Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-07087/USCOURTS-cand-4_18-cv-07087-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JACKIE TABAS, et al.,

Plaintiffs,

v.

MOVIEPASS, INC., et al.,

Defendants.

Case No. 18-cv-07087-DMR 

ORDER ON DEFENDANTS’ MOTION 

TO COMPEL ABITRATION AND

PLAINTIFFS’ MOTION TO AMEND

Re: Dkt. Nos. 33, 49

Defendants MoviePass, Inc. (“MoviePass”) and Helios and Matheson Analytics (“Helios”) 

move to compel arbitration and to stay the case pending completion of arbitration. [Docket No. 33 

(Mot.) 1, Docket No. 38 (Reply).] The court held a hearing on this motion on April 25, 2019. On 

May 9, 2019, Plaintiffs filed a motion to amend the complaint, which the court took under 

submission without oral argument at the request of the parties. [Docket Nos. 49 (MTA), 54.] For 

the following reasons, the motions to compel arbitration and to amend the complaint are granted. 

The motion to stay is denied.

I. BACKGROUND

A. Procedural History

Plaintiffs Jackie Tabas and Katherine Rosenberg-Wohl filed this putative class action on 

November 11, 2018, naming Defendants MoviePass and Helios, as well as individual defendants 

Ted Farnsworth, Stuart Benson, and Mitch Lowe. [Docket No. 1.] On February 14, 2019, 

Rosenberg-Wohl dismissed her claims against all Defendants with prejudice. [Docket No. 26.] On 

February 15, 2019,1 Plaintiffs filed their first amended complaint, adding Linda Hobbs, Tim 

Samartino, Barbara Sjodahl, Patricia Dawn Walker, and Cheryl Whelan as named plaintiffs. 

 

1 Although Plaintiffs’ “Corrected Amended Complaint” appears on the docket with a filing date of 

February 27, 2019, the clerk’s notice dated February 19, 2019 (Docket No. 28) clarifies that the 

filing date of the FAC is deemed to be February 15, 2019.

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[Docket No. 30 (FAC).] The FAC names only MoviePass and Helios as Defendants. Id. 

Following the hearing on Defendants’ motion to compel arbitration, Plaintiffs filed a motion 

for leave to file a second amended complaint. The proposed second amended complaint adds Amy 

Buckley as a named plaintiff. MTA at 2.

B. Plaintiffs’ Allegations

MoviePass sells subscriptions to see movies in movie theaters. FAC ¶ 5. Subscribers choose 

a movie from the MoviePass mobile app and then use the MoviePass card to pay for the movie. Id. 

From its formation in 2011, MoviePass has used several different pricing structures, ranging in 

length from monthly or quarterly to annually, and in frequency from two to three movies a month 

to an “unlimited” plan. Id. ¶ 7. In 2018, MoviePass offered an annual subscription for $89.95 

featuring an “unlimited” plan that allowed customers to see one movie per day. Id. 

On August 15, 2017, Helios, a data analytics firm, purchased a majority interest in 

MoviePass and eventually increased its ownership interest in the company to 91.8%, allegedly to 

obtain the watching habits of consumers using the service. Id. ¶ 8. According to Plaintiffs, Helios

sustained large financial losses as a result of its investment in MoviePass. Id. ¶ 10. Following an 

investor class action lawsuit and investigation by the New York attorney general in 2018, Helios 

announced its intention to spin off MoviePass. Id. ¶ 11.

Plaintiffs allege that Helios “took steps to protect itself at the expense of” MoviePass 

subscribers. FAC ¶ 13. From the time it acquired majority ownership of MoviePass, Helios 

allegedly instructed the subscription service to “make promises too vague to be enforceable 

contracts, and breach[] promises it was obliged to honor.” Id. It also allegedly directed MoviePass 

to breach its contracts with subscribers and make false representations to customers. Id. Plaintiffs 

contend that, at least as of mid-July 2018, Helios directed MoviePass to break contracts with 

consumers by removing the most desirable movies from the service. Id. ¶ 14. Helios allegedly told

MoviePass to cancel one-year subscription plans. Id. ¶ 15. While some consumers were offered a 

refund for the remainder of the year, Defendants gave those consumers only one week to accept, 

and if the consumers opted out, they were precluded from signing up for the service for nine months. 

Id. Plaintiffs claim that MoviePass, under the direction of Helios, purported to offer consumers “the 

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choice of movies they wanted to see,” but continually pulled specific movies and theaters from the 

list of availability. FAC ¶ 17.

Helios also allegedly made it “virtually impossible” for consumers to resolve any concerns. 

Id. ¶ 18. Responses to email inquiries consisted only of boilerplate language. Id. MoviePass also 

“fails to make itself available by any means to resolve consumer complaints and either ignores them 

or waits some time before responding, at which point the response is generic[,] saying nothing 

responsive to the particular complaint at hand and giving no hint as to what a consumer should do 

next to resolve the issue.” Id. 

