Opinion
Case No. 22-cv-04232-JST
2023-06-01
Shannon HOOPER, Plaintiff, v. JERRY INSURANCE AGENCY, LLC, Defendant.
Scott Adam Edelsberg, Edelsberg Law, PA, Los Angeles, CA, for Plaintiff. John William McGuinness, Alexandra Nicole Krasovec, Cody Austin DeCamp, Manatt, Phelps & Phillips, LLP, Los Angeles, CA, for Defendant.
Scott Adam Edelsberg, Edelsberg Law, PA, Los Angeles, CA, for Plaintiff. John William McGuinness, Alexandra Nicole Krasovec, Cody Austin DeCamp, Manatt, Phelps & Phillips, LLP, Los Angeles, CA, for Defendant.
ORDER GRANTING MOTION TO COMPEL ARBITRATION AND STAYING CASE
Re: ECF No. 22 JON S. TIGAR, United States District Judge
Before the Court is Defendant Jerry Insurance Agency, LLC's motion to compel arbitration and to dismiss or stay this case pending arbitration. ECF No. 22. The Court will grant the motion and stay this case.
I. BACKGROUND
Plaintiff Shannon Hooper alleges that she received unwanted text messages from Jerry in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, and the Florida Telephone Solicitation Act ("FTSA"), Fla. Stat. § 501.059. ECF No. 21 ¶ 5. She brings this case on behalf of herself and two classes of consumers: (1) consumers within the United States who received two or more text messages within any twelve-month period from Jerry regarding its services and (2) Florida consumers who received telephonic sales calls from Jerry regarding its services via the same equipment used to contact Hooper. Id. ¶ 57.
In November 2021, Hooper visited Jerry's website, www.getjerry.com, to receive insurance quotes. Id. ¶ 14. As part of that process, she was prompted to enter her phone number and confirm the verification code sent to her device, as shown in the screenshot below. Id. The following language was displayed just below the "Continue" button: "By clicking 'Continue' you agree to receive a 4-digit code from Jerry to verify this phone number, updates about Jerry products, the Jerry Terms of Use, and Privacy Policy." The text "Terms of Use" and "Privacy Policy" were in bright pink font. The screen advised at the top that "Jerry won't spam you with unwanted calls."
Image materials not available for display. Id.
"Terms of Use" was a hyperlink to a twelve-page Terms of Use, which included the following arbitration clause under the heading of "Dispute Resolution":
Any dispute or claim relating in any way to your use of the Jerry Services will be resolved by binding arbitration, rather than in court, except that you may assert claims in small claims court if your claims qualify. The Federal Arbitration Act and federal arbitration law apply to this Agreement . . . . The arbitration will be conducted in Santa Clara, California, by the American Arbitration Association (AAA) under its rules, including the AAA's Consumer Arbitration Rules. The AAA's rules are available at www.adr.org or by calling 1-800-778-7879 . . . .ECF No. 23 at 19.
We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action.
After providing her phone number, clicking "Continue," and confirming the verification code sent to her device, Hooper answered an insurance quote questionnaire on Jerry's website. ECF No. 23 at 6. She then received an initial text message from Jerry regarding her quote, to which she responded that she wanted to keep her current policy. ECF No. 21 ¶ 24. Hooper alleges that, in providing her phone number, she did not consent to the receipt of automated text messages regarding Jerry's services. Id. ¶¶ 49-50. However, between November 12 and December 8, 2021, she received twelve text messages from Jerry advertising its services. Id. ¶ 25. Jerry did not provide Hooper with instructions on how she could opt out of future solicitations in these text messages. Id. ¶ 31.
Jerry now moves to compel arbitration of Hooper's individual claims and argues that her class claims are barred by the Terms of Use. The company seeks dismissal or a stay of this case pending arbitration.
II. JURISDICTION
The Court has jurisdiction under 28 U.S.C. § 1331 and 28 U.S.C. § 1367.
III. LEGAL STANDARD
The Federal Arbitration Act ("FAA") applies to written contracts "evidencing a transaction involving commerce." 9 U.S.C. § 2. The parties agree that the FAA governs the contract at issue in this case. Under the FAA, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." Id. This provision reflects "both a liberal federal policy favoring arbitration, and the fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quotation marks and citations omitted).
