Court Opinion

ID: 4204564
Source: CourtListenerOpinion
Date Created: 2017-09-19 20:01:12.12283+00
Date Added: 2024-06-11T09:50:47.036536
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            SEP 19 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ALLEN WISELEY, individually and on               No.   15-56799
behalf of all others similarly situated,
                                                 D.C. No.
              Plaintiff-Appellant,               3:15-cv-00096-BAS-DHB

 and
                                                 MEMORANDUM*
ANDREA FAGERSTROM,

              Plaintiff,

 v.

AMAZON.COM, INC., a Delaware
Corporation,

              Defendant-Appellee.

                    Appeal from the United States District Court
                       for the Southern District of California
                    Cynthia A. Bashant, District Judge, Presiding

                       Argued and Submitted August 30, 2017
                               Pasadena, California

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: W. FLETCHER and IKUTA, Circuit Judges, and BARKER,** District
Judge.

      Allen Wiseley appeals from the district court’s order granting Amazon’s

motion to compel arbitration. We have jurisdiction under 9 U.S.C. § 16(a)(3).

      The Conditions of Use (COU) created a valid contract between Amazon and

its customers, as Wiseley conceded. Applying California’s approach to

determining the enforceability of the choice-of-law provision in the COU, see

Restatement (Second) of Conflict of Laws § 187(2)(b); Nedlloyd Lines, B.V. v.

Superior Court, 3 Cal. 4th 459, 466 (1992), we conclude that Washington law

applies here. Wiseley fails to explain how California’s consumer protection

statutes are more protective than Washington’s consumer protection statutes;

rather, Washington’s and California’s consumer protection laws and protections

against unconscionable contracts appear to be substantially similar. See Davis v.

O’Melveny & Myers, 485 F.3d 1066, 1079 n.6 (9th Cir. 2007), overruling on other

grounds recognized by Ferguson v. Corinthian Coll., Inc., 733 F.3d 928, 937 (9th

Cir. 2013); Al-Safin v. Circuit City Stores, Inc., 394 F.3d 1254, 1261 (9th Cir.

2005). Therefore, applying Washington law is not contrary to a fundamental

policy of California law. While California’s sliding-scale approach to

      **
            The Honorable Sarah Evans Barker, United States District Judge for
the Southern District of Indiana, sitting by designation.
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unconscionability, see Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1243–44

(2016), might hypothetically invalidate some contracts that would be upheld under

Washington’s single-prong approach, see Gandee v. LDL Freedom Enters. Inc.,

176 Wash. 2d 598, 603 (2013), the reverse is also true. Moreover, any distinction

does not bear on this case, as we would reach the same result under California law.

      While the COU are adhesive in nature, adhesion is insufficient to support a

finding of procedural unconscionability under Washington law, Zuver v. Airtouch

Commc’ns, Inc., 153 Wash. 2d 293, 304 (2004), and creates only a minimal degree

under California law. See Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1261–62

(9th Cir. 2017); Baltazar, 62 Cal. 4th at 1245. No additional indicia of procedural

unconscionability are present.

      The notices on Amazon’s checkout and account registration pages, which

alerted Wiseley that clicking the corresponding action button constituted

agreement to the hyperlinked COU, were in sufficient proximity to give him a

“reasonable opportunity to understand” that he would be bound by additional

terms. Zuver, 153 Wash. 2d at 304 (quoting Shroeder v. Fageol Motors, Inc., 86

Wash. 2d 256, 260 (1975)). Wiseley conceded before the district court that there

was sufficient notice to create a valid contract, and neither California nor

Washington allows a party to escape contract obligations if it had actual or

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constructive notice. See Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1176,

1179 (9th Cir. 2014) (applying California law); W. Consultants, Inc. v. Davis, 177

Wash. App. 33, 41 (2013).

      There is no procedural unconscionability in the presentation of the

arbitration clause itself, which appears in the same size font as the rest of the COU,

with key terms bolded. Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899,

914 (2015) (explaining that any “obligation to highlight the arbitration clause of

[the] contract . . . would be preempted by the [Federal Arbitration Act]”).

      Nor does the incorporation by reference of the American Arbitration

Association’s (AAA) rules create procedural unconscionability. See Poublon, 846

F.3d at 1262; Baltazar, 62 Cal. 4th at 1246; cf. Woodward v. Emeritus Corp., 192

Wash. App. 584, 593, 595, 607 (2016) (holding that a similar provision referencing

the AAA rules “effectively incorporates the Rules by reference”). Although

Wiseley argues that it was unclear which rules would apply, he had a “reasonable

opportunity to understand,” see Zuver, 153 Wash. 2d at 304 (quoting Shroeder, 86

Wash. 2d at 260), that the Consumer Arbitration Rules would apply in the context

of his consumer purchases, and he could call the provided phone number to resolve

any lingering uncertainty. While the AAA renamed the Supplementary Procedures

for Consumer-Related Disputes in 2014, this does not render the reference

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ambiguous or misleading in the version of the COU that applied when Wiseley

made his purchases in 2012 and 2013.

      Wiseley’s three arguments for substantive unconscionability also lack

merit.1 First, the unilateral modification clause does not render the arbitration

provision substantively unconscionable because Amazon is limited by the implied

covenant of good faith and fair dealing.2 See Tompkins v. 23andMe, Inc., 840 F.3d

1016, 1033 (9th Cir. 2016) (applying California law); cf. Rekhter v. Dep’t of Soc.

& Health Servs., 180 Wash. 2d 102, 112–13 (2014) (holding that the duty of good

faith limits a party’s unilateral discretion to determine a contract term).

      Second, the arbitration clause’s exemption of intellectual property claims for

injunctive relief does not make the provision overly harsh or one-sided. Under

Washington law, a provision that “gives [one party] alone the option of requiring

arbitration” is not substantively unconscionable, so whether one party is more

likely to bring such claims is immaterial. Satomi Owners Ass’n v. Satomi, LLC,

167 Wash. 2d 781, 815–16 (2009). Even if Amazon is more likely to bring

      1
       Because Wiseley has shown only a minimal degree of procedural
unconscionability under California law, a high degree of substantive
unconscionability is required under the sliding-scale approach. See Poublon, 846
F.3d at 1263.
      2
        Since the enforceability of provisions outside the arbitration clause is a
question for the arbitrator, we address unilateral modification only as it applies to
the arbitration clause. Tompkins, 840 F.3d at 1032.
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intellectual property claims than its consumers, California law grants Amazon “an

extra ‘margin of safety’ based on legitimate business needs.” See Tompkins, 840

F.3d at 1031 (quoting Baltazar, 62 Cal. 4th at 1250).

      Finally, the attorneys’ fees provision does not create substantive

unconscionability because it mirrors Washington’s statutory right to attorneys’ fees

for frivolous claims. Wash. Rev. Code § 4.84.185. To the extent the provision is

unilateral, Washington law automatically converts it to a bilateral provision that

would afford Wiseley the same right. See id. § 4.84.330; McKee v. AT & T Corp.,

164 Wash. 2d 372, 400 (2008). The fees provision also complies with California

law, which permits Amazon to seek fees as a sanction for frivolous claims. See

Poublon, 846 F.3d at 1268. Further, Wiseley has not shown that the overall

arbitration fee scheme “would be unaffordable or would have a substantial

deterrent effect in [his] case.” Sanchez, 61 Cal. 4th at 920 (2015).

AFFIRMED.

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