Tompkins v. 23andMe, Inc.

An arbitration clause calling for the losing party to pay arbitration costs and attorney fees of the prevailing party was not substantively unconscionable, nor was the forum selection clause.  An arbitration clause calling for the losing party to pay arbitration costs and attorney fees of the prevailing party was not substantively unconscionable.  Under Sanchez and Armendariz, having the loser pay arbitration costs is unconscionable only in the employment context or when the evidence shows one party cannot afford the arbitration fees.  A one-sided attorney fee shifting clause can be unconscionable, but not a bilateral fee shifting clause like this one.  A provision selecting San Francisco as the venue for arbitration was not unreasonable as defendant was headquartered there. Though some California Court of Appeal decisions apply a stricter standard to arbitration clauses, Sanchez confirms that the generally applicable standard enforcing forum selection clauses, if reasonable, applies to arbitration agreements as well.  The exception of intellectual property claims from arbitration fell within the margin of safety based on legitimate business needs.  Neither a one-year contractual limitations provision nor a provision allowing 23andMe the unilateral right to modify the contract—both provisions lying outside the arbitration clause—rendered the arbitration provision unconscionable.

Ninth Circuit Court of Appeals (Ikuta, J.; Watford, J., concurring); August 23, 2016; 2016 WL 4437615

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s