Lardizabal v. The Vanguard Group, Inc., 2:24-cv-01577

Plaintiffs, California residents, brought a class action suit against The Vanguard Group, alleging that its website’s Online Terms of Use unlawfully restrict consumers’ rights to make negative statements about Vanguard, in violation of California Civil Code § 1670.8.
The Online Terms of Use apply to all users of the Vanguard website and require agreement not to disparage Vanguard or its products/services.
Plaintiffs argued these terms act as a consumer waiver, invalid under California law, and sought relief on behalf of all similarly situated Californians who used or visited the site.
Defendant moved to dismiss, arguing that the Online Terms of Use are not a contract for the sale or lease of goods or services, which is a threshold requirement for § 1670.8 claims.
Plaintiffs filed the suit in California state court; Vanguard removed it to federal court, whereupon it was transferred to the Eastern District of Pennsylvania.
The court, analyzing the pleadings, dismissed the action for failure to allege that the Online Terms of Use are a qualifying contract under § 1670.8, but allowed for the possibility of amendment if claims could be brought under the Brokerage Account Agreement and not subject to arbitration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Online Terms of Use are a contract for sale/lease of consumer goods/services under § 1670.8	The terms are part of a broader consumer contract involving access and use of financial products.	The terms govern mere use of the website, not the purchase/sale of goods or services.	Not a qualifying contract; § 1670.8 does not apply.
Whether the terms unlawfully waive consumers' rights to criticize	Terms restrict users from making negative statements about Vanguard or using its marks disparagingly.	No platform exists for user comments and no true waiver of rights is present in site usage terms.	Insufficient pleading to show rights were waived.
Whether plaintiffs have standing under § 1670.8	Plaintiffs are website users subject to the challenged terms and thus within the protected class.	Plaintiffs neither made nor attempted negative statements, nor were they penalized for doing so.	Plaintiffs outside the statutory zone of interest.
Whether failure to allege attempted enforcement or penalty defeats claim under § 1670.8(a)(2)	Just the existence (or threat) of the provision is unlawful; enforcement is not required to violate statute.	Plaintiffs do not allege enforcement or threats thereof as required under the statute.	No enforcement alleged; claim fails.

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard for motion to dismiss)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for Rule 12(b)(6))
Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S. 519 (U.S. 1983) (foundation for pleading requirements under Rule 8)