According to Plaintiffs, MoviePass introduced an arbitration clause into its terms of use 

(“TOU”) around October 30, 2017. FAC ¶ 19. Since that time, MoviePass has created numerous

versions of its TOU, many of which have allegedly affected the language in the arbitration clauses. 

Id. Plaintiffs state that MoviePass never notified consumers about the introduction of the arbitration 

clause, even though it has emphasized other changes to the TOU in its emails to consumers. Id. ¶ 

20. Plaintiffs also claim that MoviePass removes previous versions of the TOU from its website 

and refuses to provide them upon request, and instead presents only the current TOU with its updated 

language. Id. ¶ 20. According to Plaintiffs, MoviePass represents that the arbitration clause 

included in its July 2018 TOU retroactively applies to all enrollments before December 6, 2018. Id. 

Plaintiffs assert that these practices have made it difficult for a consumer to determine “which 

arbitration clause within which contract is supposed to apply,” and that even if consumers read the 

arbitration agreement “they will not know what to do with it and certainly will not use it.” Id. 

Against MoviePass, Plaintiffs allege common law claims for breach of contract, unjust 

enrichment, and quantum meruit, as well as violations of California and New York consumer 

protection law. Id. ¶ 35-61, 66-67. Against Helios, Plaintiffs allege claims for inducement to breach 

MoviePass contracts and violation of the Racketeer Influenced and Corrupt Organizations Act

(“RICO”). Id. ¶ 62-63, 68-71. Against both Defendants, Plaintiffs allege a claim under California 

Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq. Id. ¶ 64-65. 

C. The Terms of Use Agreements

All Plaintiffs except for Hobbs accepted the MoviePass TOU on the MoviePass website 

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through a similar process where the website indicated that “[b]y clicking ‘Start Free Trial’ you agree 

to the Terms & Conditions.” Adarkwah Decl. ¶¶ 5-7, 17, 21, 25, 29; Id., Ex. C. Subscribers could 

access a copy of the entire TOU by clicking a link over the “Start Free Trial” button. Adarkwah 

Decl., Ex. C. Hobbs activated her subscription online through a redemption code she purchased 

from Costco. She indicated her acceptance of the TOU by checking a box that read “I agree with 

the MoviePass terms of service, including auto-renewal at the end of my subscription unless I choose 

to cancel” and then clicking a box labeled “REDEEM MY COUPON”. Adarkwah Decl. ¶ 12; Id., 

Ex. J. A copy of the TOU was viewable by clicking a link that appeared under the box. Adarkwah 

Decl. ¶ 12.

Since October 30, 2017, MoviePass has updated its TOU at least six times. See Adarkwah 

Decl., Exs. A, E, F, G, H, I. Tabas and Hobbs originally accepted the October 30, 2017 version of 

the TOU. See Adarkwah Decl. ¶ 3, 11; Id., Ex. A. Walker originally accepted the TOU modified 

on January 26, 2018. See Adarkwah Decl. ¶ 24; Id., Ex. E. Samartino, Sjodahl, and Whelan 

originally accepted the TOU modified on March 8, 2018. See Adarkwah Decl. ¶ 16, 20, 28; Id., Ex. 

F. 

Each version of the TOU contains a clause with identical language2stating that continued 

use of the MoviePass site and service manifests acceptance and agreement to any changes to the 

TOU made by MoviePass, even if the changes are unilateral and without notice:

MoviePass reserves the right, at its sole discretion, to change, modify, add or 

remove portions of these Terms of Use, at any time, without prior notice. IT IS 

YOUR RESPONSIBILITY TO CHECK THESE TERMS OF USE, AND 

THE MOVIEPASS APP PERIODICALLY FOR CHANGES. YOUR 

CONTINUED USE OF THE SERVICE AND THE SITE FOLLOWING 

THE POSTING OF CHANGES WILL MEAN THAT YOU ACCEPT 

AND AGREE TO THE CHANGES.

Adarkwah Decl., Exs. A ¶ 1.5, E ¶ 1.5, F ¶ 1.5, G ¶ 1.5, H ¶ 1.6, I ¶ 1.6.

Defendants assert that this clause means that the Plaintiffs accepted and reaffirmed the TOU 

and arbitration clause each time a new agreement came out by continuing to use the service. Mot. 

at 12. Plaintiffs appear to dispute this and suggest that the relevant contracts are the ones they 

 

2 All versions include identical language. Each version also includes bolded print as indicated, 

except for the October 2017 version.

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actually accepted at the time they signed up for the MoviePass service. [Docket No. 37 (Opp.) at 2-

3.] The court need not adjudicate this particular issue for purposes of this order. Instead, it assumes 

without deciding that Plaintiffs accepted only the TOUs that were in place at the time they signed 

up for the MoviePass service, rather than the most recent TOU. 

