How well do you understand Ring's arbitration provision and the California Supre...

Ring's Arbitration Provision Violates McGill

• Ring's argument is based on a previous case, Aanderud v. Superior Court, but the case is distinguishable.

• In Aanderud, the arbitration provision delegated issues of validity and enforceability of the arbitration provision to arbitration, but it did not suggest that a small claims court might decide whether the arbitration provision was enforceable.

• In contrast, the severability clause ("poison pill") in Ring's arbitration provision is a subsection of the arbitration provision itself and contemplates that a court may decide whether the arbitration provision is enforceable when the provision is challenged based on the limitations of the subsection itself.

• The arbitration provision allows certain claims (small claims, intellectual property claims) to be brought in court, but the severability clause in this case very clearly contemplates that a court may decide whether the arbitration provision is enforceable when the provision is challenged based on the limitations of the subsection itself.

• The reference to JAMS Rules in the arbitration provision does not constitute clear and unmistakable delegation to the arbitrator of threshold issues of enforceability.

• The reference to the JAMS Rules does not cure the ambiguity created by the severability clause/“poison pill.”

• Ring has not shown the parties clearly and unmistakably delegated exclusive authority to the arbitrator to decide the threshold issue of whether the arbitration provision is enforceable under McGill.

• Public injunctive relief is relief that benefits the general public, and private injunctive relief primarily resolves a private dispute between the parties.

• In McGill, our high court explained that public injunctive relief “is a substantive statutory remedy that the Legislature, through the UCL, the CLRA, and the false advertising law, has made available to [individuals] who meet the statutory standing requirements for filing a private action.”

• The arbitration provision in this case purports to waive plaintiffs’ right to seek public injunctive relief in any forum, judicial or arbitral.

• The trial court found the arbitration provision in this case, precisely like the ones in McGill and the other cases discussed above, purports to waive Plaintiff’s [sic] right to seek public injunctive relief in any forum, judicial or arbitral.

• Ring does not dispute that plaintiffs seek public injunctive relief, but it argues such relief is available in arbitration under the language of the arbitration provision. However, the arbitration provision in this case specifies arbitration is to be “conducted only on an individual basis and not in a class, representative or private attorney general action,” an arbitration award must be “on an individual basis,” and the arbitrator may award injunctive relief “only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual.”California Supreme Court Rules that Arbitration Agreements Cannot Waive Public Injunctive Relief

• The California Supreme Court has ruled that arbitration agreements cannot waive a plaintiff's right to seek public injunctive relief in court.

• The decision was made in response to a lawsuit against Amazon, in which the plaintiff argued that the arbitration agreement in her contract with the company waives her right to seek public injunctive relief.

• Public injunctive relief is defined as relief that benefits the general public, rather than just the individual plaintiff.

• The arbitration agreement in question stated that any claims must be brought on an individual basis and could not be brought as a class action or other representative action.

• The agreement also limited relief to the individual parties involved and did not allow relief to be awarded to anyone who is not a party.

• The court found that this language in the arbitration agreement meant that public injunctive relief could not be sought in arbitration or court.

• The court cited previous cases where parties agreed that similar language in arbitration agreements precluded the seeking of public injunctive relief.

• The court acknowledged that some cases have reached a different conclusion, such as the Ninth Circuit's decision in DiCarlo v. MoneyLion, Inc., but found those cases distinguishable and not persuasive.

• The court emphasized that California law prohibits arbitration agreements from waiving the right to seek public injunctive relief.

• The ruling applies to all arbitration agreements governed by California law, regardless of whether they were entered into before or after the decision.

• The decision highlights the ongoing tension between arbitration agreements and the right to seek public injunctive relief, which has been a hotly contested issue in California courts.

• The ruling is seen as a victory for consumers and employees who have been seeking to preserve their right to seek public injunctive relief in court.