Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-02598/USCOURTS-cand-3_18-cv-02598-1/pdf.json

Parties Involved:
Eaze Solutions, Inc.
Defendant
Farrah Williams
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

FARRAH WILLIAMS,

Plaintiff,

v.

EAZE SOLUTIONS, INC.,

Defendant.

Case No. 3:18-cv-02598-JD 

ORDER RE ARBITRATION

Re: Dkt. No. 17

In this putative class action, plaintiff Farrah Williams alleges that defendant Eaze Solutions 

violated the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, by sending her 

unsolicited, autodialed text messages. Eaze seeks to compel arbitration of her claims pursuant to 

its terms of service. Dkt. No. 17. While the case raises interesting issues about 

“ganjapreneurship” and the budding legal marijuana industry, the questions presently before the 

Court are limited to whether there was an agreement to arbitrate and, if so, whether the Court or an 

arbitrator decides the arbitrability of plaintiff’s claims. 

After an initial set of briefing on the motion to compel and oral argument, the Court called 

for supplemental submissions from the parties on the application of Buckeye Check Cashing, Inc. 

v. Cardegna, 546 U.S. 440 (2006). Dkt. No. 35. In light of the Court’s request for supplemental 

briefing, Williams’s motion for leave to file a sur-reply on similar topics, Dkt. No. 25, is denied. 

Eaze’s motion to compel arbitration is granted. 

BACKGROUND

The parties do not dispute the salient facts. Eaze operates a marijuana mobile application 

(“app”) and online marketplace. Dkt. No. 1 (“Compl.”) ¶¶ 13-15. The app facilitates the delivery 

of cannabis products from dispensaries to consumers. Williams signed up for Eaze’s service in 

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September 2017. Dkt. No. 17-1, Declaration of Daniel Erickson (“Erickson Decl.”) ¶ 17; see also 

Dkt. No. 21 at 2. Before creating her Eaze account, Williams checked a box consenting to Eaze’s 

terms of service. Erickson Decl. ¶ 17. The sign-up screen looked like this:

Dkt. No. 17-1, Ex. A.

Eaze’s terms of service, which were hyperlinked in the sign-up box, contained a clause 

providing for arbitration of disputes with a class-action waiver. Id., Ex. E at ECF pp. 28-30. 

Specifically, the terms of service state that the customer and Eaze “agree that any dispute, claim or 

controversy arising out of or relating to this Agreement or the breach, termination, enforcement, 

interpretation or validity thereof or the use of the Service or Application (collectively, “Disputes”)

will be settled by binding arbitration.” Id. at ECF p. 28. Williams does not deny that she clicked 

the box stating she consented to the terms of service, or that such a “clickwrap” agreement is 

enforceable. See In re Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d 1155, 1165-66

(N.D. Cal. 2016). 

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Even so, Williams contends that no contract was ever formed between her and Eaze. She 

argues that, because the contract’s purpose was to facilitate the selling and distribution of

marijuana, which is illegal under federal law, the contract lacked a “lawful object,” as required by 

California law, and so no contract or enforceable arbitration clause was ever formed. Cal. Civ. 

Code § 1550.

DISCUSSION

I. LEGAL STANDARD

The parties disagree about the governing legal standards. Eaze says that the Federal 

Arbitration Act (“FAA”) applies for two reasons: (1) the terms of service state that the “Federal 

Arbitration Act will govern the interpretation and enforcement” of its dispute resolution 

provisions, Dkt. No. 17-1, Ex. E at ECF p. 29; and (2) the contract involves interstate commerce

as contemplated by the FAA. See 9 U.S.C. § 2. Williams contends that California law controls

because: (1) the terms of service state the parties’ agreement will be “governed by the laws of the 

State of California,” Dkt. No. 17-1, Ex. E at ECF p. 30; and (2) the contract does not involve 

interstate commerce. 

The FAA governs the arbitration issues in this case. It applies to contracts “evidencing a 

transaction involving commerce.” 9 U.S.C. § 2. The Supreme Court has interpreted “involving 

commerce” “as the functional equivalent of the more familiar term ‘affecting commerce’ -- words 

of art that ordinarily signal the broadest permissible exercise of Congress’ Commerce Clause 

power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003) (per curiam). 