On a motion to compel arbitration, the Court's role under the FAA is "limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). In determining whether an arbitration agreement exists, "district courts rely on the summary judgment standard of Rule 56 of the Federal Rules of Civil Procedure." Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 670 (9th Cir. 2021). Thus:
In considering a motion to compel arbitration which is opposed on the ground that no agreement to arbitrate was made, a district court should give to the opposing party the benefit of all reasonable doubts and inferences that may arise. Only when there is no genuine issue of material fact concerning the formation of an arbitration agreement should a court decide as a matter of law that the parties did or did not enter into such an agreement.Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (citations omitted) (cited with approval in Hansen, 1 F.4th at 670). If the court "concludes that there are genuine disputes of material fact as to whether the parties formed an arbitration agreement, the court must proceed without delay to a trial on arbitrability and hold any motion to compel arbitration in abeyance until the factual issues have been resolved." Hansen, 1 F.4th at 672. If a valid arbitration agreement exists, "the party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).
If the court is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Where the claims alleged in a complaint are subject to arbitration, the Court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." Id. § 3. "[N]otwithstanding the language of § 3, a district court may either stay the action or dismiss it outright when . . . all of the claims raised in the action are subject to arbitration." Johnmohammadi v. Bloomingdale's, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014).
IV. DISCUSSION
A. Existence of Contract to Arbitrate
The parties first dispute whether Hooper and Jerry formed a contract to arbitrate. Such "challenges to the very existence of the contract are, in general, properly directed to the court." Kum Tat Ltd. v. Linden Ox Pasture, LLC, 845 F.3d 979, 983 (9th Cir. 2017). This is because "arbitration is a matter of contract and a party cannot be required to submit any dispute which [it] has not agreed so to submit." AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)).
The parties agree that California law applies to the question of contract formation in this case. ECF No. 22 at 16-17; ECF No. 25 at 8-10. To form a contract under California law, there must be "actual or constructive notice of the agreement" and a "manifest[ation of] mutual assent." Oberstein v. Live Nation Ent., Inc., 60 F.4th 505, 512-13 (9th Cir. 2023). The party seeking to compel arbitration has the burden to prove, by preponderance of the evidence, that a contract to arbitrate exists. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 413, 58 Cal.Rptr.2d 875, 926 P.2d 1061 (1996)).
Jerry does not attempt to show that Hooper had actual notice of the Terms of Use. To determine whether Hooper had constructive notice, the Court must consider "the design and content of the website and the agreement's webpage." Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1177 (9th Cir. 2014). "[A]n enforceable agreement may be found where '(1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms.' " Oberstein, 60 F.4th at 515 (quoting Berman v. Freedom Fin. Network, LLC, 30 F.4th 849, 856 (9th Cir. 2022)).
1. Reasonably Conspicuous Notice
For an online notice to be reasonably conspicuous, it "must be displayed in a font size and format such that the court can fairly assume that a reasonably prudent Internet user would have seen it." Id. (quoting Berman, 30 F.4th at 856). "[C]onsumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound." Nguyen, 763 F.3d at 1179. Thus, if there is a hyperlink, "the fact that a hyperlink is present must be readily apparent." Berman, 30 F.4th at 857.
Hooper first alleges that the notice in this case was not reasonably conspicuous because it is in a "tiny light font," while the surrounding text is in "comparatively larger font." ECF No. 21 ¶¶ 16-17. She further alleges that the "overall design of the webpage" draw users' attention away from the "barely readable" notice. Id. ¶¶ 19. Based on the screenshot of Jerry's website, id. ¶ 14, the Court disagrees. Despite Hooper's characterizations, the notice text is plainly readable. The dark grey text contrasts clearly with the white background and is "conspicuously displayed directly . . . below the action button." Oberstein, 60 F.4th at 516. In addition, the webpage is "uncluttered and wholly visible," as it consists only of a field for a phone number, the "Continue" button, and the text referring to the Terms of Use. Peter v. DoorDash, Inc., 445 F. Supp. 3d 580, 586 (N.D. Cal. 2020). The cases relied on by Hooper are distinguishable. E.g., Daschbach v. Rocket Mortg., No. 22-cv-346-JL, 2023 WL 2599955, at *8-9 (D.N.H. March 22, 2023) (holding that the notice text was not reasonably conspicuous because the user had to scroll down to see the remainder of the fine print, which was in a "small size and gray font . . . set against a lighter gray background mak[ing] it particularly challenging to read"); Lopez v. Dave Inc., No. 22-cv-04160-VC, 2022 WL 17089824, at *1 (N.D. Cal. Nov. 21, 2022) (holding that the notice text was not reasonably conspicuous because it was in tiny font, in comparison to the large action button, and a cartoon bear drew users' attention away from the notice).
