Case Information
1
2
3 UNITED STATES DISTRICT COURT
4 NORTHERN DISTRICT OF CALIFORNIA 5 6 MICHAEL TEMPEST, et al., Case No. 24-cv-06553-JSC
7 Plaintiffs, 8 ORDER RE: MOTION TO COMPEL v. ARBITRATION 9 Re: Dkt. No. 33 SAFEWAY, INC., Defendant.
Plaintiffs, members of Safeway, Inc.’s rewards program, seek to represent a class of Safeway Rewards members who purchased wine advertised at a members-only price. (Dkt. No. 30-1 ¶ 83.) Plaintiffs allege Safeway “deceives its customers by offering false discounts on its wine prices when, in fact, Safeway’s sale prices are not temporary at all but are instead Safeway’s price of the wine that is always available to every consumer as part of its free [rewards] program available at checkout.” (Dkt. No. 30-1 ¶ 29.) Now pending before the Court is Safeway’s motion to compel arbitration. Having carefully considered the parties’ submissions, and with the benefit of oral argument on July 3, 2025, the Court DENIES Safeway’s motion to compel arbitration. On the record before the Court, no reasonable trier of fact could find Plaintiffs formed an agreement to arbitrate with Safeway.
BACKGROUND
I. COMPLAINT ALLEGATIONS
Plaintiffs Michael Tempest, LaDiamond Harvey, Sarah McGregor Horner, Brionna Brouhard, Kerry McCarty, Hillary Beam, and Christopher Lundt are residents of California, Oregon, and the District of Columbia. ( ¶¶ 8-14.) All are members of Safeway’s “free membership rewards program for customers, Safeway Rewards,” also referred to as “Safeway for U.” ( Id. ¶ 19.) “Members are eligible to receive purported price discounts on products available for purchases in-store as long as they use their account number at checkout.” ( Id. ¶ 21.)
Plaintiffs рurchased wine that “was advertised as marked down from a reference price, as a time-limited discount promotion for Safeway Rewards members.” ( Id. ¶ 45.) Plaintiffs believed they were “buying wine at a temporary discounted sale price and had therefore saved money on the purchase by making it during the time-period for the sale that Safeway consistently included in its shelf advertising.” ( Id. ¶ 46.) In fact, Plaintiffs were “not actually buying wine at lower prices than ordinarily offered—as the wine is аlways offered at the discount price to all consumers (who can become members at check out for free).” ( Id. ¶ 34.)
II. PROCEDURAL HISTORY
Plaintiffs filed suit in September 2024. (Dkt. No. 1.) In November 2024, Safeway moved to compel arbitration. (Dkt. No. 20.) The Court granted the parties’ stipulation permitting Plaintiffs to file an amended complaint, (Dkt. No. 26), which Plaintiffs did. (Dkt. No. 27.) Plaintiffs subsequently filed the operative second amended complaint (“SAC”). (Dkt. No. 30.) They bring claims on behalf of a putative nationwide class and California, Orеgon, and D.C. subclasses alleging violations of (1) California False Advertising Law, (2) California Unfair Competition Law, (3) California Consumer Legal Remedies Act, (4) Oregon Unlawful Trade Practices Act, and (5) District of Columbia Consumer Protection Procedures Act. ( Id. at 26-38.) Plaintiffs also allege breach of contract, unjust enrichment, and fraud. ( at 31-34.)
In April 2025, Safeway moved to dismiss the SAC and to compel arbitration. (Dkt. Nos.
32, 33.)
