Gregory Ingalls et al v. Spotify USA Inc.
Filing
39
ORDER DENYING MOTION TO COMPEL ARBITRATION by Hon. William Alsup denying 25 Motion to Compel.(whalc1, COURT STAFF) (Filed on 11/14/2016)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California
United States District Court
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GREGORY INGALLS and TONY HONG,
individually and on behalf of all others
similarly situated,
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No. C 16-03533 WHA
Plaintiffs,
v.
SPOTIFY USA, INC., a Delaware
corporation, DOES 1–10, inclusive,
ORDER DENYING MOTION
TO COMPEL ARBITRATION
Defendants.
/
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INTRODUCTION
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In this putative class action, plaintiffs claim that a subscription music streaming service
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violated a California law provision restricting automatic renewal of a subscription. Defendant,
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which operated that streaming service, moves to compel arbitration and to stay the case pending
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arbitration. For the reasons stated below defendant’s motion is DENIED.
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STATEMENT
Plaintiff Gregory Ingalls signed up to use the free version subscription music streaming
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service provided by defendant Spotify, Inc., in November 2012. Spotify required subscribers to
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affirmatively accept an agreement titled “Terms and Conditions of Use” before using the
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service. Ingalls later signed up for a series of free trials of Spotify’s premium service (which
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offered music without advertisements and included additional features). Ingalls cancelled his
premium subscription in 2013, but continued to use the free service.
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In September 2015, Spotify updated its Terms and Conditions and presented all users,
including Ingalls, with the following notice upon accessing the service:
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Updated terms. We have revised our Terms and Conditions of
Use and our Privacy Policy. By clicking “Accept” you accept and
agree to these updates, so please take a few minutes to read and
understand them.
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Users could access the referenced agreements by clicking on the words in the notice. In order
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to continue using Spotify’s service, Ingalls had to affirmatively click “Accept,” which he did on
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January 7, 2016. Ingalls continued to use the free service.
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Plaintiff Tony Hong registered for Spotify’s free service in November 2011. Like
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Ingalls, he was required to accept Spotifiy’s Terms and Conditions when registering. In
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offer. In March 2015, after the three-month discount period ended, Hong’s account converted
For the Northern District of California
United States District Court
December 2015, Hong signed up for Spotify’s premium service with a three-month discount
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to the regular price for premium service. Hong cancelled his subscription two days later but
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restarted it (at full price) in May 2015.
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As stated, Spotify updated its Terms and Conditions in September 2015, and required
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users, including Hong, to affirmatively accept the new Terms and Conditions (or quit the
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service). Users that rejected the amended Terms and Conditions could receive a refund for their
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monthly subscription fee pro-rated for the part of the month following the amendment, though
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none sought such a refund.1
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Hong accepted the updated agreement that month by clicking the “Accept” button.
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Hong continued to use his subscription until he canceled it in June 2016 — just days after filing
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this action. Hong again restarted his subscription in July 2016.
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Spotify’s updated Terms and Conditions agreement was a lengthy document, but its
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table of contents included hyperlinks allowing users to navigate from section to section
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throughout the document. The first section, titled “Introduction,” included a bolded warning
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that the Terms and Conditions contained, inter alia, a class action waiver and an agreement to
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resolve disputes by arbitration.
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Counsel for Spotify represented that such a refund would be available at the hearing on this motion.
Although this appears contrary to Section 16 of the Terms and Conditions agreement, this order accepts
counsel’s unsworn representation purely for the sake of argument but notes that if users could not seek a refund
for the balance of the month, that would heighten the procedural unconscionability of the arbitration provision.
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For the Northern District of California
United States District Court
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Section 2 noted that Spotify could, in its discretion, make changes to the Terms and
Conditions agreement, but that it would provide prompt notice of material changes.
Section 24 of the Terms and Conditions agreement was titled “Choice of law, mandatory
arbitration and venue.” Paragraph 24.3.1 provided:
You and Spotify agree that any dispute, claim, or controversy
between you and Spotify arising in connection with or relating in
any way to these Agreements or to your relationship with Spotify
as a user of the Service (whether based in contract, tort statute,
fraud, misrepresentation, or any other legal theory, and whether the
claims arise during or after the termination of the Agreements) will
be determined by mandatory binding individual arbitration.
It further explained that arbitration lacked the formality of court proceedings and had no judge
or jury, among other limitations.
