Internet Commerce: Clickwrap Arbitration Agreement Was Unenforceable Because Seller “Undid” Notice
An Effective Clickwrap Agreement Provides Notice Of Arbitration, Which, However, Can Be Undone.
Plaintiffs, who purchased the Dexcom G6 Continuous Glucose Monitoring System to manage their diabetes, and sued the manufacturer alleging the the Dexcom G6 was defective and caused injuries. Dexcom moved to compel arbitration, based on a clickwrap agreement referring to arbitration. After the trial court granted motions to compel, Plaintiffs appealed. Herzog v. Superior Court of San Diego County (Real Party In Interest Dexcom, Inc.), D082847 (4/1 5/16/24) (Do, Kelety; Irion dsst).
The majority opinion authored by Justice Do concluded that the clickwrap here did not constitute unambiguous acceptance of Terms of Use, including an arbitration agreement, because Dexcom "undid whatever notice it might have provided" by telling the customer that clicking "constituted authorization for Dexcom to collect and store the user's sensitive, personal health information."
Health Care: Parents Had To Arbitrate Their Claims Where Son Agreed To Arbitration Of Medical Malpractice Claims
The Outcome Relied On Ruiz v. Podolsky, 50 Cal.4th 838 (2020) (Ruiz).
Parents sued Asistencia, a skilled nursing facility, alleging survivor claims for dependent adult abuse and negligence on behalf of their son Skyler as well as their own claim for wrongful death. An arbitration agreement existed between Skyler and Asistencia, so Astincencia moved to compel arbitration. The trial court granted Asistencia’s motion as to the survivor claims, but not as to the wrongful death claim, reasoning that the parents, who had not signed the arbitration agreement, did not have an enforceable agreement. Asistencia appealed — successfully. Jonie A. Holland v. Silverscreen Healthcare, Inc. (Asistencia), 101 Cal. App. 5th 1125 (2/2 4/16/24) (Ashmann-Gerst, Chavez, Hoffstadt).
In Ruiz, the California Supreme Court held that CCP § 1295 permitted patients who consented to arbitration to bind their heirs in actions for wrongful death. The Court in Asistencia agreed that the parents' claims were essentially for medical negligence, and were governed by Ruiz, requiring that the parents' claims be arbitrated.
Deadlines, Federal Preemption: California Judges Disagree About Whether 30-Day Deadline To Pay Fees Furthers Purpose Of Arbitration
Thirty-Day Deadline Applies.
The Court of Appeal, Fifth District, following the weight of California precedent, applies California Code of Civ. Proc. § 1281.98, requiring that the party who has drafted an arbitration agreement must pay arbitration fees within 30 days of when they are due, or else the other party gets an option to reject arbitration and litigate instead. In Reynosa v. Superior Court (Real Party in Interest Advanced Transportation Services, Inc., F086342 (5th Dist. 5/6/24) (Detjen, Meehan, Snauffer), employee Reynosa did not expressly agree to the extension of a due date for his employer to pay arbitration fees, and the employer did not pay within 30 days, in violation of 1281.98. The Court of Appeal issued a writ of mandate issue directing the Superior Court to vacate its order denying plaintiff Reynosa’s motion to withdraw from arbitration. and to enter an order granting Reynosa's motion to withdraw from arbitration.
Thirty-Day Deadline Does Not Apply If There Is Federal Preemption.
The arbitration agreement stated "this agreement is governed by the FAA" in Hernandez v. Sohnen Enterprises, Inc. B323303 (2/5 5/22/24). Justice Moor, writing for the majority, explains that this results in federal preemption of California procedural and substantive provisions. Furthermore, the majority takes the position that the California requirement of payment within 30 days unduly burdens arbitration. Usually, a payment deadline is only enforce in a contract if time is of the essence and the breach is material. Thus, the majority opinion aligns with Justice Wiley's dissent in Hohenshelt, and in fact cites to Wiley's dissent in footnote 8 of the Hernandez opinion.
Justice Baker, dissenting, believes there is no preemption. He takes the position, consistent with other California cases, that the statutory 30-day limit to pay fees furthers the goal of arbitration by preventing employers from compelling arbitration and then delaying arbitration by not paying fees. "The majority’s opinion rather obviously invites a grant of review from our Supreme Court," writes Justice Baker.