III. RELEVANT FACTS RE: TERMS OF USE
“In May 2024, all Safeway for U members were sent an e-mail notifying them that the applicable Terms of Use had been updated as of May 6, 2024.” (Dkt. No. 33-1 ¶ 3.) The email’s subject line read “We’ve Updated our Terms of Use.” (Dkt. No. 33-4 at 2.) The body of the email included the following language: “Our Terms of Use contain important information about your relationship with us, including that disputes between us will be arbitrated, instead of class actions of jury trials.” ( ) As pictured below, the email contained a link to “View Terms of Use”: ( ) Greg Borup—the Director of Customer & Merchandising Insights at Albertson’s Companies, Inc., a parent company of Safeway—reviewed Albertson’s business records. (Dkt. No. 33-1 ¶¶ 1-2.) He attests the email described above “was successfully delivered to the email address . . . associated with an account belonging to Michael Tempest, on May 9, 2024. There was no error with transmission of the Email to the subject email address.” ( Id. ¶ 4.) Mr. Borup submits the same attestation for the other plaintiffs, stating the email was successfully delivered to Ms. Harvey, Ms. McGregor Horner, Ms. Brouhard, Ms. McCarty, Ms. Beam, and Mr. Lundt between May 7 and May 9, 2024. ( ¶¶ 5-10.)
“By clicking anywhere within the hyperlink box, the user is automatically directed to the Terms of Use,” which begin in bold font with notice of the arbitration provision:
ATTENTION: THESE TERMS OF USE CONTAIN A MANDATORY ARBITRATION PROVISION THAT, AS FURTHER ADDRESSED IN SECTION 24 BELOW AND OUR DISPUTE RESOLUTION TERMS REQUIRES THE USE OF ARBITRATION ON AN INDIVIDUAL BASIS TO RESOLVE DISPUTES. THIS MEANS THAT YOU AND THE COMPANY (AS DEFINED BELOW) ARE EACH GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT OR IN CLASS ACTIONS OF ANY KIND. IN ARBITRATION, THERE IS NO JUDGE OR JURY. ((Dkt. No. 33-2 ¶ 11; Dkt. No. 33-3 at 2.) Section 24, in turn, states “all claims arising from or related to your account, access to or use of the company’s services, [and] purchases from the company” are subject to dispute resolution terms that “contain procedures that apply to mass arbitration” “unless you oрt out or another section applies.” ( Id. at 10.) The terms proceed to describe the opt-out process. Customers can opt out of the arbitration provision “within 30 days of their first purchase from the Company after the date of the Terms of Use (that date being May 6, 2024)” by going to a specified link or sending written notice. (Dkt. No. 33-2 ¶¶ 18-19.)
Kevin Michael, the Director of Loyalty & Division Support at Albertson’s, submitted a declaration stating none of the plaintiffs opted out of the arbitration provision within the time period provided. ( Id. ¶¶ 1, 21.) “The first time Mr. Tempest made a purchase after the May 2024 Update was May 9, 2024.” ( Id. ¶ 24.) The first purchases for Ms. Harvey, Ms. McGregor Horner, Ms. Brouhard, Ms. McCarty, Ms. Beam, and Mr. Lundt were between May 7 and May 12, 2024. ( Id. ¶¶ 25-30.) No plaintiff opted out by their respective deadlines of June 6 through June 11, 2024. ( ¶¶ 24-30.) Plaintiffs attest they were “made aware through Safeway’s November 12, 2024 motion to compel arbitration of Safeway’s May 6, 2024 email and that Safeway had changed its terms and conditions.” (Dkt. No. 40-1 ¶ 4.) At the direction of thеir counsel, Plaintiffs searched their email inboxes. Three of them found the email from Safeway. (Dkt. No. 40-2 ¶ 9 (Ms. Harvey found the email in her “promotions inbox”); Dkt. No. 40-3 ¶ 9 (Ms. McGregor Horner found the email in her “junk folder”); Dkt. No. 40-7 ¶ 10 (Mr. Lundt “found an email from Safeway”).) Mr. Tempest, Ms. Brouhard, and Ms. McCarty were “not able to find any emails from Safeway or Albertsons from May 2024 regarding the terms and conditions for the Safeway for U rewards membership.” (Dkt. No. 40-1 ¶ 9; Dkt. No. 40-4 ¶ 9; Dkt. No. 40-5 ¶ 9.) Ms. Beam “ha[s] not used the email address associated with [her] Safeway for U account in at least 10 years” and “do[es] not have the password for that email address anymore.” (Dkt. No. 40-6 ¶¶ 8-9.)