Paragraph 24.2 provided a class action waiver:
WHERE PERMITTED UNDER THE APPLICABLE LAW, YOU
AND SPOTIFY AGREE THAT EACH MAY BRING CLAIMS
AGAINST THE OTHER ONLY IN YOUR OR ITS
INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR
CLASS MEMBER IN ANY PURPORTED CLASS OR
REPRESENTATIVE ACTION. Unless both you and Spotify
agree, no arbitrator or judge may consolidate more than one
person's claims or otherwise preside over any form of a
representative or class proceeding.
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Paragraph 24.3.3 provided that arbitration would occur before the American Arbitration
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Association and would be resolved under the “Commercial Dispute Resolution Procedures and
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the Supplementary Procedures for Consumer Related Disputes of the American Arbitration
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Association (‘AAA’) then in force.” The arbitrator’s fees would be paid pursuant to the
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limitations on fees set forth in the AAA’s consumer rules with any balance to be paid by
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Spotify. Paragraph 24.3.3 noted that the AAA procedures and other information about
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arbitration could be found at adr.org or by calling the AAA’s phone number (which was
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provided in the agreement).
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In actuality, at the time the arbitration agreement was drafted, the AAA website did not
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include any document with the title “Commercial Dispute Resolution Procedures” or
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“Supplementary Procedures for Consumer Related Disputes of the American Arbitration
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Association” as indicated in Paragraph 24.3.3. AAA had discontinued those publications and
had begun offering the “Consumer Arbitration Rules” in 2014. (Section R-1(a) of the
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Consumer Arbitration Rules stated that the procedures therein would apply in any arbitration
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agreement that specified the AAA’s “Supplementary Procedures for Consumer-Related
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Disputes.”) Spotify concedes this was a drafting error.
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Plaintiffs brought this action in June 2016, claiming that Spotify failed to adequately
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inform them that it would automatically renew their subscriptions at the full price once their
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trial periods had ended and that Spotify failed to obtain plaintiffs’ affirmative consent for that
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renewal in violation of California law. Spotify now moves to compel arbitration pursuant to the
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updated Terms and Conditions agreement. It contends the threshold issue of arbitration must be
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decided by an arbitrator. Failing that, it contends the Court must order arbitration. This order
follows full briefing and oral argument.2
ANALYSIS
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For the Northern District of California
United States District Court
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Spotify’s motion to compel arbitration is governed by the Federal Arbitration Act. 9
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U.S.C. 1, et seq. The FAA requires the resolution of two “gateway” issues: (1) whether a valid
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agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute
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at issue. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). If a valid arbitration
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clause exists, arbitration is mandatory unless the party resisting arbitration can prove a defense
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to enforcement of the agreement, such as unconscionability. Pinnacle Museum Tower
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Association v. Pinnacle Market Development (US), LLC, 55 Cal. 4th 223 (2012).
Spotify moves to compel arbitration of this action and also moves to compel arbitration
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of the threshold issue of arbitrability. This order first turns to the threshold issue.
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1.
DELEGATION CLAUSE.
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The determination of whether an arbitration clause is valid, applicable, and enforceable
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is reserved to the district court unless “the parties clearly and unmistakably provide[d]
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otherwise,” such as by delegating the issue of arbitrability to arbitration. AT&T Technologies,
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Inc. v. Communications Workers of America, 475 U.S. 643, 649 (1986). Even if a delegation of
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The day after plaintiffs filed their opposition brief, our court of appeals decided Mohamed v. Uber
Technologies, Inc., No. 15-16178, __ F.3d ___, 2016 WL 4651409 (9th Cir. Sept. 7, 2016), reversing the district
court's denial of the motion to compel arbitration. Because our plaintiffs had relied heavily on the district court
decision, an order adjusted the briefing schedule to allow them to supplement their opposition to address
Mohamed v. Uber before Spotify filed its reply.
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arbitrability is clear and unmistakable it may be found unenforceable if the delegation itself is
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unconscionable. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 71–74 (2010).
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Spotify contends that the parties clearly and unmistakably agreed to delegate the issue of
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arbitrability to an arbitrator because the Terms and Conditions agreement provided that any
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arbitration would be governed by the AAA’s procedures.3
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Rule 7(a) of the Commercial Arbitration Rules provided:
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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.
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Our court of appeals has held that “incorporation of the AAA rules constitutes clear and
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inclusion of the paragraph just recited. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir.
