Court Opinion

ID: 9939772
Source: CourtListenerOpinion
Date Created: 2024-02-12 18:02:45.655317+00
Date Added: 2024-06-11T13:41:54.890272
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

JOHN PATRICK, individually and on          No. 22-56078
behalf of all others similarly situated,
                                              D.C. No.
               Plaintiff-Appellant,        2:21-cv-09978-
  v.                                         ODW-JEM

RUNNING WAREHOUSE, LLC, a                    OPINION
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

               Defendants-Appellees,

and

SKATE WAREHOUSE, LLC, a
California limited liability company,

               Defendant.
2            PATRICK V. RUNNING WAREHOUSE, LLC

BETHANY BUFFINGTON,                        No. 22-56080
individually and on behalf of all others
similary situated,                            D.C. No.
                                           2:21-cv-09980-
               Plaintiff-Appellant,          ODW-JEM

    v.

RUNNING WAREHOUSE, LLC, a
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

               Defendants-Appellees,

and

SKATE WAREHOUSE, LLC, a
California limited liability company,

               Defendant.
             PATRICK V. RUNNING WAREHOUSE, LLC            3

CRAIG ARCILLA, individually and           No. 22-56081
on behalf of all others similarly
situated,                                   D.C. No.
                                         5:22-cv-00012-
               Plaintiff-Appellant,        ODW-JEM

 v.

RUNNING WAREHOUSE, LLC, a
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

               Defendants-Appellees,

and

SKATE WAREHOUSE, LLC, a
California limited liability company,

               Defendant.

LAURIE GASNICK, individually and          No. 22-56082
on behalf of all others similarly
4            PATRICK V. RUNNING WAREHOUSE, LLC

situated,                                     D.C. No.
                                           2:22-cv-00101-
               Plaintiff-Appellant,          ODW-JEM
    v.

RUNNING WAREHOUSE, LLC, a
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

               Defendants-Appellees,

and

SKATE WAREHOUSE, LLC, a
California limited liability company,

               Defendant.

ERIK SOLTER; LORNE BULLING,                No. 22-56086
individually and on behalf of all others
similarly situated,                           D.C. No.
                                           2:22-cv-00460-
               Plaintiffs-Appellants,        ODW-JEM
             PATRICK V. RUNNING WAREHOUSE, LLC            5

 v.

RUNNING WAREHOUSE, LLC, a
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

               Defendants-Appellees,

and

SKATE WAREHOUSE, LLC, a
California limited liability company,

               Defendant.

TOM HARGROVE, individually and            No. 22-56087
on behalf of all others similarly
situated,                                   D.C. No.
                                         2:22-cv-01716-
               Plaintiff-Appellant,        ODW-JEM

 v.
6              PATRICK V. RUNNING WAREHOUSE, LLC

RUNNING WAREHOUSE, LLC, a
California limited liability company;
WILDERNESS SPORTS
WAREHOUSE, LLC, DBA Tackle
Warehouse, a California limited
liability company; SPORTS
WAREHOUSE, INC., DBA Tennis
Warehouse, a California corporation,

                 Defendants-Appellees,
    and

SKATE WAREHOUSE, LLC, a
California limited liability company,

                 Defendant.

          Appeal from the United States District Court
             for the Central District of California
          Otis D. Wright II, District Judge, Presiding

                 Submitted December 8, 2023 *
                    Pasadena, California

                    Filed February 12, 2024

*
 The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
               PATRICK V. RUNNING WAREHOUSE, LLC                    7

 Before: CARLOS T. BEA, MILAN D. SMITH, JR., and
       LAWRENCE VANDYKE, Circuit Judges.

             Opinion by Judge Milan D. Smith, Jr.