On November 15, 2024, Plaintiffs sent letters opting out of arbitration. [1] (Dkt. Nos. 40-1 ¶
7; 40-2 ¶ 7; 40-3 ¶ 7; 40-4 ¶ 7; 40-5 ¶ 7; 40-6 ¶ 7.) Although Plaintiffs became Safeway Rewards members between 2009 and 2021 (Dkt. Nos.
40-1 ¶ 2; 40-2 ¶ 2; 40-3 ¶ 2; 40-4 ¶ 2; 40-5 ¶ 2; 40-6 ¶ 2; 40-7 ¶ 2), the record does not contain any
evidence as to what, if anything, each plaintiff agreed to during the sign-up process. Safeway
submitted its terms of use as of May 6, 2024, in which Safeway “reserve[s] the right to make
changes to these Terms at any time, and such changes will be effective immediately upon being
posted on the Sites. . . . Your continued access to or use of your Account or the Services
constitutes your acceptance of the current Terms.” (Dkt. No. 33-3 at 3.) But Safeway provides no
evidence as to its terms in 2009, 2010, 2012, 2013, and 2021—the years Plaintiffs became
Safeway Rewards members. In its reply in support of its motion to compel, Safeway cites a
District of Arizona case in which Safeway’s November 2022 terms оf use—provided as an exhibit
in that case—contained similar language regarding modification.
Ehrmantraut v. Safeway Inc.
,
transaction involving commerce.” 9 U.S.C. § 2. Such agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” In resolving a motion to compel arbitration under the FAA, a court’s inquiry is limited to two “gateway” issues: “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses thе dispute at issue.” Lim v. TForce Logistics, LLC , 8 F.4th 992, 999 (9th Cir. 2021) (quotation marks omitted). “If both conditions are met, the FAA requires the court to enforce the arbitration agreement in accordance with its terms.” (cleaned up).
Plaintiffs do not dispute Safeway’s assertion the FAA governs their agreement. Regarding the second gateway issue, Plaintiffs do not challenge Safeway’s assertion the agreement encompasses the dispute at issue. The parties’ disagreement pertains to the first gateway issue: whether а valid agreement to arbitrate exists. Safeway argues “Plaintiffs all received the Email notifying them of the terms” and afterwards, “continued to make purchases in which they sought and received the benefits of their loyalty accounts, thereby manifesting assent to the Terms.” (Dkt. No. 33 at 19.) Plaintiffs respond “Safeway’s one-way email notice did not create an enforceable contract requiring arbitration.” (Dkt. No. 40 at 11.)
I. EXISTENCE OF AGREEMENT
The existence of an arbitration agreement is a question fоr the Court, not an arbitrator.
See Knutson v. Sirius XM Radio Inc.
,
“In determining whether the parties have agreed to arbitrate a particular dispute, federal courts apply state-law principles of contract formation.” Patrick v. Running Warehouse, LLC , 93 F.4th 468, 476 (9th Cir. 2024). Under California law, “the vital elements of a cause of action based on contract are mutual assent (usually accomplished through the medium of an offer and acceptance) and consideration.” [2] Aton Ctr., Inc. v. United Healthcare Ins. Co ., 93 Cal. App. 5th 1214, 1231 (2023) (cleaned up). To put it another way, “there must be actual or constructive notice” of the contract offer “and the parties must manifest mutual assent.” Oberstein , 60 F.4th at 512–13. The Court begins with whethеr Plaintiffs had notice of the arbitration offer, then turns to manifestation of mutual assent.