For the Northern District of California
United States District Court
unmistakable evidence that contracting parties agreed to arbitrate arbitrability” based on the
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2015). (Brennan did not specify which AAA rules it concerned, though nearly all of the AAA’s
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rules include the above paragraph.) Nevertheless, our court of appeals has not determined
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whether incorporation of the AAA rules can be clear and unmistakable evidence of delegation
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of arbitrability where one party is an unsophisticated consumer. Brennan expressly left that
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question unresolved. Id. at 1131.
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Every district court decision in our circuit to address the question since Brennan has
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held that incorporation of the AAA rules was insufficient to establish delegation in consumer
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contracts involving at least one unsophisticated party. See Money Mailer, LLC v. Brewer, No.
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15-1215, 2016 WL 1393492, at *2 (W.D. Wash. Apr. 8, 2016) (Judge Rober S. Lasnik);
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Galilea, LLC v. AGCS Marine Ins. Co., No. 15-0084, 2016 WL 1328920, at *3 (D. Mont. Apr.
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5, 2016) (Judge Susan P. Waters); Vargas v. Delivery Outsourcing, LLC, No. 15-03408, 2016
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WL 946112, at *8 (N.D. Cal. Mar. 14, 2016) (Judge Jon S. Tigar); Aviles v. Quik Pick Express,
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LLC, No. 15-5214, 2015 WL 9810998, at *6 (C.D. Cal. Dec. 3, 2015) (Judge Michael W.
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Fitzgerald); Meadows v. Dickey’s Barbecue Restaurants Inc., 144 F. Supp. 3d 1069, 1078 (N.D.
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Cal. 2015) (Judge Jon S. Tigar).
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The fact that Spotify’s Terms and Conditions incorporated the AAA procedures under a
decommissioned title further refutes Spotify’s assertion that its delegation of arbitrability was clear and
unmistakable.
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Before Brennan, decisions from district courts in our circuit split on the issue. Compare
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Tompkins v. 23andMe, Inc., No. 13-05682, 2014 WL 2903752, at *11 (N.D. Cal. June 25, 2014)
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(Judge Lucy H. Koh), affirmed on other grounds No. 14-16405, 2016 WL 4437615 (9th Cir.
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Aug. 23, 2016), with Zenelaj v. Handybook Inc., 82 F. Supp. 3d 968, 973 (N.D. Cal. 2015)
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(Judge Thelton Henderson).
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Additionally, several decisions enforced delegation clauses even though the parties
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resisting arbitration were not corporations with extensive legal teams, but each such decision
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found a minimal level of sophistication, particularly in the context of commercial, rather than
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consumer, agreements. See Mike Rose’s Auto Body, Inc. v. Applied Underwriters Captive Risk
Assurance Co., Inc., 16-01864, 2016 WL 5407898, at *8 (N.D. Cal. Sept. 28, 2016) (Judge
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For the Northern District of California
United States District Court
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Edward M. Chen); Capelli Enterprises, Inc. v. Fantastic Sams Salons Corp., No. 16-03401,
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2016 WL 4492588, at *5 (N.D. Cal. Aug. 26, 2016) (Judge Edward J. Davila); Mikhak v.
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University of Phoenix, No. 16-0901, 2016 WL 3401763, at *5 (N.D. Cal. June 21, 2016) (Judge
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Charles R. Breyer);; Khraibut v. Chahal, No. 15-04463, 2016 WL 1070662, at *5 (N.D. Cal.
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Mar. 18, 2016) (Judge Charles R. Breyer); Pelayo v. Platinum Limousine Services, Inc., No.
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15-00023, 2015 WL 9581801, at *1 (D. Haw. Dec. 30, 2015) (Judge Derrick K. Watson).
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Those decisions do not speak to our case, which involves two consumers — a music teacher and
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an architect — who have not been shown to have any business or legal acumen. (It is Spotify’s
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burden to establish that the delegation clause is enforceable.)
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In the absence of binding authority and with the benefit of a consistent trend of
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persuasive authority, this order finds that the parties, which included two ordinary consumers
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who could not be expected to appreciate the significance of incorporation of the AAA rules, did
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not clearly and unmistakably intend to delegate the issue of arbitration to an arbitrator.
ARBITRATION CLAUSE.
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2.
