57 F.4th 677
9th Cir.2023Background
- Plaintiff Kevin Johnson bought tires on Walmart.com and assented to Walmart.com Terms of Use, which include a broad arbitration clause.
- While his tires were installed at a Walmart Auto Care Center, Johnson separately purchased a lifetime tire balancing and rotation Service Agreement in-store.
- Johnson received one service in 2019 but was later denied service multiple times at Walmart Auto Care Centers in several states.
- He filed a putative class action for breach of the Service Agreement (breach of contract and breach of the covenant of good faith and fair dealing).
- Walmart moved to compel arbitration under the online Terms of Use; the district court denied the motion, finding the Terms govern "access to and use of Walmart Sites" and do not cover in‑store purchases.
- The Ninth Circuit affirmed, holding the existence of an arbitration agreement covering the in‑store Service Agreement was contested, the presumption in favor of arbitration did not apply, and the online Terms did not govern the separate in‑store contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Johnson agreed to arbitrate disputes arising from the in‑store Service Agreement by assenting to the Walmart.com Terms of Use | Johnson: He never consented to arbitrate the in‑store Service Agreement; Terms govern only online site use | Walmart: Johnson accepted a broad arbitration clause online that covers all disputes "relating to" the relationship with Walmart, including the in‑store purchase | Held: No; existence of an arbitration agreement covering the in‑store purchase is contested and Walmart did not prove assent for that contract |
| Whether the Terms of Use apply to in‑store transactions | Johnson: Terms expressly govern access/use of Walmart Sites only | Walmart: The arbitration clause language is broad and independent of the site‑use restrictions | Held: Terms are limited by their introductory language to Walmart Sites and do not extend to the in‑store Service Agreement |
| Whether the online tire purchase and the in‑store Service Agreement are "interrelated contracts" so arbitration in one carries over to the other | Johnson: The contracts are separate—different formation, consideration, and performance | Walmart: The transactions are part of an ongoing series and thus interrelated | Held: Contracts are separate; arbitration in the online contract does not encompass the separate in‑store agreement |
| Standard and burden for compelling arbitration when formation is disputed | Johnson: Formation of an agreement to arbitrate must be proven by defendant | Walmart: N/A (moves to compel) | Held: Walmart bears burden to prove by a preponderance that Johnson agreed to arbitrate; where formation is contested, courts apply state contract‑interpretation rules and do not apply pro‑arbitration presumption |
Key Cases Cited
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (discussing enforceability of arbitration agreements).
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (FAA mandates arbitration where parties agreed).
- Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) (two‑step FAA inquiry: existence and scope).
- Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733 (9th Cir. 2014) (presumption in favor of arbitration does not apply to disputes over formation).
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (arbitration is strictly a matter of consent).
- Int’l Ambassador Programs, Inc. v. Archexpo, 68 F.3d 337 (9th Cir. 1995) (when separate contracts are interrelated, arbitration may carry over).
- Knutson v. Sirius XM Radio Inc., 771 F.3d 559 (9th Cir. 2014) (movant bears burden to show agreement to arbitrate by preponderance).