D. Arbitration Clauses

Each TOU contains an arbitration clause. The October 2017 version of the TOU requires 

that the parties arbitrate disputes that arise out of the relationship between the consumer and 

MoviePass:

You and we agree that any dispute, claim or controversy arising out of or 

relating to: (a) these Terms of Use or the existence, breach, termination, 

enforcement, interpretation or validity thereof; or (b) your access to or use 

of our Site at any time, whether before or after the date you agreed to these 

Terms of Use, will be settled by binding arbitration between you and us, 

and not in a court of law, with the exception of either party seeking 

injunctive or equitable relief as specified below.

Adarkwah Decl., Ex. A. ¶ 35. 

Subsequent versions of the TOU state that either the consumer or MoviePass may elect to 

arbitrate certain disputes arising out of the relationship between the consumer and MoviePass:

Any claim or dispute, whether in contract, tort, statute or otherwise 

(including the interpretation and scope of this Arbitration Provision, and the 

arbitrability of the claim or dispute, between you and us or our employees, 

agents, successors or assigns, which arises out of or relates to (a) these 

Terms of Use or the existence, breach, termination, enforcement, 

interpretation or validity thereof; (b) your access to or use of our Site at any 

time, whether before or after the date you agreed to these Terms of Use ; or 

(c) any resulting transaction or relationship (including any such relationship 

with third parties who do not agree to these Terms of Use) SHALL, AT 

YOUR OR OUR ELECTION, BE RESOLVED BY NEUTRAL, 

BINDING ARBITRATION AND NOT BY A COURT ACTION.

Id., Exs. E ¶ 17, F ¶ 17, G ¶ 17, H ¶ 17, I ¶ 17. 

All versions of the TOU contain identical language in their last clause under the heading 

“Jurisdiction for Dispute Proceedings”:

For purposes of seeking injunctive or equitable relief or in the event the 

Arbitration provision above is found unenforceable, any legal suit other 

than a suit in small claims court, action or proceeding arising out of, or 

related to, these Terms of Use or the Website shall be instituted exclusively 

in the federal or state courts located in the State of New York in each case 

located in the City of New York and County of New York. You waive any 

and all objections to the exercise of jurisdiction over you by such courts and 

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to venue in such courts.

Id., Exs. A ¶ 36, E ¶ 18, F ¶ 18, G ¶ 18, H ¶ 18, I ¶ 18. 

Based on these provisions, Defendants now move to compel arbitration of all claims asserted 

by Plaintiffs. 

II. LEGAL STANDARDS GOVERNING ENFORCEMENT OF ARBITRATION 

AGREEMENTS

The Federal Arbitration Act (“FAA”) governs written arbitration agreements affecting 

interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 111-12 (2001). Under 

the FAA, arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such 

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Enacted for 

the purpose of enforcing written arbitration agreements according to their own terms, the FAA 

embodies “the basic precept that arbitration ‘is a matter of consent, not coercion.’” Stolt–Nielsen

S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 681 (2010) (quoting Volt Info. Sciences, Inc. v. Bd. 

of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). “Whether enforcing an 

agreement to arbitrate or construing an arbitration clause, courts and arbitrators must ‘give effect to 

the contractual rights and expectations of the parties.’” Id. at 682 (quoting Volt, 489 U.S. at 479). 

Section 4 of the FAA ensures that “private agreements to arbitrate are enforced according to their 

terms,” Stolt–Nielsen, 559 U.S. at 682 (quoting Volt, 489 U.S. at 479), by expressly authorizing a 

party to an arbitration agreement to petition a United States district court for an order directing that 

“arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. Courts apply 

ordinary state law principles governing the formation of contracts to evaluate such claims. Davis v. 

O’Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir. 2007), overruling on other grounds recognized 

by Ferguson v. Corinthian Coll., Inc., 733 F.3d 928, 937 (9th Cir. 2013). Like other contracts, 

arbitration agreements “may be invalidated by generally applicable contract defenses, such as fraud, 

duress, or unconscionability.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 66 (2010) 

(quotation omitted). 

“By its terms, the [FAA] ‘leaves no place for the exercise of discretion by a district court, 

but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as 

to which an arbitration agreement has been signed.’” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 

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207 F.3d 1126, 1130 (9th Cir. 2000) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218

(1985)) (emphasis in original). Therefore, the court’s role under the FAA is limited to determining 

“(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement 

encompasses the dispute at issue.” Chiron Corp., 207 F.3d at 1130 (citations omitted). 

III. MOTION TO COMPEL ARBITRATION

Defendants move to compel arbitration on the basis that Plaintiffs and MoviePass3entered 

into enforceable written agreements to arbitrate all disputes. Plaintiffs respond that there was no 

agreement to arbitrate, and that even if there were, the agreement is illusory and unconscionable, 

and therefore unenforceable. Plaintiffs also request a limited trial. Although not entirely clear, 

Plaintiffs appear to request that the limited trial cover the issues of contract formation and 

enforceability. Opp. at 18. 