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Spotify contends that even if the delegation clause is unenforceable, Ingalls and Hong
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must nevertheless arbitrate their claims. Plaintiffs do not dispute that they clicked “Accept”
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when presented with Spotify’s updated Terms and Conditions agreement. Nor do they dispute
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that their claims fall within the scope of the arbitration provision in Spotify’s Terms and
conditions. Instead, plaintiffs contend that the arbitration clause is unenforceable.
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Under the FAA, an arbitration clause in an agreement is presumptively valid “unless it
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may be said with positive assurance that the arbitration clause is not susceptible of an
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interpretation that covers the asserted dispute.” AT&T v. CWA, 475 U.S. at 650. Plaintiffs
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contend the presumption in favor of arbitrability should not apply here, citing Goldman Sachs &
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Co. v. City of Reno, 747 F.3d 733 (9th Cir. 2014). There, a city contracted with an underwriter
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for the issuance of securities. The city’s financing collapsed, and it initiated arbitration
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proceedings before the Financial Industry Regulatory Authority to resolve claims against the
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underwriter. The underwriter contended that the city had disclaimed any right to arbitrate under
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FINRA by agreeing to a forum-selection provision in its agreement with the underwriter.
The underwriter contended that pursuant to its membership in FINRA it was obligated to
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For the Northern District of California
United States District Court
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arbitrate at any customer’s request, provided the parties did not contract around that obligation.
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The underwriter, however, further contended the forum-selection clauses had contracted around
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any obligation to arbitrate pursuant to FINRA’s default rules. Our court of appeals held that
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because the underwriter disputed the existence of the obligation to arbitrate, no presumption in
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favor of arbitrability applied. Thus, state-law principles of contract interpretation applied, and
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the question turned to whether the written agreement was clear and unambiguous on its face.
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Id. at 743. That is not our case.
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Our plaintiffs do not dispute that they accepted Spotify’s Terms and Conditions or that
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the Terms and Conditions included an arbitration clause that, if enforceable, applies to the
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instant claims. Instead, they argue that the arbitration clause within that agreement is not
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enforceable. Under the FAA, that clause may only be set aside based upon “generally
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applicable contract defenses, such as fraud, duress, or unconscionability.” AT&T Mobility LLC
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v. Concepcion, 563 U.S. 333, 339 (2011). Thus, the enforceability of the arbitration clause rests
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on the defenses available under California contract law. Ibid.
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Here, the only contract defense that plaintiffs raise is unconscionability. Under
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California law, an arbitration clause must be both procedurally and substantively
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unconscionable in order to be found invalid. Agreements are evaluated on a sliding scale,
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which disregards the need to show procedural unconscionability in proportion to the harshness
of the substantive terms. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.
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4th 83, 114 (2000). “In other words, the more substantively oppressive the contract term, the
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less evidence of procedural unconscionability is required to come to the conclusion that the
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term is unenforceable, and vice versa.” Ibid.
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A.
Procedural Unconscionability.
Procedural unconscionability refers to oppression or unfair surprise. Armendariz, 24
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Cal. 4th at 114. Oppression is shown by “an inequality of bargaining power that results in no
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real negotiation and an absence of meaningful choice.” Flores v. Transamerica HomeFirst,
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Inc., 93 Cal. App. 4th 846, 853 (2001). Unfair surprise relates to “the extent to which the
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supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by
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For the Northern District of California
United States District Court
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the party seeking to enforce the disputed terms.” Armendariz, 24 Cal. 4th at 114.
Here, plaintiffs contend that Spotify’s Terms and Conditions were offered subject to a
high degree of procedural unconscionability.
Plaintiffs first argue that the Terms and Conditions were presented in an oppressive
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manner because they were offered on a take-it-or-leave-it basis. But the mere fact that a
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contract is one of adhesion establishes only a low degree of procedural unconscionability. Peng
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v. First Republic Bank, 219 Cal. App. 4th 1462, 1470 (2013). Our plaintiffs could have ceased
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using Spotify’s service and they could have sought a pro-rated refund for any fees paid for the
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monthly subscription.
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Plaintiffs also contend that Spotify failed to provide our plaintiffs with the text of the
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AAA procedures that would apply in any arbitration to our plaintiffs because they used the
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wrong title for those rules. But the failure to provide the AAA procedures also establishes only
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minimal procedural unconscionability. Id. at 1472. True, Spotify did not merely fail to provide
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the procedures but used a title for an older, abrogated version of the AAA procedures.
