Court Opinion

ID: 9840428
Source: CourtListenerOpinion
Date Created: 2023-09-18 16:00:46.36016+00
Date Added: 2024-06-11T10:46:27.025654
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                          SEP 18 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

LENA EVANS; RONI SHEMTOV;                       No.    22-15979
SHBADAN AKYLBEKOV,
                                                D.C. No. 5:22-cv-00248-BLF
                Plaintiffs-Appellants,

 v.                                             MEMORANDUM*

PAYPAL, INC.,

                Defendant-Appellee.

                   Appeal from the United States District Court
                       for the Northern District of California
                  Beth Labson Freeman, District Judge, Presiding

                          Submitted September 14, 2023**
                             San Francisco, California

Before: S.R. THOMAS, FORREST, and MENDOZA, Circuit Judges.

      Appellants (collectively “Evans”) appeal the district court’s order

compelling arbitration and dismissing the case. We have jurisdiction under

28 U.S.C. § 1291, Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
(9th Cir. 2014), and we affirm.

      1. The district court did not err in limiting the length of Evans’s opposition

to the motion to compel arbitration. First, Evans failed to contest the district

court’s order striking the original opposition; thus, the argument is waived. See G

& G Prods. LLC v. Rusic, 902 F.3d 940, 950 (9th Cir. 2018) (“A party’s

unexplained failure to raise an argument that was indisputably available below is

perhaps the least ‘exceptional’ circumstance warranting our exercise of . . .

discretion.”). Even if we consider Evans’s argument, it still fails. Evans could

have sought leave of court to exceed the 10-page limit but did not. See Standing

Order re Civil Cases § IV.A.4. Moreover, a district court has significant discretion

in managing its docket and may issue standing orders concerning motion practice.

See Christian v. Mattel, Inc., 286 F.3d 1118, 1129 (9th Cir. 2002).

      2. The district court correctly granted the motion to compel arbitration.

First, the district court properly held that the arbitration agreement covers the

dispute. Evans’s argument that PayPal failed to sufficiently demonstrate that the

plaintiffs entered into the User Agreement is meritless. PayPal produced a PayPal

employee’s declaration describing the process by which each plaintiff signed up

for his or her PayPal account (including a screenshot of a checkbox assenting to

the User Agreement that must be selected, as well as a button stating “agree and

create account”). Under both California and Delaware law, mutual assent

                                           2
manifests when an internet user accepts this type of “clickwrap” agreement. See

Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175–76 (9th Cir. 2014); Doe v.

Massage Envy Franchising, LLC, No. CV S20C-05-005RFS, 2020 WL 7624620,

at *2 (Del. Super. Ct. Dec. 21, 2020) (“Clickwrap agreements are routinely

recognized by courts and are enforceable under Delaware law.”). Based on the

undisputed PayPal employee declaration, the district court did not err in holding

that the agreement to arbitrate covers the dispute.

      Second, the district court correctly held that the arbitration agreement was

valid and enforceable. Under the User Agreement, Delaware law applies. Federal

courts sitting in diversity look to the law of the forum state—here, California—

when making choice-of-law determinations. Nguyen, 763 F.3d at 1175 (citing

Hoffman v. Citibank (S.D.), N.A., 546 F.3d 1078, 1082 (9th Cir. 2008) (per

curiam)). California “has no public policy against the enforcement of choice-of-

law provisions,” Washington Mutual Bank, FA v. Superior Court, 24 Cal. 4th 906,

917 (2001), and, in fact, there is a “strong public policy in favor of arbitration,”

Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev., LLC, 55 Cal. 4th 233, 235

n.4 (2012). The district court correctly held that Delaware law applies.

      Delaware courts generally assess whether an agreement is unconscionable

under two headings: procedural unconscionability and substantive

unconscionability. See James v. Nat’l Fin., LLC, 132 A.3d 799, 815 (Del. Ch.

                                           3
2016). The district court correctly determined that the User Agreement is not

unconscionable.

      Here, the User Agreement is not procedurally unconscionable, because a

contract of adhesion alone is insufficient. See AT&T Mobility LLC v. Concepcion,

563 U.S. 333, 346–47 (2011). Under Delaware law, “mere disparity between the

bargaining power of parties to a contract will not support a finding of

unconscionability.” Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 912

(Del. 1989); see also James, 132 A.3d at 832 (“[T]he fact that an agreement is a

contract of adhesion is not sufficient, standing alone, to render an agreement

unconscionable.”). Evans has not shown procedural unconscionability where

PayPal users can opt-out of the Arbitration Agreement, see Mikkilineni v. PayPal,

Inc., No. N19C-05-1243 PRW, 2021 WL 2763903, at *12 (Del. Super. Ct. July 1,

2021), and have alternative means for transferring money electronically such that

they do not lack “meaningful choice,” Ketler v. PFPA, LLC, 132 A.3d 746, 748

(Del. 2016).

      Further, the User Agreement lacks substantive unconscionability. Under

Delaware law, “[t]he concept of substantive unconscionability tests the substance

of the exchange.” James, 132 A.3d at 815. Evans argues that (1) a forum selection

clause renders the provisions unconscionable, (2) the seizure of funds shocks the

conscience, (3) the class action waiver violates California’s public policy, (4) the

                                          4
arbitration fees can greatly exceed the cost of litigation, and (5) various issues of

non-mutual collateral estoppel and indemnification.

      All these arguments are unavailing. One, there is no forum selection clause.

Two, Evans’s argument about the consequences of the liquidated damages

provisions goes to the heart of the dispute, not to the threshold question of who

should hear the dispute. As the district court properly noted, “under the FAA, on

this motion to compel the Court may only examine ‘issues relating to the making

and performance of the agreement to arbitrate,’ not the underlying merits of the

dispute.” Evans v. PayPal, Inc., No. 22-cv-00248-BLF, 2022 WL 1813993, at *6

(N.D. Cal. Jun. 2, 2022) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co.,

388 U.S. 395, 404 (1967)). Three, the class action waiver, valid under the FAA,

does not contravene California public policy. See Concepcion, 563 U.S. at 352;

Hodges v. Comcast Cable Commc’ns, LLC, 21 F.4th 535, 542 (9th Cir. 2021)

(holding that “public injunctive relief within the meaning of McGill is limited to

forward-looking injunctions that seek to prevent future violations of law for the

benefit of the general public as a whole”). Four, PayPal’s promise to advance

arbitration fees for claims under $10,000 does not amount to use of a superior

bargaining power “to take unfair advantage of another” party. Fleck v. Moore, No.

98-08-069, 1999 WL 1847435, at *3 (Del. Ct. Com. Pl. Jan. 29, 1999). Five,

Evans cites no case law to support the proposition that because the arbitration

                                           5
agreement does not allow for non-mutual collateral estoppel, the agreement grants

“unreasonably favorable terms” to PayPal. Progressive Int’l Corp. v. E.I. Du Pont

de Nemours & Co., No. C.A. 19209, 2002 WL 1558382, at *11 n.46 (Del. Ch. Jul.

9, 2002) (cleaned up). The district court correctly determined that the bi-lateral

arbitration agreement is not substantively unconscionable.

      Because the Arbitration Agreement is neither procedurally nor substantively

unconscionable, the district court did not err in granting the motion to compel

arbitration and dismissing the lawsuit.

      AFFIRMED.

                                          6