                          SUMMARY **

                           Arbitration

    The panel affirmed the district court’s order granting
Defendants’ motions to compel arbitration and dismissing
without prejudice Plaintiffs’ six putative class actions
asserting claims arising out of a data breach of Defendants’
websites.
    Plaintiffs purchased goods online from Defendants, and
their personal information was stolen by hackers who
breached Defendants’ websites.
    The panel held that Plaintiffs had sufficient notice of the
arbitration provision. The district court determined that all
Plaintiffs other than Craig Arcilla acknowledged seeing a
hyperlink to the websites’ Terms of Use and therefore had
inquiry notice of the arbitration provision. Plaintiffs’ failure
to challenge this finding on appeal waived any assertion of
error. As for Arcilla, the panel agreed with the district
court’s finding that Defendant Running Warehouse’s
website provided sufficient information to put him on
inquiry notice. The website provided reasonably

**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
8            PATRICK V. RUNNING WAREHOUSE, LLC

conspicuous notice of the Terms, and Arcilla manifested
assent to the Terms by clicking the “Place Order” button to
complete his purchase.
    The panel held that the arbitration provision was not
invalid under McGill v. Citibank, N.A., 393 P.3d 85 (Cal.
2017) (holding that under California law, a clause
prohibiting a party from seeking public injunctive relief was
invalid and unenforceable), because the arbitration provision
did not bar the arbitrator from awarding public injunctive
relief.
    The panel held that the arbitration clause was not
unconscionable under California law. The district court
correctly found that the “mere presence” of a unilateral
modification clause did not render the arbitration clause, a
separate provision, substantively unconscionable.
    Finally, the panel held that the parties agreed to delegate
the threshold question of arbitrability by agreeing to an
arbitration provision that incorporated JAMS arbitration
rules.

                         COUNSEL

Jean S. Martin (argued), Law Office of Jean Sutton Martin
PLLC, Wilmington, North Carolina, for Plaintiffs-
Appellants John Patrick, Bethany Buffington, Craig Arcilla,
Laurie Gasnick, Erik Solter, and Tom Hargrove.
M. Anderson Berry, Clayeo C. Arnold A Professional
Corporation, Sacramento, California; Terence R. Coates,
Markovits Stock & DeMarco LLC, Cincinnati, Ohio; for
Plaintiff-Appellant Bethany Buffington.
             PATRICK V. RUNNING WAREHOUSE, LLC               9

Tina Wolfson and Robert R. Ahdoot, Ahdoot & Wolfson PC,
Burbank, California; Ben Barnow, Barnow and Associates
PC, Chicago, Illinois; for Plaintiff-Appellant Craig Arcilla.
Kiley L. Grombacher and Marcus J. Bradley, Bradley/
Grombacher LLP, Westlake Village, California; Joseph M.
Lyon, The Lyon Firm LLC, Cincinnati, Ohio; for Plaintiff-
Appellant Laurie Gasnick.
Timothy J. Peter, Faruqi & Faruqi LLP, Philadelphia,
Pennsylvania; Lisa Omoto, Faruqi & Faruqi LLP, Los
Angeles, California; for Plaintiff-Appellant Erik Solter.
MaryBeth V. Gibson, The Finley Firm PC, Atlanta, Georgia;
for Plaintiff-Appellant Tom Hargrove.
P. Craig Cardon (argued), Jay T. Ramsey, Benjamin O.
Aigboboh, and Alyssa Sones, Sheppard Mullin Richter &
Hampton LLP, Los Angeles, California, for Defendants-
Appellees.

                         OPINION

M. SMITH, Circuit Judge:

    Defendants-Appellees are companies that own and
operate e-commerce websites selling sporting goods. 1
Plaintiffs-Appellants John Patrick, Bethany Buffington,
Craig Arcilla, Laurie Gasnick, Erik Solter, Lorne Bulling,

1
  See www.tacklewarehouse.com (“Tackle Warehouse”); www.tennis-
warehouse.com (“Tennis Warehouse”); www.runningwarehouse.com
(“Running    Warehouse”);    www.skatewarehouse.com    (“Skate
Warehouse”); and www.racquetballwarehouse.com (“Racquetball
Warehouse”).
10             PATRICK V. RUNNING WAREHOUSE, LLC

and Tom Hargrove (Plaintiffs) purchased goods online from
Defendants. 2     In October 2021, hackers breached
Defendants’ websites and stole their consumers’ personally
identifiable information. Based on this data breach,
Plaintiffs brought six putative class actions against
Defendants asserting claims of negligence, breach of
contract and of implied contract, and quasi contract.
Defendants moved to compel Plaintiffs to arbitrate their
claims against Defendants based on the arbitration provision
in the terms of use in their agreements. The district court
granted the motions and dismissed the six related actions
without prejudice. We affirm.
     FACTUAL AND PROCEDURAL BACKGOUND
    Because the parties do not dispute the district court’s
recitation of the facts underlying this case, we recount that
recitation here.      During the checkout process, each
Defendant’s website provides an option for consumers to
either proceed straight to checkout or to create an account.
When consumers choose to create an account during
checkout, they must check a box next to the words “Create
an Account.” On each website, the following statement
appears immediately adjacent to the account creation
checkbox: “[b]y creating an account, you agree to our
privacy policy and terms of use.” The phrase “terms of use”
is a hyperlink that leads to the respective Defendant’s terms
of use (the Terms). Gasnick and Hargrove created accounts
on Running Warehouse and Tackle Warehouse,
respectively.

