be equally unenforceable whether the waiver applied to an arbitration proceeding or to a judicial proceeding.

    The Court also relies on a distinction applied by SCOTUS in the Italian Colors Restaurant case (see my June 25, 2013 post) – the distinction between waiver of a statutory remedy that is substantive, and waiver of a procedural path to vindicate a statutory remedy. The Italian Colors majority ruled that waiver of a procedural path to vindicate a statutory right is acceptable, so long as there is no waiver of the substantive right. (Because the substantive right may be ineffective without a procedural path to vindicate it, some may believe that the distinction between waiver of a substantive right and waiver of the procedural path, e.g., class action, to vindicate that right, is a distinction without a practical difference.) In McGill, however, enforcement of the arbitration clause would have required waiver of the substantive right to obtain public injunctive relief: not acceptable.

    The California Supreme Court avoided having to decide whether the so-called Broughton-Cruz rule applied in McGill. As stated by the Court, that rule provides: "Agreements to arbitrate claims for public injunctive relief under the CLRA, the UCL, or the false advertising law are not enforceable in California." The Court distinguished McGill on the grounds that it is a case where no public injunctive relief could be obtained in any forum, in contrast to a Broughton-Cruz scenario where the parties have agreed to arbitrate claims for public injunctive relief.

    COMMENT: The practical effect of the ruling in McGill may be diminished if the parties have to arbitrate the arbitrable claims, and the superior court stays judicial determination of the right to public injunctive relief. In the future, arbitration clauses could be drafted allowing for obtaining public injunctive relief through the arbitration process. While that approach would put the Broughton-Cruz rule at issue again, it would seemingly avoid the holding of McGill, in which the holding depends on the unavailability of public injunctive relief in any forum.

    I previously posted about McGill v. Citibank on April 5, 2015 and December 18, 2014.

Enforcement Of Arbitration Agreement, Non-Signatories: Ninth Circuit Affirms Order Denying Samsung’s Motion To Compel Arbitration Of Class Complaint Filed By Purchaser Of Galaxy S4 Phone

Customer Agreement With Verizon And Samsung Product And Safety & Warranty Agreement In The Box Failed To Bind Plaintiff To Arbitrate.

     In Norcia v. Samsung Telecommunications America, LLC, et al., No 14-16994 (9th Cir. 10/17/17) (Ikuta, Thomas, Bea), Judge Ikuta provides in depth analysis of whether a 101 page brochure containing an arbitration provision and placed in the box containing a purchaser’s Galaxy S4 phone bound Daniel Norcia to arbitrate.  For a number of reasons, the panel concludes that Mr. Garcia was not bound to arbitrate.  He had not signed the brochure, the box did not state that opening it meant he agreed to the terms found in the brochure, generally, “silence or inaction does not constitute acceptance of an offer” (Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal.App.4th 1372, 1385 (1993), and the brochure stated that Norcia was entitled to “the benefits of the Limited Warranty” regardless whether he opted out of the arbitration agreement.  As the party seeking to compel arbitration, Samsung bore the burden of proving the existence of an arbitration agreement, and it failed to carry its burden.

    Samsung also argued that Norcia agreed to arbitrate by signing a Customer Agreement with Verizon, an argument that Judge Ikuta dismissed in three paragraphs as “meritless.”  Samsung was not a signatory, nor was there evidence that Samsung was intended as a third-party beneficiary of the Verizon agreement.   

     COMMENT:  The Federal Arbitration Act, embodying the national policy favoring arbitration, applies to this case.  However, the parties agreed that California law governs the issue of contract information, and thus Judge Ikuta applies basic principles of California contract law.

     Samsung sought to rely on several cases involving licenses and warranties, arguing that those cases are analogous to the brochure in the box.  Because the panel’s analysis involves contract law, the opinion examines differences between contract, license, and warranty cases.   For example, a shrink-wrap license imposing limits on the number of authorized licenses has been held to be enforceable in California.  Wall Data Inc. v. L.A. Cty. Sheriff’s Dep’t, 447 F.3d 769, 782 (9th Cir. 2006).  Such a license states that by opening a package or wrapper, the user agrees to the terms of the license.    In Wall Data Inc., the court avoided the issue of contract formation.  Norcia explains it makes sense that a user who opens a box with notice of a shrink-wrap license cannot do more than what the license permits -- say, installing software on 6,007 computers when the license is only for 3,663 computer.  In Norcia, “the outside of the Galaxy S4 box did not notify the consumer that opening the box would be considered agreement to the terms set forth in the brochure.”