Williams v. Eaze Solutions, Inc.
417 F.Supp.3d 1233
N.D. Cal.2019Background
- Plaintiff Farrah Williams signed up for Eaze’s marijuana delivery app in September 2017 and clicked to accept Eaze’s hyperlinked terms of service (a clickwrap agreement).
- The terms of service included a binding arbitration clause, a class-action waiver, and incorporation of the AAA Commercial Arbitration Rules and Supplementary Consumer Procedures; the dispute-resolution section states the FAA governs arbitration.
- Williams alleges Eaze sent unsolicited autodialed text messages in violation of the TCPA and seeks to litigate as a class action.
- Williams argues no enforceable contract formed because the contract’s object—facilitating marijuana distribution—is unlawful under federal law; she contends that makes the agreement void under California law.
- Eaze moved to compel arbitration; the court requested supplemental briefing on Buckeye Check Cashing, Inc. v. Cardegna and related FAA delegation/severability issues.
- The court granted Eaze’s motion to compel arbitration and dismissed the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing law for arbitration (FAA vs. California law) | California law governs; choice-of-law clause selects California | FAA applies because terms state FAA governs and the transaction affects interstate commerce | FAA governs arbitration; FAA clause controls the arbitration provision |
| Whether a contract formed given alleged unlawful object (marijuana business) | No contract was formed because the contract lacked a lawful object under Cal. Civ. Code § 1550 | Clickwrap created a valid contract; even if contract is tainted, Buckeye makes arbitration clause severable and arbitrability goes to arbitrator | Under Buckeye and California law, illegality renders the contract unenforceable but arbitration provisions are severable; arbitrator to decide validity of the agreement as a whole |
| Who decides arbitrability (delegation clause) | Delegation clause challenged lightly (Williams notes AAA links may have been broken) | Delegation clause and incorporation of AAA rules constitute clear and unmistakable delegation of arbitrability to arbitrator | Delegation clause is valid and enforceable; incorporation of AAA rules is clear evidence of delegation; arbitrator decides arbitrability |
| Challenge to delegation clause or unconscionability | Asserts various objections (fees, scope), but did not specifically attack delegation clause | No specific challenge to delegation clause; defects in link to AAA rules irrelevant | Because plaintiff did not specifically challenge the delegation clause, the court enforces it and declines to reach unconscionability; issues go to arbitrator |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (arbitration provisions severable from contract; arbitrator decides validity when contract alleged void for illegality)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (party must specifically challenge delegation clause for courts to decide it)
- Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015) (incorporation of AAA rules is clear and unmistakable evidence of delegation)
- Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069 (9th Cir. 2013) (courts generally decide gateway issues unless parties clearly delegate arbitrability)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (procedural questions of arbitration are for arbitrator when parties agreed)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA’s purpose is to enforce arbitration agreements according to their terms)
- Gonzales v. Raich, 545 U.S. 1 (U.S. 2005) (purely intrastate marijuana activity may substantially affect interstate commerce)
- Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (U.S. 2003) ("involving commerce" under the FAA construed broadly)