2
  The six appeals arise out of the same district court order and rest on
nearly identical briefs. The appeal in a seventh action, Pfeffer v.
Wilderness Sports Warehouse, No. 22-cv-0097-ODW, was voluntarily
dismissed on March 1, 2023.
             PATRICK V. RUNNING WAREHOUSE, LLC              11

    Regardless of whether a consumer chooses to create an
account, he or she must confirm the order by clicking a final
button to “Place Order” or “Submit Order.” Immediately
adjacent to this final button on each website is the following
statement: “By submitting your order you . . . agree to our
privacy policy and terms of use.” Once again, the phrase
“terms of use” is a hyperlink that leads to the respective
Defendant’s Terms. Arcilla, Buffington, Gasnick, and
Patrick purchased goods from Running Warehouse; Bulling
purchased goods from Tennis Warehouse; Solter purchased
goods from Racquetball Warehouse; and Hargrove
purchased goods from Tackle Warehouse.
   Each website’s “terms of use” hyperlink leads to
substantially identical Terms. Each contains the same
“Choice of Law, Arbitration, and Venue” provision, which
provides, in relevant part:

       You agree to arbitrate any and all claims,
       including all statutory claims, and any state
       or federal claims. By agreeing to arbitration,
       you understand and agree that you are giving
       up any rights to litigate claims in a court or
       before a jury, or to participate in a class action
       or representative action with respect to a
       claim.

The arbitration provision states:

       Any claim, dispute or controversy (whether
       in contract, tort or otherwise, whether pre-
       existing, present or future, and including
       statutory, consumer protection, common law,
       intentional tort, injunctive and equitable
12           PATRICK V. RUNNING WAREHOUSE, LLC

       claims) between you and us arising from or
       relating in any way to your use or purchase of
       products or services through the website or
       services will be resolved exclusively and
       finally by binding arbitration.
       All Claims shall be decided by one arbitrator
       pursuant to this provision and the commercial
       arbitration rules and procedures of JAMS,
       Inc. at their offices located in Orange County,
       California.

    In October 2021, hackers breached Defendants’ websites
and stole their consumers’ personally identifiable
information (the Data Breach). Plaintiffs assert that, as part
of the Data Breach, the hackers stole Plaintiffs’ information
they had provided to Defendants when purchasing goods
online from Defendants. Based on the Data Breach,
Plaintiffs brought six putative class actions against
Defendants asserting claims of negligence, breach of
contract and of implied contract, and quasi contract.
    Defendants moved to compel Plaintiffs to arbitrate their
claims against Defendants based on the arbitration provision
in the Terms. Plaintiffs opposed. On October 18, 2022, the
district court granted Defendants’ motions to compel
arbitration and dismissed Plaintiffs’ individual and putative
class claims in the six related actions without prejudice. The
court concluded that (1) there was a valid contract, (2) the
arbitration provision was not unconscionable, (3) the
arbitration clause did not prohibit public injunctive relief,
and (4) the Terms delegated the issue of arbitrability because
they incorporated JAMS’s rules. Plaintiffs timely appealed.
             PATRICK V. RUNNING WAREHOUSE, LLC              13