A. Agreement to Arbitrate

As the party moving to compel arbitration, Defendants bear “the burden of proving the 

existence of an agreement to arbitrate by a preponderance of the evidence.” Norcia v. Samsung 

Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (quotation omitted). “When considering 

a motion to compel arbitration, a court applies a standard similar to the summary judgment standard 

of [Federal Rule of Civil Procedure] 56.” Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 

(N.D. Cal. 2004) (quotation omitted). When a party opposes a motion to compel arbitration on the 

ground that no agreement to arbitrate was made, the court “should give to the opposing party the 

benefit of all reasonable doubts and inferences that may arise.” Sanford v. MemberWorks, Inc., 483 

F.3d 956, 963 (9th Cir. 2007) (quoting Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 

F.2d 1136, 1141 (9th Cir. 1991) (further citations and quotations omitted)); see also Cordas v. Uber 

Techs., Inc., 228 F. Supp. 3d 985, 988 (N.D. Cal. 2017) (finding that, for an arbitration dispute 

regarding contract formation, “[t]he party opposing arbitration shall receive the benefits of all 

reasonable doubts and inferences”.). “Only when there is no genuine issue of fact concerning the 

formation of the [arbitration] agreement should the court decide as a matter of law that the parties 

 

3 The parties do not dispute that Helios, as the parent company of MoviePass, is also entitled to 

invoke the arbitration provision. Mot. at 16-18; Opp. at 6 n. 6.

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did or did not enter into such an agreement.” Three Valleys, 925 F.2d at 1141 (quoting Par-Knit 

Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980)). 

Defendants contend that each of the named Plaintiffs entered into an enforceable agreement 

to arbitrate all disputes relating to their use of the MoviePass service when they agreed to the TOU 

during the signup process. Plaintiffs raise four arguments in support of their position that they did 

not consent to arbitrate their present claims. First, they assert that the parties did not form a contract 

to arbitrate because there was no meeting of the minds about arbitration. Opp. at 12. Second, 

Plaintiffs argue that most class members do not have a contract with an arbitration clause. Id. at 8. 

Third, Plaintiffs contend that the arbitration clause does not apply to the equitable claims raised in 

the operative complaint. Id. Finally, Plaintiffs argue that the language of the arbitration clauses 

provides that Plaintiffs have the option to arbitrate, but not the obligation to do so. Id. at 9.

1. Contract Formation

Plaintiffs first argue that they did not consent to arbitrate their present claims. At the hearing, 

Plaintiffs clarified that they are disputing whether a valid contract was ever formed. To decide an 

issue of contract formation with respect to arbitration agreements, “courts generally . . . should apply 

ordinary state-law principles.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); 

see also Cordas, 228 F. Supp. 3d at 988 (“Questions of contract formation are questions of state 

law.”).

Under California law,4a valid contract requires four essential elements: (1) “[p]arties 

capable of contracting”; (2) “[t]heir consent”; (3) “[a] lawful object”; and (4) “[a] sufficient cause 

or consideration.” Cal. Civ. Code § 1550. “[M]utual assent is a required element of contract 

formation” and “[c]ourts must determine whether the outward manifestations of consent would lead 

a reasonable person to believe the offeree has assented to the agreement.” Knutson v. Sirius XM 

Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). “A party who is bound by a contract is bound by all 

 

4 For contract formation issues brought before a federal court in California, “[i]n the absence of any 

real dispute, . . . the choice-of-law rules of the forum state, California, will apply.” Fields v. Wise 

Media LLC, No. 12-cv-05160-WHA, 2013 WL 12174296, at *3 (N.D. Cal. Jan. 25, 2013). 

Defendants state that California law governs issues of contract formation, and Plaintiffs do not 

dispute this point. Mot. at 10, fn. 5. Therefore, the court will look to California law in analyzing 

whether a valid contract exists in this case.

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its terms, whether or not the party was aware of them.” Norcia, 845 F.3d at 1284. Similarly, “[a]

party cannot avoid the terms of a contract on the ground that he or she failed to read it before 

signing.” Id. (quoting Marin Storage & Trucking, Inc. v. Benco Contracting & Eng’g, Inc., 89 Cal. 

App. 4th 1042, 1049 (2001)). “[T]he enforceability of a web-based agreement” like the one at issue

“is clearly a fact-intensive inquiry.” Meyer v. Uber Techs., Inc., 868 F.3d 66, 76 (2d Cir. 2017)

(applying California law).

Plaintiffs contend that they never consented to arbitration because MoviePass reserved the 

right to unilaterally change its TOU, including its arbitration clause. Opp. at 4, 11. They argue that 

there was no meeting of the minds because MoviePass could modify the arbitration clause at its sole 

discretion, retroactively and without notice. Id. at 12. While these facts may be relevant to whether 

Plaintiffs’ contracts are enforceable,

5

they are not relevant to the question of contract formation in 

this case. As stated above, in analyzing this motion the court proceeds under Plaintiffs’ assumption 

that they accepted only the TOUs that were in place at the time they each signed up for the 

MoviePass service, rather than any subsequent TOU. Therefore, Plaintiffs’ contentions about 

MoviePass’s ability to unilaterally modify the arbitration clause are immaterial to whether the 

parties formed a valid contract. It is undisputed that each named plaintiff indicated his or her consent 

to the TOU in the process of signing up for the MoviePass service. It is also undisputed that each 

TOU contains an arbitration clause, and that the relevant arbitration clauses are substantially similar. 