COMMENT: I have written about conflicting California and Federal views of whether California is a friend or foe of arbitration, as well as about Justice Wiley's dissent in Hohenshelt. For my April 10, 2024 article in the Daily Journal, use this link to the ARC website. I also have an April 11, 2024 blog post on the subject.
Health Care: Provider Complied With Arbitration Disclosure Requirements In Health & Safety Code Section 1363.1
Necessary Disclosures Were Found In The Group Subscriber Agreement And Enrollment Form.
Dougherty v. U.S. Behavioral Health Plan, 101 Cal. App. 5th 682 (4/2 4/24/24) (Codrington, Miller, Fields) involves the application of Health & Safety Code § 1363.1 to determine whether a dispute had to be arbitrated with a health care provider. While reading the legal analysis, it is very easy to skip by the human tragedy in the case.
Christine Dougherty enrolled herself and her son Ryan in a health care plan. Ryan had a severe addiction problem. He admitted himself to a treatment facility which the plan initially agreed to cover, but denied coverage three days later on the ground that Ryan could be treated at home. Shortly after discharge, Ryan fatally overdosed.
Defendant USB moved to compel arbitration. The trial court denied the motion on the ground that USB had failed to comply with § 1363.1(d), which requires that, "In any contract or enrollment agreement for a health care service plan, the disclosure required by this section shall be displayed immediately before the signature line provided for the representative of the group contracting with a health care service plan and immediately before the signature line provided for the individual enrolling in the health care service plan.”
USB's argument that the issue of arbitrability had been delegated to the arbitrator had been forfeited. However, the Court of Appeal determined that the necessary disclosures were included in the Group Subscriber Agreement and enrollment form. USB's argument that 1363.1 was preempted by federal law did not need to be addressed.
Delegation: Delegation Of Arbitrability To Arbitrator Fails When Delegation Is Not Clear And Unmistakable
Reference To The URL For AAA Rules Is Not Clear And Unmistakable Evidence Of Delegation Of Arbitrability.
In an employment-related disputed, employee Mondragon argued that an arbitration provision that did not cover PAGA claims to the extent possible excluded all PAGA claims from arbitration, whereas the employer argued that it was only intended to exclude claims brought by the employee as a representative of other workers. Also, the employer argued that the issue of arbitrability had been delegated by reference to AAA rules to the arbitrator to decide. The employee's position prevailed in the trial court as well as the Court of Appeal. Mondragon v. Sunrun Inc., 101 Cal. App. 5th 592 (2/7 4/23/24) (Segal, Feuer, Martinez).
Justice Segal explained, "We conclude that, by signing an arbitration agreement that (1) merely referred to the rules of the American Arbitration Association; (2) included a carve-out that arguably covered the dispute; and (3) included a severability clause stating a court may not enforce certain provisions, Mondragon, an unsophisticated party, did not delegate arbitrability decisions to the arbitrator. We also conclude the language of the arbitration agreement did not require Mondragon to arbitrate his individual PAGA claims."
Waiver: Waiting Too Long To Move To Compel Arbitration While Propounding Discovery Leads To Waiver
Lawsuit Was Filed In March 2015 And Motion To Compel Arbitration Was Filed In March 2023.
Plaintiff Joseph Semprini sued his employer Wedbush in March 2015, alleging 11 causes of action unique to him, and 7 putative class action claims for wage and hour violations. He added a representative PAGA claim in April 2015. For several years, the class and PAGA claims were litigated, the parties having stipulated that the 11 personal causes of action would be arbitrated. In 2022, however, two events occurred to give the employer an argument that the litigated claims should be arbitrated, notwithstanding the earlier stipulation.
First, Viking River Cruises was decided in June 2022, holding that an employer could enforce an agreement to arbitrate PAGA claims. Second, in the wake of Viking River Cruises, the employer was able to get a number of employees to execute arbitration agreements. Perhaps this could have opened up an opportunity to compel arbitration of the remaining claims. However, the employer did not move to compel until March 2023, and meanwhile conducted discovery. If the employer might have resuscitated a right to arbitrate, that right was waived and died because of the employer's delay and continuing litigation conduct.
The order denying Wedbush's motion to compel arbitration was affirmed. Semprini v. Wedbush Securities, Inc., G062662 (4/3 4/18/24) (Goethals, Sanchez, Delaney).
This is an example of the "you snooze you lose" adage.