   JURISDICTION AND STANDARD OF REVIEW
    We have jurisdiction pursuant to 28 U.S.C. § 1291 and 9
U.S.C. § 16(a)(3). Green Tree Fin. Corp.-Ala. v. Randolph,
531 U.S. 79, 89 (2000); Shivkov v. Artex Risk Sols., Inc., 974
F.3d 1051, 1058 (9th Cir. 2020). “We review a district
judge’s order to compel arbitration de novo.” Casa del Caffe
Vergnano S.P.A. v. ItalFlavors, LLC, 816 F.3d 1208, 1211
(9th Cir. 2016). “We review factual findings for clear error,
and the interpretation and meaning of contract provisions de
novo.” Shivkov, 974 F.3d at 1058.
                        ANALYSIS
     Plaintiffs argue that the district court erred in granting
Defendants’ motions to compel arbitration because
(1) Plaintiffs had insufficient notice of the arbitration
provision, (2) the arbitration provision was unconscionable,
(3) the arbitration provision bars public injunctive relief and
is therefore invalid pursuant to McGill v. Citibank, N.A., 393
P.3d 85 (Cal. 2017), and (4) the arbitration provision does
not clearly or unmistakably delegate the issue of
arbitrability. We disagree.
I. Plaintiffs Had Sufficient Notice of the Arbitration
   Provision.
    Because our circuit’s recent decision in Berman v.
Freedom Fin. Network, LLC, 30 F.4th 849 (9th Cir. 2022),
is both relevant and instructive, we recount it here. “The
Federal Arbitration Act (FAA) requires district courts to
compel arbitration of claims covered by an enforceable
arbitration agreement.” Berman, 30 F.4th at 855; see 9
U.S.C. § 3. “The FAA limits the court’s role to determining
whether a valid arbitration agreement exists and, if so,
14           PATRICK V. RUNNING WAREHOUSE, LLC

whether the agreement encompasses the dispute at issue.”
Berman, 30 F.4th at 855 (internal quotation marks omitted).
    “In determining whether the parties have agreed to
arbitrate a particular dispute, federal courts apply state-law
principles of contract formation.” Id. “To form a contract
under . . . California law, the parties must manifest their
mutual assent to the terms of the agreement.” Id. “Parties
traditionally manifest assent by written or spoken word, but
they can also do so through conduct.” Id. “However, ‘[t]he
conduct of a party is not effective as a manifestation of his
assent unless he intends to engage in the conduct and knows
or has reason to know that the other party may infer from his
conduct that he assents.’” Id. (alteration in original) (quoting
Restatement (Second) of Contracts § 19(2) (1981)). “These
elemental principles of contract formation apply with equal
force to contracts formed online. Thus, if a website offers
contractual terms to those who use the site, and a user
engages in conduct that manifests her acceptance of those
terms, an enforceable agreement can be formed.” Id. at 855–
56.
    “To avoid the unfairness of enforcing contractual terms
that consumers never intended to accept, courts confronted
with online agreements . . . have devised rules to determine
whether meaningful assent has been given. Unless the
website operator can show that a consumer has actual
knowledge of the agreement, an enforceable contract will be
found based on an inquiry notice theory only if: (1) the
website provides reasonably conspicuous notice of the terms
to which the consumer will be bound; and (2) the consumer
takes some action, such as clicking a button or checking a
box, that unambiguously manifests his or her assent to those
terms.” Id. at 856 (citing Meyer v. Uber Techs., Inc., 868
F.3d 66, 75 (2d Cir. 2017); Nguyen v. Barnes & Noble Inc.,
              PATRICK V. RUNNING WAREHOUSE, LLC               15

763 F.3d 1171, 1173 (9th Cir. 2014)). “Reasonably
conspicuous notice of the existence of contract terms and
unambiguous manifestation of assent to those terms by
consumers are essential if electronic bargaining is to have
integrity and credibility.” Berman, 30 F.4th at 856 (cleaned
up).
    Here, the district court determined that all Plaintiffs other
than Arcilla “acknowledge[d] seeing a hyperlink to the
Terms” and therefore “had inquiry notice” of the arbitration
provision. In so finding, the court rejected Plaintiffs’
argument that “the existence of this hyperlink did not apprise
them of the existence of an arbitration agreement” and cited
as authority for its position the Second Circuit’s decision in
Meyer, 868 F.3d at 79, which states that “[w]hile it may be
the case that many users will not bother reading the terms,
that is the choice the user makes; the user is still on inquiry
notice.”
      Plaintiffs do not challenge this finding on appeal. Their
failure to do so waives any assertion of error. See Murphy v.
DirecTV, Inc., 724 F.3d 1218, 1225 n.4 (9th Cir. 2013) (“The
district court found that Plaintiffs received the Customer
Agreement containing the arbitration provision, and were
bound by the contract, even if they did not read
it. . . . Plaintiffs did not argue in their Opening Brief that
they did not ‘assent to arbitration,’ and therefore they have
waived this argument.”).
    As for Arcilla, the district court found that the Running
Warehouse website provided sufficient information to put
him on inquiry notice. We agree. First, the website provided
reasonably conspicuous notice of the Terms. See Berman,
30 F.4th at 856. Running Warehouse uses a “browsewrap
agreement[], in which a website offers terms that are
16           PATRICK V. RUNNING WAREHOUSE, LLC