Plaintiffs have not raised any disputed facts about whether they accepted the TOU at the time they 

signed up for the service. 

Therefore, the court finds that Plaintiffs manifested consent to the terms of the TOU when 

they each signed up for the MoviePass service. Since Plaintiffs have not identified any disputed 

facts regarding contract formation, their request for a limited trial on this issue is denied.

2. Unnamed Class Members

Plaintiffs next assert that many putative class members entered into contracts with 

MoviePass that do not contain an arbitration clause. They point out that the arbitration clause did 

 

5 As discussed below, Plaintiffs concede that issues regarding enforceability of the contract have 

been delegated to the arbitrator and so the court does not reach that question here. 

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not become part of MoviePass’s TOU until October 30, 2017, more than five years after MoviePass 

first began operating. Therefore, Plaintiffs argue, there are likely numerous putative class members 

who did not accept a TOU with an arbitration clause. Opp. at 8. Although not clear or explicit, 

Plaintiffs appear to argue that because some of the putative class members did not consent to 

arbitrate, the entire class cannot be compelled to arbitration. 

In response, Defendants correctly point out that all named plaintiffs signed up for the 

MoviePass service after introduction of the arbitration clause into the TOU. Reply at 1-2. Each 

TOU accepted by the named plaintiffs includes an arbitration clause. Adarkwah Decl., Exs. A ¶ 35, 

E ¶ 17, F ¶ 17. The most recent TOU, issued in December 2018, likewise contains an arbitration 

clause. Id., Ex. I ¶ 17. Defendants argue that the contracts of putative class members are irrelevant 

until a class is certified. Reply at 1-2. They contend that the court should only look at the contracts 

of the named plaintiffs when deciding whether to compel arbitration as to those individuals.

At the hearing, Plaintiffs conceded that the court may only analyze the claims of parties who 

are presently before the court. In this case, as no class has yet been certified, only the named 

plaintiffs are parties to the current action. In re TFT-LCD (Flat Panel) Antitrust Litig., No. 07-md1827-SI, 2011 WL 1753784, at *4 (N.D. Cal. May 9, 2011) (“[P]utative class members are not 

parties to an action prior to class certification.”) (quoting Saleh v. Titan Corp., 353 F. Supp. 2d 1087, 

1091 (S.D. Cal. 2004)). Accordingly, the only relevant contracts at issue are the contracts between

Defendants and the individual named plaintiffs, each of which contains an arbitration clause.

3. Scope of Arbitration Agreement

Plaintiffs argue that the arbitration clauses in the respective TOUs do not apply to equitable 

claims. They assert that twelve of the thirteen claims for relief have a “basis in equitable restitution”

and therefore are exempt from the arbitration clause.6 Opp. at 8. Plaintiffs rely on language in the 

TOUs indicating that actions seeking injunctive or equitable relief shall be brought in state or federal 

 

6 Plaintiffs admit that the first claim for relief, a claim for breach of contract (generally) against 

MoviePass, seeks damages rather than equitable relief. Id. Defendants disagree that twelve of 

Plaintiffs’ thirteen claims are based in equity; that disagreement need not be resolved here because 

the court concludes that equitable claims are not exempt from arbitration under the TOUs. 

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court in New York. The October 2017 TOU provides, under the paragraph labeled “Arbitration”:

You and we agree that any dispute, claim or controversy . . . will be settled 

by binding arbitration between you and us, and not in a court of law, with 

the exception of either party seeking injunctive or equitable relief as 

specified below.

Adarkwah Decl., Ex. A ¶ 35. The next paragraph, labeled “Jurisdiction for Dispute Proceedings,”

explains the injunctive or equitable relief exception in more detail:

For purposes of seeking injunctive or equitable relief or in the event the 

Arbitration provision above is found unenforceable, any legal suit, action or 

proceeding arising out of, or related to, these Terms of Use or the Website 

shall be instituted exclusively in the federal or state courts located in the 

State of New York in each case located in the City of New York and County 

of New York.

Id., Ex. A ¶ 36. The January 2018, March 2018, and December 2018 TOUs contains a similar 

jurisdictional paragraph, except that those agreements add the language “any legal suit other than a 

suit in small claims court,” and do not contain a reference to equitable relief within the arbitration 

clause itself. Id., Exs. E ¶ 18, F ¶ 18, I ¶ 18.

For their part, Defendants assert that the language relied upon by Plaintiffs is not in the 

arbitration clause itself but in a separate paragraph relating to the TOUs’ jurisdiction and venue 

provisions.7 Reply at 2. They argue that such language is “often used in arbitration provisions to 

provide for a right to seek enforceable relief in courts, including to compel arbitration, and to 

supplement what is available in the arbitration.” Id. They further contend that the sole purpose of 

this language is to allow MoviePass “to seek a temporary restraining order or preliminary injunction 

from a federal or state court in New York to secure its rights to arbitrate under the TOU.” Id. at 3. 

