479 F.Supp.3d 890
C.D. Cal.2020Background
- On April 8, 2019, Maynez purchased an item through Walmart’s mobile app; the checkout page showed: “By clicking Place Order, you agree to Walmart’s Updated Privacy Policy and Terms of Use,” with hyperlinks to those documents immediately above the Place Order button.
- Walmart’s Terms of Use (Section 20) contained a mandatory arbitration clause requiring final, binding, individual arbitration for “all disputes arising out of or related to these Terms of Use or any aspect of the relationship between you and Walmart,” and prohibited class actions; it also stated an arbitrator could award injunctive relief only to the extent necessary to provide relief warranted by the individual claim.
- In May 2019 Maynez used the app to check prices for baby products, then purchased those products in-store after finding in-store prices materially higher than the app-listed prices.
- Maynez filed a putative class action under the UCL, CLRA, and False Advertising Law seeking injunctive relief (no retrospective monetary damages alleged).
- Walmart moved to compel individual arbitration and stay the case; Maynez argued there was no valid agreement to arbitrate (insufficient notice/assent) and that the clause unlawfully waived the right to seek public injunctive relief under California law (McGill).
- The court granted Walmart’s motion: it found Maynez assented to the Terms by placing the order and held the arbitration provision covers the dispute and does not bar public injunctive relief (Walmart conceded the arbitrator may order relief applying to other app users); the case was stayed pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a valid arbitration agreement / assent | Maynez lacked notice and did not assent; she never saw the arbitration provision | Terms were presented at checkout with clear notice; clicking "Place Order" constituted assent | Court: Constructive/inquiry notice and assent found; purchase confirmed assent (clickwrap-like) |
| Scope—does the arbitration clause cover this suit? | Impliedly: the dispute not covered by the arbitration clause | Clause broadly covers “all disputes arising out of or related to these Terms” | Court: Clause covers the dispute alleged in FAC |
| Enforceability under McGill (public injunctive relief waiver) | Clause effectively waives right to seek public injunctive relief in any forum, rendering it unenforceable | Clause does not bar public injunctive relief; arbitrator can issue injunctive relief addressing issues affecting others | Court: After supplemental briefing and Walmart’s concession, clause does not waive public injunctive relief and is enforceable |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA enforces arbitration agreements)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (district courts must send disputes to arbitration when a valid agreement exists)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (questions of arbitrability generally resolved in favor of arbitration)
- Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014) (distinguishes clickwrap and browsewrap and explains inquiry/constructive notice analysis)
- Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015) (court’s gateway inquiry: existence of agreement and whether it covers the dispute)
- McGill v. Citibank, N.A., 2 Cal.5th 945 (2017) (California rule: arbitration provisions that waive the right to seek public injunctive relief are contrary to public policy)
- Blair v. Rent-A-Ctr., Inc., 928 F.3d 819 (9th Cir. 2019) (McGill rule not preempted by FAA; clauses preventing public injunctive relief are unenforceable)