The activity covered by Eaze’s terms of service are within Congress’s commerce power, 

and so the FAA applies here. In Gonzales v. Raich, 545 U.S. 1, 17 (2005), the Supreme Court 

determined that even purely intrastate marijuana possession and distribution in compliance with 

California’s Compassionate Use Act had a “substantial effect on interstate commerce,” and that 

regulation of that activity was within Congress’s commerce power. By similar reasoning, 

Williams’s own formation argument assumes the presence of interstate commerce. Since Eaze’s 

business is legal under California state law, her claim that federal law applies to render her 

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contract with Eaze illegal necessarily requires that Eaze’s business has a substantial interstate 

commerce effect. 

The TCPA allegations in the complaint also depend on the presence of interstate 

commerce. The TCPA was passed under Congress’s Commerce Clause power. See Satterfield v. 

Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2009). Williams alleges Eaze has violated the 

TCPA by harassing her with text messages, and she seeks to represent a nationwide class. Compl.

¶ 1. The federal and nationwide claims in this case again require that Eaze be engaged in 

interstate commerce. 

Consequently, the FAA controls. The parties could have agreed otherwise, see DIRECTV, 

Inc. v. Imburgia, 136 S. Ct. 463, 468 (2015), but they did not do so. The terms of service 

expressly state that the “Federal Arbitration Act will govern the interpretation and enforcement” of 

the dispute resolution section. Dkt. No. 17-1, Ex. E at ECF p. 29. While the contract contains a

more general choice-of-law provision that opts for California law, it is the specific provision 

designating the FAA that governs arbitration. See Cronus Invs., Inc. v. Concierge Servs., 35 Cal. 

4th 376, 387 (2005). 

The “overarching purpose” of the FAA “is to ensure the enforcement of arbitration 

agreements according to their terms so as to facilitate streamlined proceedings.” AT&T Mobility 

LLC v. Concepcion, 563 U.S. 333, 344 (2011). Under Section 4 of the FAA, “the district court’s 

role is limited to determining whether a valid arbitration agreement exists and, if so, whether the 

agreement encompasses the dispute at issue.” Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 

F.3d 1010, 1012 (9th Cir. 2004). If the party seeking to compel arbitration establishes both 

factors, the district court “must order the parties to proceed to arbitration.” Id. Any doubts about 

the scope of arbitrable issues should be decided in favor of arbitration. Three Valleys Mun. Water 

Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1139 (9th Cir. 1991). 

Unless the parties agree differently, the validity and scope of an agreement to arbitrate are 

determined by the Court. Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 

2013). The validity inquiry usually involves a determination of whether the arbitration agreement 

is unenforceable because it is unconscionable.

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But the parties may delegate questions of validity and scope to the arbitrator. Delegation is 

accomplished by a “clear and unmistakable” agreement in the contract, typically in the form of a 

reference to arbitration rules that cover arbitrability, that is itself enforceable. Brennan v. Opus 

Bank, 796 F.3d 1125, 1130 (9th Cir. 2015); see also Howsam v. Dean Witter Reynolds, Inc., 537 

U.S. 79, 83 (2002). When a delegation clause is in an arbitration agreement, the Court retains 

authority to determine any validity challenges directly addressed to delegation. Rent-A-Center, W, 

Inc. v. Jackson, 561 U.S. 63, 72 (2010); Brennan, 796 F.3d at 1132-33; McLellan v. Fitbit, Inc., 

Case No. 16-cv-00036-JD, 2018 WL 1913832, at *1 (N.D. Cal. Jan. 24, 2018). This is because 

arbitration provisions -- including delegation clauses -- are severable and separately enforceable 

from the remainder of a contract. Rent-A-Center, 561 U.S. at 70-72. If a party challenges the 

overall agreement to arbitrate, without specifically challenging the delegation clause, the questions 

of validity and enforceability will go to the arbitrator. McLellan v. Fitbit, Inc., Case No. 16-cv00036-JD, 2017 WL 4551484, at *1 (N.D. Cal. Oct. 11, 2017). 