A. Notice of Safeway’s Arbitration Offer
1. Actual Notice The record is undisputed Plaintiffs lacked actual notice, that is, knowledge, of the existence of Safeway’s offer to enter into an arbitration agreement. Each plaintiff attests they were “made aware through Safeway’s November 12, 2024 motion to compel arbitration of Safeway’s May 6, 2024 email and that Safeway had changed its terms and conditions.” (Dkt. Nos. 40-1 ¶ 5; 40-2 ¶ 5; 40-3 ¶ 5; 40-4 ¶ 5.) As Safeway does not identify аny evidence that disputes each plaintiff lacked actual notice, it is undisputed no plaintiff had actual notice of Safeway’s email offer. All the record establishes is that Safeway emailed the offers to each plaintiff and no plaintiff read the email offer prior to their respective first Safeway purchase after May 6, 2024. 2. Constructive Notice
So, the next question is whether Plaintiffs had constructive notice, that is constructive knowledge, of Safeway’s arbitration offеr before their first Safeway purchase after May 6, 2024. Safeway does not cite, and this Court is not aware, of any case holding that a consumer has constructive notice of an arbitration offer based solely on an email of which the consumer is unaware.
The cases upon which Safeway relies are very different from the undisputed facts here.
For the most part they involve “clickwrap” and “browsewrap” agreements on websites.
“Clickwrap” refers to an agreement where “a website presents users with specified contractual
terms on a pop-up screen and users must check a box explicitly stating ‘I agree’ in order to
proceed.”
Oberstein
,
constructive notice of a website’s content. Since the record is undisputed Plaintiffs never saw the
May 2024 email Safeway relies on for notice purposes, it matters not whether the email’s font was
size 6 or size 24, whether the hyperlinks were blue or grey, or whether the body of the email was
one or ten paragraphs long. The clickwrap and browsewraр cases are wholly inapposite.
Safeway insists courts “have consistently enforced online agreements sent forth via email.”
(Dkt. No. 33 at 19.) But in none of those district court cases did the plaintiff present evidence they
had no knowledge of the email containing the arbitration offer.
See Ghazizadeh v. Coursera, Inc.
,
[T]he Court’s ruling here is based on the facts and arguments
presented before it. The Court is not opining that, in any instance in
which a defendant sends an email giving notice of updated terms
and a plaintiff continues to use the defendant’s serviсe, the inquiry
notice test has been satisfied. Indeed, the Court can see potential
problems with a defendant relying on notice via email (problems
aside from whether the email gave reasonably conspicuous notice of
the terms of use). For example, was the email in fact received, or
was the email shunted into a spam folder? Is there evidence that the
plaintiff actually saw the email?
email .” Id. at 1096 (emphasis added). The defendant “provided only a declaration with a vague statement that a notice of updated terms was sent via email.” Id. at 1100. “Given [the defendant’s] limited proffer,” the court “could not evaluate whether the email (assuming it was received at all) sufficed to provide individualized notice.” at 1100. The Ninth Circuit’s focus on receipt of the email suggests that when a defendant updates its terms of service via email, as Safeway did here, whether the consumer actually receives the email, that is, is aware of the email, is relevant for notice purposes. Further, in Jackson, the record cоntained evidence of the original terms the plaintiffs had agreed to, which stated they were “responsible for reviewing this Agreement regularly to stay informed of any modifications.” at 1095. Again, here, Safeway offers no evidence as to how Plaintiffs signed up for Safeway Rewards, including evidence as to what were the terms of use, if any, they agreed to at that time, let alone evidence Plaintiffs agreed Safeway could update its terms of use at any time. [3] So, Safeway’s еvidence the emails were “successfully delivered” does not meet its burden to show contract formation or even create a genuine dispute as to contract formation.
Safeway also argues Plaintiffs’ ongoing relationship with Safeway somehow establishes
constructive notice of Safeway’s offer. According to Safeway, that Plaintiffs have shopped at
Safeway for years means Plaintiffs had notice Safeway could change its terms via emаil and so
Plaintiffs are bound by emails Safeway sent containing new terms. But, again, Safeway does not
offer any evidence of the terms of use, if any, Plaintiffs agreed to when they signed up for
Safeway Rewards; so, there is no evidence Plaintiff had notice Safeway could change its terms via
email. And, there is no evidence Safeway ever sent any plaintiff any email other than the May 6,
2024 email. Safeway’s reliance on
Oberstein
is misplaced.