disclosed only through a hyperlink and the user supposedly
manifests assent to those terms simply by continuing to use
the website.” Id. (internal quotation marks omitted). To be
conspicuous, a browsewrap agreement “must be displayed
in a font size and format such that the court can fairly assume
that a reasonably prudent Internet user would have seen it.”
Id.
    Here, Running Warehouse includes explicit notice on the
final order review page, directly below key information such
as the purchase total, and directly below the button Arcilla
tapped to complete his purchase. The notice is on an
uncluttered page and is not hidden or obscured. The notice
is clear and legible, and the hyperlinked phrase “terms of
use” is colored bright green—contrasted against the
surrounding white background and adjacent black text.
Moreover, the “terms of use” hyperlink is the same color as
other clickable links on the page, suggesting clearly that it is
a hyperlink.
    Relying principally on our decision in Berman, Plaintiffs
argue that the hyperlinked terms of use do not provide
sufficiently conspicuous notice.          Their argument is
unavailing. The website here is distinguishable from that
reviewed in Berman: in Berman, the text disclosing the
existence of the terms and conditions was “printed in a tiny
gray font considerably smaller than the font used in the
surrounding website elements, and indeed in a font so small
that it is barely legible to the naked eye.” Id. at 856–57. As
previously explained, that is not the case here. That the links
are not blue, underlined, or capitalized does not undercut the
district court’s conclusion that Running Warehouse
provided Arcilla with “reasonably conspicuous notice” of
the Terms. See id. at 856.
             PATRICK V. RUNNING WAREHOUSE, LLC              17

    Second, Arcilla manifested assent to the Terms by
clicking the “Place Order” button to complete his purchase.
See id. at 857 (“A user’s click of a button can be construed
as an unambiguous manifestation of assent only if the user
is explicitly advised that the act of clicking will constitute
assent to the terms and conditions of an agreement.”). Here,
Running Warehouse indicates clearly that, by submitting an
order, the consumer “confirms [he is] 18 years of age or
older and agree[s] to our privacy policy and terms of use.”
Plaintiffs do not meaningfully challenge assent on appeal.
    Accordingly, the district court did not err in finding that
Plaintiffs had sufficient notice of the arbitration provision.
II. The Arbitration Provision is Not Invalid Under
    McGill.
   Under California law, a clause prohibiting a party from
seeking public injunctive relief is invalid and unenforceable.
See McGill, 393 P.3d at 87. As the Supreme Court of
California has observed:

       [The McGill rule] is not a defense that applies
       only to arbitration or that derives its meaning
       from the fact that an agreement to arbitrate is
       at issue. . . . [A] provision in any contract—
       even a contract that has no arbitration
       provision—that purports to waive, in all fora,
       the statutory right to seek public injunctive
       relief under the [Unfair Competition Law],
       the [Consumers Legal Remedies Act], or the
       false advertising law is invalid and
       unenforceable under California law.

Id. at 94 (second emphasis added).
18            PATRICK V. RUNNING WAREHOUSE, LLC

    The district court properly found that McGill does not
apply because the arbitration provision does not prohibit
public injunctive relief in all fora. Contracts permitting
public injunctive relief in some fora but not others do not
violate McGill. See Blair v. Rent-A-Ctr., Inc., 928 F.3d 819,
829 (9th Cir. 2019) (“The McGill rule leaves undisturbed an
agreement that both requires bilateral arbitration and permits
public injunctive claims.”).
    Here, the arbitration agreement does not bar the
arbitrator from awarding public injunctive relief (nor does it
address awardable remedies at all). The relevant clause
reads: “All Claims shall be brought solely in the parties’
individual capacity, and not as a plaintiff or class member in
any purported class or representative proceeding.” As the
district court noted, “[t]his language prohibits the consumer
from arbitrating as part of a class or representative
proceeding, but says nothing about the consumer’s ability to
pursue, or the arbitrator’s ability to award, any certain type
of relief.”
    Plaintiffs suggest that the “arbitration clause taken as a
whole prevents [them] from obtaining public injunctive
relief in arbitration.” Plaintiffs cite, for example, the
following two provisions: (1) “No arbitration award or
decision will have any preclusive effect as to issues or claims
in any dispute with anyone who is not a named party to the
arbitration,” and (2) “All Claims shall be brought solely in
the parties’ individual capacity, and not as a plaintiff or class
member in any purported class or representative
proceeding.” But neither provision conflicts with McGill.
The first merely provides that the arbitration award cannot
be used by or against a non-party to establish an issue or
claim in a separate and subsequent proceeding—i.e., the
default rule in California. See Vandenberg v. Sup. Ct., 982
             PATRICK V. RUNNING WAREHOUSE, LLC              19