Courts have held that notices akin to that on Jerry's webpage are reasonably conspicuous. For example, in Meyer v. Uber Technologies, Inc., the Second Circuit held that Uber's registration process afforded users sufficient notice of its terms and conditions under California law. 868 F.3d 66, 78 (2d Cir. 2017). The screen was "uncluttered" with only a field for credit card information and a "Register" button; the text "appear[ed] directly below the buttons for registration"; and "[t]he entire screen [wa]s visible at once," such that the user did "not need to scroll beyond what [wa]s immediately visible to find notice of the Terms of Service." Id. Though the text was "in small font, the dark print contrast[ed] with the bright white background, and the hyperlinks [we]re in blue and underlined." Id. Similarly, in Peter v. DoorDash, this Court held that the notice was reasonably conspicuous where, despite the plaintiff's characterization of the notice's font as "gray-on-gray," the text actually "contrast[ed] clearly with the background"; the webpage was "uncluttered"; and the notice text appeared in close proximity to the action button. 445 F. Supp. 3d at 586.
Hooper argues that the "Terms of Use" hyperlink is not reasonably conspicuous because Jerry "simply provides hyperlinks to the Terms of Use and nothing more," and that "simply highlighting" a hyperlink is insufficient. ECF No. 25 at 12-13 (citing Berman, 30 F.4th at 857). In Berman, the Ninth Circuit explained that "[s]imply underscoring words or phrases . . . will often be insufficient to alert a reasonably prudent user that a clickable link exists." 30 F.4th at 857 (emphasis added). "Underscore" can mean to underline or, more generally, to emphasize or stress. Underscore, Merriam-Webster's Collegiate Dictionary (11th ed. 2020). Hooper appears to interpret "underscore" to mean "generally emphasize," but reading the quoted sentence from Berman in context makes clear that the court intended "underscore" to mean "underline." The court explained that "[a] web designer must do more than simply underscore" text to alert a user to the presence of a hyperlink and suggested that "use of a contrasting font color (typically blue) and the use of all capital letters" can accomplish that goal. Berman, 30 F.4th at 857. This would be nonsensical if the court intended to hold that emphasizing a hyperlink, rather than underlining it with nothing more, may be insufficient.
Jerry's "Terms of Use" hyperlink appears in bright pink font, in contrast to the surrounding gray font. ECF No. 21 ¶ 14. This is sufficient to "set apart" the hyperlink from the rest of the text. Berman, 30 F.4th at 857 (quoting Sellers v. JustAnswer LLC, 73 Cal. App. 5th 444, 487, 289 Cal.Rptr.3d 1 (2021)). As the Ninth Circuit recently held, it is sufficient for a "Terms of Use" hyperlink to be "written in bright blue font, distinguishing it from the surrounding text." Oberstein, 60 F.4th at 516-17; see also Oberstein v. Live Nation Ent., Inc., No. CV 20-3888-GW-GJSx, 2021 WL 4772885, at *2 (C.D. Cal. Sept. 20, 2021), aff'd, 60 F.4th 505 (9th Cir. 2023) (underlying district court decision with screenshot, showing that "Terms of Use" appears in blue, non-underlined font). Other courts, including this one, have similarly held that a different font color is sufficient to make a hyperlink reasonably conspicuous even if the hyperlink is neither underlined nor capitalized. E.g., Houtchens v. Google, LLC, 649 F. Supp. 3d 933, 939-42 (N.D. Cal. Jan. 6, 2023); Peter, 445 F. Supp. 3d at 586-87; DeVries v. Experian Info. Sols., Inc., No. 16-cv-02953-WHO, 2017 WL 733096, at *2, *6-7 (N.D. Cal. Feb. 24, 2017).
The cases on which Hooper relies are distinguishable because the hyperlinks found to be not reasonably conspicuous were in a smaller font, not set apart in a different color, or both. E.g., Treinish v. iFit Inc., No. CV 22-4687-DMG, 2023 WL 2230431, at *4 C.D. Cal. Feb. 2, 2023 (hyperlinks, although underlined, were displayed in a smaller font that was the same color as the rest of the surrounding text); Brooks v. IT Works Marketing, Inc., No. 1:21-cv-01341-DAD-BAK, 2022 WL 2079747, at *6 (E.D. Cal. June 9, 2022) ("Terms of Use" was "a tiny grey hyperlink displayed against a slightly lighter grey background and located in the very bottom left corner of each webpage" and contained no "customary design elements" such as "contrasting font color"); Sellers, 73 Cal. App. 5th at 481, 289 Cal.Rptr.3d 1 ("Terms of Use" was in "extremely small print," and although the hyperlink was underlined, it was not "set apart . . . such as with blue text or capital letters"). Thus, such cases are inapposite.