Oberstein
involved a website
agreement in which “users [were] prеsented with a confirmation button above which text
inform[ed] the user that, by clicking on this button, ‘you agree to our Terms of Use.’”
Id.
at 515.
The Ninth Circuit “agree[d] with the district court that a reasonable user would have seen the
notice and been able to locate the Terms via hyperlink.” at 516. Regarding the context of the
transaction, the court distinguished a California Court of Appeal case in which the plaintiffs “were
merely attempting to start a free trial, making it less likely that they would ‘sсrutin[ize] the page
for small text outside the payment box or at the bottom of the screen linking them to 26 pages of
contractual terms.’” (quoting
Sellers v. JustAnswer LLC
,
In
Oberstein
and
Sellers
, the context of the transaction informed how closely users wеre
expected to scrutinize website agreements.
See Sellers
,
Moreover, in “considering the context of the transaction” here, see Oberstein , 60 F.4th at 516 (cleaned up), it is relevant that most of the рlaintiffs signed up to become Safeway Rewards members in person at Safeway stores, (Dkt. Nos. 40-1 ¶ 2; 40-2 ¶ 2; 40-3 ¶ 2; 40-4 ¶ 2; 40-5 ¶ 2; 40-6 ¶ 2), whereas notice of the arbitration offer was provided via email. The discrepancy between in-person sign-up and email notice further undermines Safeway’s argument that an “out of the blue” email created sufficient notice in this case. *** So, Safeway has not met its burden of establishing actual or constructive notice of its offer or its terms as a matter of law. Further, drаwing all reasonable inferences from the evidence in Safeway’s favor, no reasonable trier of fact could find Plaintiffs had actual or constructive notice
of Safeway’s email offer or its terms.
B. Manifestation of Assent
“Mutual assent requires, at a minimum, that the party relying on the contractual provision
establish that the other party had notice and gave some indication of assent to the contract.”
Jackson
,
Safeway argues that by “continuing to shop at Safeway after receiving” the May 2024
notice, Plaintiffs “manifested repeated assent to the terms.” (Dkt. No. 33 at 19.) But it is
undisputed no plaintiff had knowledge of Safeway’s email offer, and Safeway has not established
Plаintiffs can be charged with inquiry notice of the contents of an email Because Safeway has not
established the email provided notice of the arbitration offer, it follows that no reasonable trier of
fact could find Plaintiffs’ subsequent purchases at Safeway manifested assent to Safeway’s offer.
Put another way, given it is undisputed Plaintiffs did not know Safeway made an offer, the Court
cannot conclude as a matter of law Plaintiffs’ conduct constituted accеptance of that offer or that
there is even a genuine dispute on that issue.
See Knutson,
CONCLUSION
arbitration agreement with Safeway, the Court DENIES Safeway’s motion to compel arbitration.
[4]
The Court postpones setting a hearing on Safeway’s motion to dismiss until after Safeway
determines whether it will appeal this order denying the motiоn to compel arbitration.
See
Coinbase, Inc. v. Bielski
,
IT IS SO ORDERED.
Dated: July 16, 2025
JACQUELINE SCOTT CORLEY United States District Judge
Notes
[1] Mr. Lundt, first named as a plaintiff in the SAC, opted out of arbitration on February 11, 2025. 28 (Dkt. No. 40-7 ¶ 7.)
[2] The parties do not argue the application of Oregon or D.C. law affects the result, so the Court 28 focuses it analysis on California law.
[3] At oral argument, Safeway repeatedly lamented that Plaintiffs had not offered any evidence as to 27 the terms of their original participation in the Safeway Rewards program. But Safeway, as the party moving to compel arbitration, bears the sole burden of proving the existence of an agreement 28 to arbitrate.
[4] Having determined no reasonable trier of fact could find Plaintiffs formed an agreement to arbitrate with Safeway, the Court need not address Plaintiffs’ arguments that the arbitration clause is unenforceable and unconscionable.