P.2d 229, 240 (Cal. 1999) (“[A] private arbitration award . . .
can have no collateral estoppel effect in favor of third
persons unless the arbitral parties agreed . . . that such a
consequence should apply.”). The second does not bar the
arbitrator from awarding public injunctive relief. Under
California law, “[a] plaintiff requesting a public injunction
files the lawsuit ‘on his or her own behalf’ and retains sole
control over the suit.” Blair, 928 F.3d at 829 (quoting
McGill, 393 P.3d at 92). To implicate McGill, the arbitration
provision must also “prohibit the arbitrator from awarding
relief that would affect those other than [p]laintiff.” Maynez
v. Walmart, Inc., 479 F. Supp. 3d 890, 899 (C.D. Cal. 2020).
No such prohibition exists here.
    Finally, Plaintiffs argue that “arbitration clauses
containing these or substantially similar provisions violate
the McGill rule,” citing various district court decisions such
as Jialu Wu v. iTalk Glob. Commc’ns, Inc., No. CV 20-7150,
2020 WL 8461696, at *5 (C.D. Cal. Oct. 21, 2020)
(invalidating arbitration provision stating “No arbitrator may
award relief outside the limits set herein. . . . [A]ll claims
shall be in Customer’s individual capacity and that
Customer will not commence or join any class or
consolidating Customer’s claim with the claims of any
person or persons”). However, as the district court found, in
each of the cited cases, “the arbitration clause contained an
explicit term providing that the arbitrator could grant only
individual relief.” Again, no such provision exists here. The
district court did not err by finding that the arbitration
agreement is not invalid under McGill.
III. The Arbitration Clause was Not Unconscionable.
   Plaintiffs next claim that the district court erred by not
considering     both     substantive       and     procedural
20           PATRICK V. RUNNING WAREHOUSE, LLC

unconscionability and ask that we remand the action for
further proceedings to determine whether the Terms are
procedurally unconscionable.
    “The unconscionability of an arbitration agreement is a
question of law that [courts] review de novo, applying
general principles of California contract law to determine the
agreement’s enforceability.” Nunez v. Cycad Mgmt. LLC,
291 Cal. Rptr. 3d 921, 926 (Cal. Ct. App. 2022) (quoting
Dougherty v. Roseville Heritage Partners, 260 Cal. Rptr. 3d
580, 588 (Cal. Ct. App. 2020)). Section 2 of the FAA
“permits arbitration agreements to be declared
unenforceable ‘upon such grounds as exist at law or in equity
for the revocation of any contract.’” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (quoting 9 U.S.C.
§ 2). “This saving clause permits agreements to arbitrate to
be invalidated by generally applicable contract defenses,
such as fraud, duress, or unconscionability . . . .” Id.
(internal quotation marks omitted); see also Sonic-
Calabasas A, Inc. v. Moreno, 311 P.3d 184, 201 (Cal. 2013)
(“[A]fter Concepcion, unconscionability remains a valid
defense to a petition to compel arbitration.”).
    Under California law, a contract or contract clause that
is both procedurally and substantively unconscionable is
unenforceable. Sanchez v. Valencia Holding Co., 353 P.3d
741, 748 (Cal. 2015).           Substantive and procedural
unconscionability “need not be present in the same degree.
Essentially a sliding scale is invoked . . . . In other words,
the more substantively oppressive the contract term, the less
evidence of procedural unconscionability is required to
come to the conclusion that the term is unenforceable, and
vice versa.” Id. (internal quotation marks omitted) (quoting
Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d
669, 690 (Cal. 2000)). “Substantive unconscionability
                  PATRICK V. RUNNING WAREHOUSE, LLC                    21