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Although the Consumer Arbitration Rules do differ from the cited Supplementary Procedures
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for Consumer Related Disputes of the American Arbitration Association, our plaintiffs do not
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contend that any material difference was unfairly concealed. Indeed, plaintiffs do not contend
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that any provisions of either version of the AAA procedures were unfair, so any surprise due to
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Spotify’s error did not hide any substantively unconscionable provisions.
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While these circumstances presented some degree of procedural unfairness, they fell far
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short of the “high degree of procedural unconscionability” suggested by our plaintiffs.
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Nevertheless, this order turns to plaintiffs’ substantive unconscionability arguments, which this
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order finds strong enough to render the arbitration agreement unenforceable in light of the
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degree of procedural unfairness already shown.
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B.
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Substantive Unconscionability.
Substantive unconscionability concerns how one-sided a bargain is. Armendariz, 24
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Cal. 4th at 114. An arbitration clause that lacks mutuality without a reasonable justification is
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sufficient to find unconscionability. Id. at 117–18. Under California law, the presence of
multiple unconscionable provisions in an arbitration clause, even if all are severable,
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For the Northern District of California
United States District Court
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“indicate[s] a systematic effort to impose arbitration” on the consumers, “not simply as an
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alternative to litigation, but as an inferior forum” that works to the advantage of the party
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pressing arbitration. See Armendariz, 24 Cal. 4th at 124–25. Saving an arbitration clause by
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severing each individual problematic provision would allow a company to draft a one-sided
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agreement and then whittle down to the least-offensive agreement when faced with litigation,
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rather than drafting fair agreements in the first instance. Thus, a court may refuse to enforce an
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arbitration agreement that is “so permeated with unconscionable clauses that we cannot remove
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the unconscionable taint from the agreement.” Ferguson v. Countrywide Credit Industries, Inc.,
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298 F.3d 778, 788 (9th Cir. 2002).
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Three features of the arbitration agreement at issue here give rise to substantive
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unconscionability: (1) Spotify retained the right to unilaterally change the terms of the
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arbitration agreement, (2) any arbitration was required to proceed confidentially, and (3) a one-
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year limitations period applied to all claims brought in arbitration. Each is addressed in turn,
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though it is the pervasiveness of unconscionability, not any one source of it, that is fatal to
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Spotify’s motion.4
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The applicable AAA Rules provided that after a consumer paid a filing fee of $200, the arbitrator’s
compensation would be paid by the business (Spotify) and could not be reallocated except as required by law or
if the claim was filed for purposes of harassment or if it was patently frivolous.
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(1)
Unilateral Modification.
Plaintiffs contend that the arbitration provision was substantively unconscionable
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because it contemplated that Spotify could make changes to the arbitration provision, which
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would take effect unless the user timely rejected the amendment (which resulted in termination
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of that user’s service. Plaintiffs cite Ingle v. Cir. City Stores, Inc., 328 F.3d 1165, 1179 (9th
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Cir. 2003), for the proposition that such unilateral authority are substantively unconscionable.
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In Tompkins v. 23andMe, Inc., No. 14-16405, __ F.3d __, 2016 WL 4437615 (9th Cir.
unilateral modification provision and held that “the implied covenant of good faith and fair
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dealing prevents a party from exercising its rights under a unilateral modification clause in a
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For the Northern District of California
Aug. 23, 2016), our court of appeals considered an arbitration agreement that included a
9
United States District Court
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way that would make it unconscionable.” Id. at *12. Nevertheless, Tompkins acknowledged
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that Ingle held that a “unilateral modification provision itself may be unconscionable.” Ibid.
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Tompkins then distinguished Ingle, holding that a unilateral modification provision set forth
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separate from the arbitration provision could not invalidate the arbitration agreement or the
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contract as a whole, because the parties are free to argue that the unilateral modification clause
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is unenforceable in arbitration.
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Here, Section 2 of the Terms and Conditions reserved to Spotify the right to unilaterally
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change the agreement as a whole. Spotify offered an online contact form through which users
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could reject unilateral amendments (and terminate their service), but Paragraph 24.3.6 of the
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Terms and Conditions established a more burdensome procedure for rejecting modifications to
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the arbitration provision (involving written notice sent by mail), indicating Spotify’s intent to
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specially protect its right to unilaterally modify the arbitration provision. This distinction
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brings our case closer to Ingle than to Tompkins.
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(2)
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Confidentiality.