The Ninth Circuit’s decision in Comedy Club is directly on point. In that case, the court

considered an arbitration clause that contained the following language:

All disputes relating to or arising under this Agreement . . . shall be resolved 

by arbitration . . . in accordance with the commercial arbitration rules of the 

American Arbitration Association. . . . Notwithstanding this agreement to 

 

7 This contention is not accurate. As noted above, the December 2017 TOU does contain a reference 

to “injunctive or equitable relief” in the paragraph containing the arbitration clause. Adarkwah 

Decl., Ex. A ¶ 35.

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arbitrate, the parties, in addition to arbitration, shall be entitled to pursue 

equitable remedies and agree that the state and federal courts shall have 

exclusive jurisdiction for such purpose and for the purpose of compelling 

arbitration and/or enforcing any arbitration award. 

Comedy Club, Inc., 553 F.3d at 1281–82. In Comedy Club, the plaintiff argued that the arbitrator 

lacked authority to arbitrate equitable claims because the arbitration clause vested “exclusive 

jurisdiction” of those claims in state and federal courts. Id. at 1284. The defendant contended that 

the language was intended to carve out equitable claims “in aid of arbitration,” such as issuing 

injunctive relief to maintain the status quo between parties pending arbitration. Id. at 1285. The 

Ninth Circuit determined that both interpretations were plausible, but ultimately applied the federal 

presumption in favor of arbitration to find that the clause mandated arbitration for both equitable 

and legal disputes. Id. at 1286. It reconciled the seemingly contradictory language by finding that 

the clause was intended to “give a court the authority to issue equitable remedies, such as a 

temporary restraining order,” which is otherwise not allowed under the FAA. Id. (“[I]t makes sense 

that if the parties wanted to give themselves the ability to seek temporary equitable remedies in 

courts while arbitration was ongoing, they would add such a clause to the arbitration agreement.”)

As in Comedy Club, the parties’ agreements in this case provide that courts, and not 

arbitrators, will have exclusive jurisdiction over claims seeking equitable remedies and injunctive 

relief. This language could be read, as Plaintiffs argue, to mean that equitable claims cannot be 

compelled to arbitration. However, Comedy Club found similar language to be ambiguous and 

resolved the dispute in favor of arbitration. In fact, the clause in dispute in this case is even less 

amenable to Plaintiffs’ interpretation than the clause examined in Comedy Club. In Comedy Club, 

the disputed clause was explicitly part of the arbitration clause. Here, only the December 2017 TOU 

contains any language about an exception for injunctive or equitable relief within the arbitration 

clause itself, and the disputed language in the other TOUs occurs in a separate paragraph on 

jurisdiction. Even the equitable claims language in the December 2017 TOU merely references a

jurisdictional provision in a different section of the agreement. If the parties intended to carve out 

equitable claims, they could have done so more clearly by including an exception within the 

arbitration clause itself. See AbbVie Inc. v. Novartis Vaccines & Diagnostics, Inc., No. 17-cvCase 4:18-cv-07087-DMR Document 57 Filed 08/13/19 Page 12 of 17
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01815-EMC, 2017 WL 3835340, at *5 (N.D. Cal. Aug. 31, 2017) (determining that a provision that 

was not a part of the arbitration clause was not meant to create an exception to the arbitration clause).

Although the language at issue may be susceptible to Plaintiffs’ interpretation, it is at least 

as ambiguous as the clause examined in Comedy Club. As this court is bound by that case, the 

ambiguity must be resolved in favor of arbitration.

8

 Comedy Club, 553 F.3d at 1286; accord

McKesson Corp. v. Health Robotics, S.R.L., No. 11-cv-00728-JCS, 2011 WL 3157044, at *2 (N.D. 

Cal. July 26, 2011) (finding the plaintiff’s equitable claims were subject to arbitration where the 

arbitration clause provided that “[n]otwithstanding the [arbitration agreement], either PARTY may 

elect to seek injunctive relief or other equitable remedies against the other PARTY from any court 

of competent jurisdiction”).

Accordingly, the court concludes that the arbitration clauses in Plaintiffs’ TOUs do not 

exempt all equitable claims from arbitration.

4. Choice Versus Obligation

Plaintiffs argue that the language of the arbitration clauses gives Plaintiffs “the choice of 

arbitrating, not the obligation.” Opp. at 9. They point to language from the January 2018 TOU, 

which appliesto Walker. That language states: “EITHER YOU OR WE MAY CHOOSE TO HAVE 

ANY DISPUTE BETWEEN US DECIDED BY ARBITRATION AND NOT IN COURT OR BY 

JURY TRIAL.” Adarkwah Decl., Ex. E ¶ 17. Further down in that agreement, it also states that 

“[a]ny claim or dispute . . . SHALL, AT YOUR OR OUR ELECTION, BE RESOLVED BY 

NEUTRAL, BINDING ARBITRATION AND NOT BY A COURT ACTION.” Id. (emphasis 

in original). The March 2018 TOU, applicable to Samartino, Sjodahl, and Whelan, contains 

identical language. Id., Ex. F ¶ 17. The October 2017 TOU, agreed to by Tabas and Hobbs, contains 

different language that states: “You and we agree that any dispute . . . will be settled by binding 

arbitration between you and us, and not in a court of law.” Adarkwah Decl., Ex. A ¶ 35.