addresses the fairness of the term in dispute.” Szetela v.
Discover Bank, 118 Cal. Rptr. 2d 862, 867 (Cal. Ct. App.
2002).
     The district court correctly found that the “mere
presence” of a unilateral modification clause 3 does not
render the arbitration clause, a separate provision,
substantively unconscionable. “Because § 2 of the FAA
states that an agreement to arbitrate is ‘valid, irrevocable,
and enforceable,’ and does not address ‘the validity of the
contract in which it is contained,’ the United States Supreme
Court has held that ‘a party’s challenge to another provision
of the contract, or to the contract as a whole, does not prevent
a court from enforcing a specific agreement to arbitrate.’”
Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1032 (9th Cir.
2016) (quoting Rent-A-Center, W., Inc. v. Jackson, 561 U.S.
63, 70–71 (2010)). “In other words, if the plaintiff does not
specifically and directly challenge the precise agreement to
arbitrate at issue, a court must treat the arbitration agreement
as valid under § 2 and enforce it, thereby letting the arbitrator
decide questions as to the validity of other provisions in the
first instance.” Id. (cleaned up). “This rule applies even

3
    The clause states:
           We reserve the right to change or modify the terms and
           conditions that govern your use of the Website,
           Services and this Agreement at any time as provided
           herein, with or without notice to you, at our discretion.
           You are responsible for ensuring we have an up-to-
           date active and deliverable email address for you, and
           for periodically visiting the Website to see the current
           Agreement in effect and any changes that may have
           been made to it. Your use of the Website and Services
           following any such change constitutes your agreement
           to follow and be bound by the terms and conditions as
           changed.
22            PATRICK V. RUNNING WAREHOUSE, LLC

when the plaintiff challenges the contract on ‘a ground that
directly affects the entire agreement (e.g., the agreement was
fraudulently induced), or on the ground that the illegality of
one of the contract’s provisions renders the whole contract
invalid.’” Id. (quoting Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 444 (2006)). “Given this
precedent, our authority to review portions of the contract
outside the arbitration provision is limited.” Id.
     Here, Plaintiffs argue that “the unilateral modification
clause, which gives . . . Defendants the ‘unilateral right to
amend terms with no notice to users[,] presents at least some
substantive unconscionability.’” But as the district court
explained, “the unilateral modification clause does not make
the arbitration provision itself unconscionable.” Id. at 1033.
“California courts have held that the implied covenant of
good faith and fair dealing prevents a party from exercising
its rights under a unilateral modification clause in a way that
would make it unconscionable.” Id.
    Plaintiffs read Tompkins more narrowly, suggesting that
the court held only that the unilateral modification provision
does not render an arbitration agreement per se
unconscionable—i.e., leaving open the door that there is “at
least some substantive unconscionability” by its mere
presence in the contract. We disagree. In Tompkins, the
district court concluded that “although the arbitration
provision was procedurally unconscionable, it was not
substantively unconscionable and therefore was enforceable
under California law.” Id. at 1021. Under Plaintiffs’ reading
of the case, the panel should have remanded the case back to
the district court to apply the sliding-scale test (i.e., because
there would exist both procedural and substantive
unconscionability). Instead, we affirmed. Id. at 1033 (“We
conclude that under principles established by recent
             PATRICK V. RUNNING WAREHOUSE, LLC              23

California Supreme Court decisions, California’s common
law rule of unconscionability does not provide a basis to
revoke the arbitration agreement in the Terms of Service
here.”). Thus, Tompkins instructs that the presence of a
unilateral modification provision, without more, does not
render a separate arbitration clause at all substantively
unconscionable. Accordingly, Plaintiffs’ argument fails.
IV. The Parties Agreed to Delegate the Threshold
    Question of Arbitrability.
    While the general rule is that a district court decides
whether a claim falls within the scope of an arbitration
agreement, such questions “can be expressly delegated to the
arbitrator where the [contracting] parties clearly and
unmistakably provide otherwise.” Brennan v. Opus Bank,
796 F.3d 1125, 1130 (9th Cir. 2015) (internal quotation
marks omitted). When the parties do so, “a court may not
override the contract” and has “no power to decide the
arbitrability issue.” Henry Schein, Inc. v. Archer & White
Sales, Inc., 139 S. Ct. 524, 529 (2019).
    Courts have found that parties clearly delegated
arbitrability where they incorporated an arbitrator’s
arbitration rules in the agreement. For instance, “[v]irtually
every circuit to have considered the issue has determined
that incorporation of the American Arbitration Association’s
(AAA) arbitration rules constitutes clear and unmistakable
evidence that the parties agreed to arbitrate arbitrability.”
Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1074
(9th Cir. 2013).
    Here, the district court determined that, “[b]y agreeing to
an arbitration provision that incorporates JAMS Rules, and
particularly in light of the language of JAMS Rule 11(b), the
Court finds that the parties clearly and unmistakably
24           PATRICK V. RUNNING WAREHOUSE, LLC