For the above reasons, the Court concludes that Jerry's webpage provided reasonably conspicuous notice of the Terms of Use that contained the arbitration provision.
Hooper also relies on the following statement from Berman to argue that the notice in this case was not conspicuous: "[E]ven close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice." 30 F.4th at 858 (quoting Nguyen, 763 F.3d at 1179). However, the something "more" is related to the issue of assent, not the conspicuousness of the notice. Immediately following the quoted statement, the Berman court stated: "Rather, the notice must explicitly notify a user of the legal significance of the action she must take to enter into a contractual agreement." Id. Similarly, in Nguyen, the full quote is as follows:
[W]here a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.763 F.3d at 1178-79 (emphasis added). Thus, the Court considers whether Jerry did something "more" when evaluating whether Hooper provided an unambiguous manifestation of assent, and not as part of the reasonably conspicuous analysis.
2. Unambiguous Manifestation of Assent
"A user's click of a button can be construed as an unambiguous manifestation of assent only if the user is explicitly advised that the act of clicking will constitute assent to the terms and conditions of an agreement." Oberstein, 60 F.4th at 515 (quoting Berman, 30 F.4th at 857). "[A]ll that is required" is that the text of the notice "explicitly alert the user that by . . . proceeding to the next page, the user 'agrees to our Terms of Use.' " Id. However, a defendant's "misrepresentation as to the . . . essential terms of a proposed contract" can prevent contract formation if it "induces conduct that appears to be a manifestation of assent by one who neither knows nor has a reasonable opportunity to know of the character or essential terms of the proposed contract." Rosenthal, 14 Cal. 4th at 420, 58 Cal.Rptr.2d 875, 926 P.2d 1061 (emphasis in original) (quoting Restatement (Second) of Contracts § 163 (1981)). The party seeking to invalidate contract formation on the basis of fraud "bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense [of fraud]." Id. at 413, 58 Cal.Rptr.2d 875, 926 P.2d 1061.
Hooper also relies on this section from the Restatement (Second) of Contracts. ECF No. 25 at 15-16.
Hooper argues that no contract was formed because Jerry procured her assent by mispresenting that her phone number would be used for identity verification purposes and to provide custom quotes, and that she would not be spammed with unwanted calls. She also alleges that Jerry did not "adequately call attention" to the Terms of Use or that she was agreeing to be bound by them. ECF No. 21 ¶ 21.
Even assuming that Jerry made misrepresentations, Hooper cannot demonstrate that she was fraudulently induced into entering the contract. Hooper does not contend that she did not know the true terms of the contract as contained in the Terms of Use. Nor does she contend that she did not have a reasonable opportunity to know the true terms of the contract. "Fraud in the execution most often arises where some limitation—such as blindness, illness, or illiteracy—prevents a party from reading or understanding a contract he or she is about to sign." Munoz v. Patel, 81 Cal. App. 5th 761, 775, 297 Cal.Rptr.3d 574 (2022). Absent such limitations, Hooper's failure to read the Terms of Use does not support voiding the contract. Pizarro v. QuinStreet, Inc., No. 22-cv-02803-MMC, 2022 WL 3357838, at *4 (N.D. Cal. Aug. 15, 2022) (holding that the plaintiff failed to prove her assent was procured through misrepresentations because she failed to demonstrate that she both did not know the true terms and did not have a reasonable opportunity to learn of the terms). Regardless of whether Jerry's webpage contained "falsely and fraudulently made" assurances, "[i]t is generally unreasonable, in reliance on such assurances, to neglect to read a written agreement before signing it." Rosenthal, 14 Cal. 4th at 424, 58 Cal.Rptr.2d 875, 926 P.2d 1061.