 

8 At the hearing, Plaintiffs argued that the Supreme Court’s recent decision in Lamps Plus v. Varela, 

139 S.Ct. 1407 (2019) overruled Comedy Club to the extent that Comedy Club applied a presumption 

in favor of arbitration where an arbitration clause is ambiguous. Plaintiffs’ argument appears to be 

that Lamps Plus rejects the use of any presumptions (whether arising under contract law or the FAA) 

in examining arbitration clauses. Lamps Plus cannot be read for such a broad proposition.

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At the hearing, Plaintiffs argued that these paragraphs establish that they have the right to 

choose the forum in which they bring their claims. They contend that Defendants’ attempt to bring 

their claims to arbitration undermines their choice and cuts against the common-sense interpretation 

of the clauses cited above. Plaintiffs argue that these clauses essentially establish a “first come, first 

served” approach, where the party bringing the claims is the party whose choice should be enforced. 

They also cite Lamps Plus again for the proposition that if the language in an arbitration agreement 

is ambiguous, the court may not resolve that ambiguity in favor of arbitration. Defendants respond 

that these provisions unambiguously establish that either party may unilaterally submit the matter 

to arbitration, regardless of which party initially files the case.

The court is hard-pressed to find support in the language of the provision for Plaintiffs’ 

“first come, first served” interpretation. Indeed, numerous courts have enforced arbitration 

agreements against a plaintiff (who, by definition, sues first) where the arbitration clause contained 

language providing that either side could choose to arbitrate their claims. See, e.g., Grear v. 

Comcast Corp., No. 14-cv-05333-JSW, 2015 WL 926576, at *1 (N.D. Cal. Mar. 3, 2015) (enforcing 

an arbitration agreement where either party could “elect to arbitrate [a] Dispute in accordance with 

the terms of this Arbitration Provision”); Dean v. Ad Astra Recovery Servs., Inc., No. 16-cv-03817-

RGK, 2016 WL 10968663, at *1 (C.D. Cal. Sept. 14, 2016) (compelling arbitration where either 

party could elect to arbitrate any claims arising under the disputed agreement); Trout v. Comcast 

Cable Commc’ns, LLC, No. 17-cv-01912-RS, 2018 WL 4638705, at *2 (N.D. Cal. Mar. 15, 2018)

(enforcing arbitration clause where either party could “elect to arbitrate [a] Dispute in accordance 

with the terms of this Arbitration Provision”). In accordance with this body of similar cases, the 

court declines to adopt Plaintiffs’ interpretation. 

In sum, the court concludes that a valid agreement to arbitrate exists in each of the contracts 

applicable to the named plaintiffs. 

B. Enforceability

Plaintiffs argue that the arbitration agreements are unenforceable because the arbitration 

remedy is illusory and because the agreements are unconscionable. Defendants contend that these 

defenses are questions of arbitrability that the parties agreed to submit to the arbitrator. Generally, 

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“a gateway dispute about whether the parties are bound by a given arbitration clause raises a 

‘question of arbitrability’ for a court to decide.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 

79, 84 (2002) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 946 (1995)). However, 

“parties may delegate the adjudication of gateway issues to the arbitrator if they ‘clearly and 

unmistakably’ agree to do so.” Portland Gen. Elec. Co. v. Liberty Mut. Ins. Co., 862 F.3d 981, 985 

(9th Cir. 2017), as amended (Aug. 28, 2017) (quoting Howsam, 537 U.S. at 83-84). 

At the hearing, Plaintiffs conceded that the arbitration agreements at issue delegate questions 

of arbitrability to an arbitrator. Accordingly, the court concludes that all the contracts applicable to 

the named plaintiffs delegate the issue of arbitrability to an arbitrator, and it is the arbitrator who 

must rule on Plaintiffs’ defenses to the arbitration clause. 

IV. MOTION TO AMEND

On May 9, 2019, subsequent to the hearing on Defendants’ motion to compel arbitration, 

Plaintiffs filed a motion to amend the FAC to add named plaintiff Amy Buckley, who signed up for 

the MoviePass service prior to the introduction of the arbitration clause into MoviePass’s TOU in 

October 2017. [Docket No. 49.] Defendants filed an opposition. [Docket No. 53.] The parties 

filed a stipulation that the motion be decided without a hearing, which the court granted. [Docket 

Nos. 52, 54.]