delegated the question of arbitrability to JAMS.” See id.
The Terms require arbitration “pursuant to . . . the
commercial arbitration rules and procedures of JAMS, Inc.”
and direct consumers to “visit http://www.jamsaadr.com”
via a provided hyperlink for “more information on JAMS
and/or [its] rules.” Rule 11(b) of JAMS requires in relevant
part that:

       [J]urisdictional and arbitrability disputes,
       including disputes over the formation,
       existence, validity, interpretation or scope of
       the agreement under which Arbitration is
       sought, and who are the proper parties to the
       Arbitration, shall be submitted to and ruled
       on by the Arbitrator. The Arbitrator has the
       authority to determine jurisdiction and
       arbitrability issues as a preliminary matter.

    Although our circuit has not previously, in a published
opinion, extended Brennan’s rationale to the incorporation
of the JAMS rules, we agree with the district court and do so
here. Accord Belnap v. Iasis Healthcare, 844 F.3d 1272,
1279 (10th Cir. 2017) (“We conclude that by incorporating
the JAMS Rules into the Agreement, [the parties] evidenced
a clear and unmistakable intent to delegate questions of
arbitrability to an arbitrator.”); Cooper v. WestEnd Cap.
Mgmt., L.L.C., 832 F.3d 534, 546 (5th Cir. 2016); Emilio v.
Sprint Spectrum L.P., 508 F. App’x 3, 5 (2d Cir. 2013)
(summary order). Incorporation of the JAMS arbitration
rules by reference constitutes clear and unmistakable
evidence that the parties agree to arbitrate arbitrability.
   Plaintiffs argue that reference to the arbitrator’s rules
does not mandate delegation of the issue of arbitrability
                PATRICK V. RUNNING WAREHOUSE, LLC                         25

since they are unsophisticated parties. 4 Brennan involved an
employment contract between two sophisticated parties. See
796 F.3d at 1130–31. Our circuit has not yet decided
whether Brennan’s holding should extend to arbitration
clauses in consumer contracts between a sophisticated entity
and an average unsophisticated consumer. See Eiess v.
USAA Fed. Sav. Bank, 404 F. Supp. 3d 1240, 1252 (N.D.
Cal. 2019) (“The issue of whether the sophistication of the
contracting parties should be taken into account in
evaluating whether a delegation to an arbitrator is clear and
unmistakable is an open one in the Ninth Circuit.”).
However, as Defendants observe, Plaintiffs offered no
evidence concerning their sophistication or lack thereof to
the district court. Accordingly, we need not decide the issue
in order to resolve this case.
                           CONCLUSION
   For the foregoing reasons, the district court’s order
granting Defendants’ motions to compel arbitration and
dismissing without prejudice Plaintiffs’ individual and
putative class claims in the related actions is AFFIRMED.

4
  In their reply briefs, Plaintiffs argue for the first time that even if the
Terms’ reference to JAMS was sufficient to delegate the issue of
arbitrability, the delegation clause is nevertheless unenforceable because
the Terms fail to comply with JAMS’s own rules. Defendants move to
strike this section of Plaintiffs’ reply briefs on the grounds that it is
entirely new argument based on non-record evidence. Plaintiffs’
argument is waived, as Plaintiffs did not raise it before the district court
or in their opening brief. See Meyer v. Portfolio Recovery Assocs., LLC,
707 F.3d 1036, 1044 (9th Cir. 2012); Smith v. Marsh, 194 F.3d 1045,
1052 (9th Cir. 1999). Defendants’ motions to strike are denied as moot.