The design and content of the website also support finding assent. Jerry explicitly informs customers of the legal significance of providing a phone number and choosing to continue on the site. The website states, in clear text just below, and on the same screen as, the "Continue" button: "By clicking 'Continue' you agree to receive a 4-digit code from Jerry to verify this phone number, updates about Jerry products, the Jerry Terms of Use and Privacy Policy." ECF No. 21 ¶ 14. This is precisely the type of language that the Ninth Circuit has suggested is sufficient. In Berman, for example, the court held that the "notice defect could easily have been remedied by including language such as, 'By clicking the Continue>> button, you agree to the Terms & Conditions.' " 30 F.4th at 858. Likewise, in Oberstein, the notice stated, "By continuing past this page, you agree to the Terms of Use." 60 F.4th at 515-16. The Ninth Circuit held that such language "explicitly alert[ed] the user that by . . . proceeding to the next page, the user 'agrees to our Terms of Use.' " Id. at 517.
The language on Jerry's website adequately informed Hooper that she would be agreeing to the Terms of Use by clicking on the "Continue" button, which she does not dispute she did. She has also presented no evidence indicating that she lacked a reasonable opportunity to review the written terms of the agreement. Hooper therefore unambiguously manifested her assent to the Terms of Use, of which Jerry provided reasonably conspicuous notice. Consequently, Jerry and Hooper formed a contract to arbitrate.
B. Enforceability of Arbitration Agreement
Hooper does not contest that her individual claims are covered by the scope of the arbitration agreement or that the agreement bars class claims. However, she argues that the arbitration agreement is unenforceable because it prevents her from seeking public injunctive relief in violation of McGill v. Citibank, N.A., 2 Cal. 5th 945, 216 Cal.Rptr.3d 627, 393 P.3d 85 (2017). In McGill, the plaintiff sought "an injunction prohibiting Citibank from continuing to engage in its allegedly illegal and deceptive practices" related to the operations and marketing of its credit protector plan. Id. at 953, 216 Cal.Rptr.3d 627, 393 P.3d 85. Citibank's arbitration agreement only permitted relief to be awarded on an individual basis and required all claims to be brought in arbitration. Id. at 952, 216 Cal.Rptr.3d 627, 393 P.3d 85. The California Supreme Court held that the arbitration provision was "invalid and unenforceable because it waives [McGill's] right to seek public injunctive relief in any forum." Id. at 954, 216 Cal.Rptr.3d 627, 393 P.3d 85.
1. Delegation of Arbitrability
Jerry argues that the arbitrator, and not this Court, must decide whether the McGill rule applies. "[P]arties can agree to arbitrate 'gateway' questions of 'arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-85, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002)). The applicability of McGill is one such "gateway issue that may be delegated to the arbitrator." Marselian v. Wells Fargo & Co., 514 F. Supp. 3d 1166, 1176 (N.D. Cal. 2021). "Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, so the question 'who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter." First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (emphasis in original) (citations omitted). Whether the Court or the arbitrator decides arbitrability is "an issue for judicial determination unless the parties clearly and unmistakably provide otherwise." Howsam, 537 U.S. at 83, 123 S.Ct. 588 (alteration omitted) (quoting AT&T Techs., 475 U.S. at 649, 106 S.Ct. 1415). "Clear and unmistakable evidence of an agreement to arbitrate arbitrability 'might include . . . a course of conduct demonstrating assent . . . or . . . an express agreement to do so.' " Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (ellipses in original) (quoting Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011)).
Jerry argues that the Terms of Use's incorporation of rules by the American Arbitration Association provides the requisite clear and unmistakable evidence in this case. The Terms of Use provide that "[t]he arbitration will be conducted in Santa Clara, California, by the American Arbitration Association (AAA) under its rules, including AAA's Consumer Arbitration Rules." ECF No. 23 at 19. In turn, the AAA's rules expressly provide, "The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim." AAA Consumer Arb. R. R-14(a) (available at http://www.adr.org/sites/default/files/Consumer-Rules-Web_0.pdf).
Jerry mistakenly argues that the Terms of Use incorporated the AAA Commercial Arbitration Rules. ECF No. 22 at 14 & n.5.
The Ninth Circuit has held that "incorporation of the AAA rules constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability." Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). However, after noting that "[t]he issue of the sophistication of the parties was raised at oral argument" and explaining that "[o]ur holding today should not be interpreted to require that the contracting parties be sophisticated or that the contract be 'commercial' before a court may conclude that incorporation of the AAA rules constitutes 'clear and unmistakable' evidence of the parties' intent," the court "limit[e]d [its] holding to the facts of the present case, which do involve an arbitration agreement 'between sophisticated parties.' " Id. at 1131 (quoting Oracle Am., Inc., v. Myriad Group A.G., 724 F.3d 1069, 1075 & n.2 (9th Cir. 2013)). The Ninth Circuit stated that its holding did "not foreclose the possibility that this rule could also apply to unsophisticated parties or to consumer contracts," but it explicitly left that question open. Id. at 1130-31.