Under Federal Rule of Civil Procedure 15(a), leave to amend should be granted as a matter 

of course, at least until the defendant files a responsive pleading. Fed. R. Civ. P. 15(a)(1). After 

that point, Rule 15(a) provides generally that leave to amend the pleadings before trial should be 

given “freely . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This policy is to be applied 

with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 

2003) (quotation omitted). In the absence of an “apparent” reason, such as undue delay, bad faith 

or dilatory motive, prejudice to the opposing party, futility of the amendments, or repeated failure 

to cure deficiencies in the complaint by prior amendment, it is an abuse of discretion for a district 

court to refuse to grant leave to amend a complaint. Foman v. Davis, 371 U.S. 178, 182 (1962); 

Lockheed Martin Corp. v. Network Sols., Inc., 194 F.3d 980, 986 (9th Cir. 1999). These factors do 

not “merit equal weight,” and “it is the consideration of prejudice to the opposing party that carries 

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the greatest weight.” Eminence Capital, 316 F.3d at 1052. “Granting leave to amend does not 

necessarily mean that the underlying allegations ultimately have merit.” FlatWorld Interactives 

LLC v. Apple Inc., 12-cv-01956-WHO, 2013 WL 6406437, at *3 (N.D. Cal. Dec. 6, 2013). “Rather, 

‘[a]bsent prejudice, or a strong showing of any of the remaining [ ] factors, there exists a 

presumption under Rule 15(a) in favor of granting leave to amend.’” Id. (quoting Eminence Capital, 

316 F.3d at 1052).

Plaintiffs argue that the liberal policy in favor of amendment should be applied here because 

the proposed amendment is of “direct relevance to the pending motion to compel arbitration.” 

[Docket No. 49 at 3.] This statement is in reference to a discussion at the hearing on the motion to 

compel arbitration, discussed above, where Plaintiffs conceded that the court may only decide 

matters relating to parties who are actually before the court and not for putative class members 

before a class has been certified. 

Defendants oppose the motion to amend primarily on the basis that Plaintiffs unduly delayed 

filing its motion. Docket No. 53 at 3 (citing Moore v. Kayport Package Express, Inc., 885 F.2d 531, 

538 (9th Cir. 1989)). They argue that Tabas was “advised of the grounds for Defendants’ Motion 

to Compel Arbitration in early February 2019,” which was before Tabas filed the FAC adding five 

additional MoviePass subscribers as additional plaintiffs. Id. at 4. They argue that Plaintiffs had 

ample time to find other subscribers “who had originally agreed to earlier versions of the TOU that 

do not include arbitration provisions.” Id. at 4. They contend that Plaintiffs have not adequately 

justified such a delay, and that granting leave to amend “would endorse a revolving door theory of 

litigation where a lawsuit stays alive until a plaintiff can be found to pursue it.” Id. at 3-4. 

Plaintiffs did not unjustifiably delay in filing the motion to amend. The case was filed in 

November 2018 and is still in early proceedings. Even if Plaintiffs were “advised of the grounds” 

for the motion to compel arbitration in February 2019, that motion had not yet been briefed or heard. 

Defendants also argue that the motion to amend may impermissibly delay a decision on their 

motion to compel arbitration. That concern is moot as the court determined that the issues would 

be addressed together in this order. Further, the delay caused by consideration of the motion to 

amend was not substantial, particularly as the case is still in early proceedings.

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Accordingly, the court grants Plaintiffs’ motion to amend to add Buckley as a named plaintiff 

in this action.

V. STAY OF ACTION

Defendants request that this matter be stayed pending the conclusion of arbitration. Mot. at 

18. As the court is granting Plaintiffs’ motion to amend to add Buckley as a named plaintiff 

representing a putative class who signed up for MoviePass subscription before an arbitration clause 

was introduced in MoviePass’s TOU, there is no reason to stay the case as to Buckley’s claims. The 

claims of the other named plaintiffs are submitted to arbitration, and their individual claims are 

stayed. The case will proceed with Buckley as the named plaintiff representing the putative class. 

VI. CONCLUSION

For the foregoing reasons, Defendants’ motion to compel arbitration is granted as to Tabas, 

Hobbs, Samartino, Sjodahl, Walker, and Whelan. Only the claims of those six Plaintiffs are stayed 

pending arbitration. Defendants’ request to stay the action is denied. Plaintiffs’ request for a limited 

trial on contract formation and enforceability is denied.

Plaintiffs’ motion to amend to add Buckley as a named plaintiff is granted. The proposed 

second amended complaint attached to the Declaration of David Rosenberg-Wohl (Docket No. 49-

1) is deemed the operative complaint as of the date of this order. Plaintiff shall file the second 

amended complaint, without changes, separately on the docket by August 16, 2019. 

The parties shall appear for a case management conference on September 18, 2019 at 1:30 

p.m. They shall file an updated joint case management conference statement by September 11, 

2019.

IT IS SO ORDERED.

Dated: August 13, 2019

______________________________________

Donna M. Ryu

United States Magistrate Judge

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORN

I

A

IT IS SO ORDERED

Judge Donna M. Ryu

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