Paragraph 24.3.5 of the Terms and Conditions included a confidentiality clause
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prohibiting both sides from making “any public pronouncement or public comment or
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originat[ing] any publicity concerning the arbitration.” Our court of appeals has recognized that
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even facially-neutral confidentiality provisions can favor a company over an individual, because
the various attorneys representing individual plaintiffs cannot learn from the full body of
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F.3d 1126, 1151–52 (9th Cir. 2003). Spotify argues that our court of appeals has cautioned
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against invalidating arbitration clauses based on confidentiality provisions because “plaintiffs
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are free to argue during arbitration that the confidentiality clause is not enforceable.” Kilgore v.
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KeyBank, Nat. Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013). Spotify further argues that Ting did
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not invalidate an arbitration clause based on the confidentiality agreement, but rather
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invalidated a provision detailing the legal remedies available to the plaintiffs. True, but Spotify
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ignores the fact that the issue in Ting simply did not concern a motion to compel arbitration.
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Our court of appeals found that the agreement that was at issue in Ting was “so permeated with
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unconscionability and illegality” due to its confidentiality, fee-splitting, and class-action-waiver
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For the Northern District of California
arbitration, while the limited set of attorneys representing the company can. Ting v. AT&T, 319
2
United States District Court
1
provisions that the agreement could not be saved or reformed. Ting, 319 F.3d at 1149 n.13.
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Spotify’s attempt to distinguish Ting fails.
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(3)
One-Year Limitations Period.
Plaintiffs argue that the arbitration provision is substantively unconscionable because it
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applies a one-year limitations period for claims asserted in arbitration (but not for claims
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brought in court. Our court of appeals and the California Court of Appeal have both recognized
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that arbitration provisions that reduce the limitations period for a consumer’s assertion of a
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statutory right are unconscionable when the reduction applies only to claims in arbitration. See
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Martinez v. Master Protec. Corp., 118 Cal. App. 4th 107, 117–18 (2012); Graham Oil Co. v.
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ARCO Products Co., 43 F.3d 1244, 1248 (9th Cir. 1994), as amended (Mar. 13, 1995).
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Spotify notes that in Tompkins, our court of appeals held that a reduction of a limitations
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period that applies to all disputes (not just those asserted in arbitration) does not render an
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arbitration provision unconscionable. Tompkins, 2016 WL 4437615, at *12. Like our case,
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Tompkins involved claims under the California Unfair Competition Law, which includes a four-
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year statute of limitations (the longest limitations period applicable in either case) and reduced
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the limitations period to one year. Cal Bus. & Prof. Code § 17208. In Tompkins, however, the
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limitations period reduction applied to all claims regardless of the venue and thus did not affect
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the enforceability of the arbitration clause in particular. Not so here. Because the reduced
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limitations period here is part and parcel of the arbitration provision in Spotify’s Terms and
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Conditions, Tompkins is inapposite.
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*
*
*
Spotify cites Bleak v. Spotify USA Inc., Case No. 13-5653 (N.D. Cal. Apr. 25, 2014)
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(Dkt. No. 37), in which a judge compelled arbitration of similar claims against Spotify pursuant
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to an earlier version of the Terms and Conditions. The plaintiffs therein raised many of the
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same substantive unconscionability issues that are the subject of the instant motion, but the
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written decision comprised only a single sentence adopting the reasons stated on the record at
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oral argument. Moreover, a review of the transcript reveals that the specific unconscionability
issues were never discussed, beyond the bare conclusion that the agreement was mutual because
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For the Northern District of California
United States District Court
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it applied to claims relating to payment both by consumers and by Spotify (Dkt. No 40 at 5–6).
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Nevertheless, because this order cannot discern or engage with the reasoning in Bleak, it finds
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the holding in that decision unpersuasive.
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Although, as stated, many of the substantively unconscionable provisions that form part
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of the arbitration provision could be severed, unconscionability so permeates the arbitration
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clause that it cannot be cured by severance.
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CONCLUSION
For the reasons stated above, Spotify’s motion to compel arbitration is DENIED. A case
management order will follow.
This order notes that the Terms and Conditions agreement at issue herein also included a
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class-action waiver separate from the arbitration agreement, which this order does not address.
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See Am. Exp. Co. v. Italian Colors Rest., 570 U.S. __, 133 S. Ct. 2304, 2310 (2013)
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IT IS SO ORDERED.
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Dated: November 14, 2016.
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE
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