Jerry does not contest that Hooper is unlike the sophisticated plaintiffs in either Brennan or Oracle—an "experienced attorney and businessman," id. at 1131, and a large corporation, respectively—but urges the Court to follow those courts that have applied Brennan's holding in cases involving unsophisticated parties. E.g., Diaz v. Intuit, Inc., No. 5:15-cv-01778-EJD, 2017 WL 4355075, at *3 (N.D. Cal. Sept. 29, 2017); Cordas v. Uber Techs., Inc., 228 F. Supp. 3d 985, 992 (N.D. Cal. 2017). However, "[w]here at least one party is unsophisticated, judges in this district routinely find that the incorporation of the AAA rules is insufficient to establish a clear and unmistakable agreement to arbitrate arbitrability." Magill v. Wells Fargo Bank, N.A., No. 4:21-cv-01877 YGR, 2021 WL 6199649, at *5 (N.D. Cal. June 25, 2021) (citing Eiess v. USAA Fed. Sav. Bank, 404 F. Supp. 3d 1240, 1253 (N.D. Cal. 2019); Ingalls v. Spotify USA, Inc., No. 16-0353 WHA, 2016 WL 6679561, at *3-4 (N.D. Cal. Nov. 14, 2016)). This Court has twice before declined to extend Brennan to a case involving an unsophisticated party, and Jerry has not persuaded the Court to reach a contrary result here. Meadows v. Dickey's Barbecue Rests. Inc., 144 F. Supp. 3d 1069, 1077-79 (N.D. Cal. 2015); Vargas v. Delivery Outsourcing, LLC, No. 15-cv-03408-JST, 2016 WL 946112, at *7-8 (N.D. Cal. Mar. 14, 2016).
Following those decisions, the Court concludes that the incorporation of the AAA rules in the Terms of Use is not clear and unmistakable evidence that Hooper intended to delegate the question of arbitrability to an arbitrator. Thus, the Court will decide whether McGill bars enforcement of the arbitration agreement in this case.
2. Applicability of McGill
The Court does not decide whether Hooper seeks public injunctive relief or whether the Terms of Use prohibit seeking such relief. Instead, the Court rejects Hooper's challenge for a more fundamental reason: She brings claims under federal and Florida law, but "[n]othing in the California Supreme Court's decision in McGill purports to extend its reach to claims that arise under the law of other jurisdictions." Cal. Crane Sch., Inc. v. Google LLC, 621 F. Supp. 3d 1024, 1031 (N.D. Cal. 2022) (declining to apply McGill where the plaintiff brought only federal claims). The McGill court concluded that enforcing the arbitration agreement in that case would "seriously compromise" the purposes of California's Consumers Legal Remedies Act, unfair competition law, and false advertising law. 2 Cal. 5th at 961, 216 Cal.Rptr.3d 627, 393 P.3d 85. None of those statutes is at issue in this case, and the McGill rule therefore does not apply.
Hooper offers no other arguments as to why the arbitration agreement should not be enforced. Nor does she challenge enforcement of the agreement's provision that "dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action." ECF No. 23 at 19. Accordingly, the Court will compel arbitration of Hooper's claims on an individual basis.
C. Stay of Litigation
Although Jerry's motion sought dismissal of Hooper's putative class claims and asked the Court to dismiss or alternatively stay this case pending arbitration, ECF No. 22 at 19, its reply requests only that "the Court should compel this matter to arbitration and stay proceedings pending the ultimate disposition of the action in the arbitral forum," ECF No. 26 at 10. The Court will grant Jerry's request for a stay. See MediVas, LLC v. Marubeni Corp., 741 F.3d 4, 9 (9th Cir. 2014) (expressing a "preference for staying an action pending arbitration rather than dismissing it," especially to account for instances in which an arbitration panel leaves "undecided a claim that the district court had ordered to arbitration").
CONCLUSION
For the foregoing reasons, the Court grants Jerry's motion to compel arbitration of Hooper's claims on an individual basis and stays this case pending arbitration.
The Clerk shall administratively close the file. This order shall not be considered a dismissal or disposition of this action against any party. If further proceedings become necessary, any party may initiate them in the same manner as if this order had not been entered.
IT IS SO ORDERED.