II. CONTRACT FORMATION 

Formation issues are for the Court to decide. See Buckeye, 546 U.S. at 444 n.1; Rent-ACenter, 561 U.S. 70 n.2. Arbitration may be ordered only when the Court is satisfied that a 

contract has been formed. Granite Rock Co. v. Int’l Broth. of Teamsters, 561 U.S. 287, 299 

(2010). Our circuit has recognized that the formation of the arbitration agreement is for the court 

to decide even though the agreement referred to arbitration rules that provided the “arbitral 

tribunal shall have the power to rule on its own jurisdiction, including any objections with respect 

to the existence or validity of the arbitration agreement.” Casa del Caffe Vergnano S.P.A. v. 

ItalFlavors, LLC, 816 F.3d 1208, 1210, 1214 (9th Cir. 2016). 

The parties dispute yet again what law should be used to resolve the contract formation 

question. Eaze says that, under the FAA and cases like Buckeye, the issue should be delegated to 

an arbitrator. Dkt. No. 39 at 4-10. Williams says that California law controls, and that the 

agreement’s unlawful object to facilitate marijuana distribution and use means a contract was 

never formed. Dkt. No. 40 at 2-9. 

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Starting with Williams’s position, it is important to understand that, under California law, a 

contract that has an unlawful object is deemed void and unenforceable, not that it was never 

formed. Williams argues California Civil Code § 1550, which states that it “is essential to the 

existence of a contract that there should be: (1) Parties capable of contracting; (2) Their consent; 

(3) A lawful object; and, (4) A sufficient cause or consideration,” means no contract was ever 

formed. She also cites an unpublished California Court of Appeal decision equating these factors

with contract formation principles. Dkt. No. 40 at 2. 

But the California Code and decisions by the state Supreme Court critically undermine

Williams’s argument. These sources, some of which Williams herself cites, definitively establish 

that the consequence under California law of an unlawful object is not that a contract was not 

formed, but that the contract cannot be enforced. For example, California Civil Code § 1608

states that if consideration is unlawful, then “the entire contract is void.” See also Cal. Civ. Code 

§ 1598 (“Where a contract has but a single object, and such object is unlawful, whether in whole 

or in part . . . the entire contract is void.”). This conclusion has also been stated by the California 

Supreme Court, which treats illegality as a matter of enforceability. Armendariz v. Found. Health 

Psychare Servs., Inc., 24 Cal. 4th 83, 124 (2000) (“Courts are to look to the various purposes of 

the contract. If the central purpose of the contract is tainted with illegality, then the contract as a 

whole cannot be enforced.”); see also Gatti v. Highland Park Builders, Inc., 27 Cal. 2d 687, 689 

(1946) (holding that a “contract made contrary to the terms of a law designed for the protection of 

the public and prescribing a penalty for the violation thereof is illegal and void, and no action may 

be brought to enforce such contract.”). Williams mentions some arguably different opinions by 

California appellate courts and federal courts, but they are not controlling authorities. 

Because the consequence of a contract with an unlawful object under California law is that 

it is void and unenforceable, this case is controlled by Buckeye and its progeny. Buckeye held as a 

matter of substantive law under the FAA that an arbitration provision is severable from the rest of 

a contract that is challenged as being void or voidable for illegality. Buckeye, 546 U.S. at 445-46. 

There, the Supreme Court considered the question of “whether a court or an arbitrator should 

consider the claim that a contract containing an arbitration provision is void for illegality.” Id. at 

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442. It held that under the FAA when the “crux of the complaint is that the contract as a whole 

(including its arbitration provision) is rendered invalid” by illegality “the issue of the contract’s 

validity is considered by the arbitrator in the first instance.” Id. at 444, 446. It also determined 

that a contract’s arbitration “provisions are enforceable apart from the remainder of the contract.” 

Id. at 446. Consequently, the terms of service arbitration agreement can be severed and enforced 

even if Williams’s underlying contract with Eaze has an unlawful object.

Eaze’s argument takes a step further to suggest that the Supreme Court has applied

substantive federal law to determine whether an issue is nondelegable. See Kindred Nursing Ctrs. 

Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1428-29 (2017) (rejecting argument that state law definition 

of “formation” is determinative in FAA case). This rule would distinguish “treatment of the 

generally nonarbitral question whether an arbitration agreement was ‘ever concluded’ from the 

question whether an arbitration clause was illegal when formed.” Granite Rock, 561 U.S. at 296-

97 (citing Buckeye). On this view, questions going to whether a contract has been concluded are 

limited to whether a contract was signed, whether the signor had authority, and whether the signor 

possessed the mental capacity to assent and do not include issues related to legality. Buckeye, 546 

U.S. at 445 n.1. 

But the Court need not decide whether California or federal law determines the effect of a 

contract’s illegality because the answer is the same under both regimes. No other formation 

challenges are presented here.

III. THE DELEGATION CLAUSE

The parties agreed to arbitrate threshold issues concerning the arbitration agreement. 

Under the Supreme Court’s decision in Rent-A-Center, Williams must challenge the delegation 

provision itself since “any challenge to the validity of the Agreement as a whole [is] for the 

arbitrator.” Rent-A-Center, 561 U.S. at 72. Here, the arbitration clause provides that “any dispute, 

claim or controversy arising out of or relating to this Agreement or the breach, termination, 

enforcement, interpretation or validity thereof or the use of the Service or Application 

(collectively, “Disputes”) will be settled by binding arbitration.” Dkt. No. 17-1, Ex. E at ECF

p. 28. There is no challenge to the delegation provision here and, so the Court will “treat it as 

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valid under § 2, and must enforce it under §§ 3 and 4, leaving any challenge to the validity of the 

Agreement as a whole for the arbitrator.” Rent-A-Center, 561 U.S. at 72. It is also worth noting 

that Rent-A-Center turned aside the similar objections about fee-splitting and types of claims 

subject to arbitration that Williams raises here, and held those factors not to be “arguments 

specific to the delegation provision.” Id. at 73; see also Preston v. Ferrer, 552 U.S. 346, 349 

(2008). 

The parties’ incorporation of the AAA rules into the contract “constitutes clear and 

unmistakable evidence that contracting parties agreed to arbitrate arbitrability.” Brennan, 796 

F.3d at 1130; see also Oracle, 724 F.3d at 1074 (“Virtually every circuit” has found incorporation 

of AAA rules indicates that the parties agreed to delegate arbitrability to the arbitrator.). The 

contract in this case requires that the “arbitration will be administered by the American Arbitration 

Association (‘AAA’) in accordance with the Commercial Arbitration Rules and the 

Supplementary Procedures for Consumer Related Disputes (the ‘AAA Rules’) then in effect, 

except as modified by this ‘Dispute Resolution’ section.” Dkt. No. 17-1, Ex. E at ECF p. 29. 

Consequently, unless what is effectively a delegation provision is itself unconscionable, the 

arbitrator and not the Court decides the question of arbitrability. Brennan, 796 F.3d at 1132. 

Williams makes a cursory run at suggesting she still should not be bound by the delegation 

clause because the links to the AAA rules in the terms of service were not working when she 

signed up with Eaze. Because there is no duty to attach the AAA rules, the allegedly broken link 

is of no moment. See Lane v. Francis Capital Mgmt., 224 Cal. App. 4th 676, 690 (2014). 

Moreover, the terms of service also provided a toll-free number that Williams has not alleged was 

defective, and could have called, in order to obtain the AAA rules. 

The Court declines to consider whether the arbitration clause itself is unconscionable 

because that question was delegated under the terms of service, and Williams did not challenge the 

delegation. See Brennan, 796 F.3d at 1132-34; Fruth v. AGCS Marine Ins. Co., Case No. 15-cv03311-JD, 2016 WL 6806368, at *3 (N.D. Cal. Mar. 31, 2016). “If a party challenges the overall 

agreement to arbitrate, without specifically challenging the delegation clause, the questions of 

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validity and enforceability will go to the arbitrator.” Alonso v. AuPairCare, Inc., Case No. 18-cv00970-JD, 2018 WL 4027834, at *1 (N.D. Cal. Aug. 23, 2018). 

CONCLUSION

Eaze’s motion to compel arbitration of Williams’s claims, Dkt. No. 17, is granted. 

Williams’s motion for a sur-reply, Dkt. No. 25, is denied. The case is dismissed.

IT IS SO ORDERED.

Dated: October 21, 2019

JAMES DONATO

United States District Judge

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