United States District Court, N.D. California
ORDER RE ARBITRATION RE: DKT. NO. 17
DONATO UNITED STATES DISTRICT JUDGE.
putative class action, plaintiff Farrah Williams alleges that
defendant Eaze Solutions violated the Telephone Consumer
Protection Act (“TCPA”), 47 U.S.C. § 227, by
sending her unsolicited, autodialed text messages. Eaze seeks
to compel arbitration of her claims pursuant to its terms of
service. Dkt. No. 17. While the case raises interesting
issues about “ganjapreneurship” and the budding
legal marijuana industry, the questions presently before the
Court are limited to whether there was an agreement to
arbitrate and, if so, whether the Court or an arbitrator
decides the arbitrability of plaintiff's claims.
an initial set of briefing on the motion to compel and oral
argument, the Court called for supplemental submissions from
the parties on the application of Buckeye Check Cashing,
Inc. v. Cardegna, 546 U.S. 440 (2006). Dkt. No. 35. In
light of the Court's request for supplemental briefing,
Williams's motion for leave to file a sur-reply on
similar topics, Dkt. No. 25, is denied. Eaze's motion to
compel arbitration is granted.
parties do not dispute the salient facts. Eaze operates a
marijuana mobile application (“app”) and online
marketplace. Dkt. No. 1 (“Compl.”) ¶¶
13-15. The app facilitates the delivery of cannabis products
from dispensaries to consumers. Williams signed up for
Eaze's service in September 2017. Dkt. No. 17-1,
Declaration of Daniel Erickson ("Erickson Decl.")
¶ 17; see also Dkt. No. 21 at 2. Before
creating her Eaze account, Williams checked a box consenting
to Eaze's terms of service. Erickson Decl. ¶ 17. The
sign-up screen looked like this:
No. 17-1, Ex. A.
terms of service, which were hyperlinked in the sign-up box,
contained a clause providing for arbitration of disputes with
a class-action waiver. Id., Ex. E at ECF pp. 28-30.
Specifically, the terms of service state that the customer
and Eaze "agree that any dispute, claim or controversy
arising out of or relating to this Agreement or the breach,
termination, enforcement, interpretation or validity thereof
or the use of the Service or Application (collectively,
"Disputes") will be settled by binding
arbitration." Id. at ECF p. 28. Williams does
not deny that she clicked the box stating she consented to
the terms of service, or that such a "clickwrap"
agreement is enforceable. See In re Facebook Biometric
Info. Privacy Litig., 185 F.Supp.3d 1155, 1165-66 (N.D.
so, Williams contends that no contract was ever formed
between her and Eaze. She argues that, because the
contract's purpose was to facilitate the selling and
distribution of marijuana, which is illegal under federal
law, the contract lacked a “lawful object, ” as
required by California law, and so no contract or enforceable
arbitration clause was ever formed. Cal. Civ. Code §
parties disagree about the governing legal standards. Eaze
says that the Federal Arbitration Act (“FAA”)
applies for two reasons: (1) the terms of service state that
the “Federal Arbitration Act will govern the
interpretation and enforcement” of its dispute
resolution provisions, Dkt. No. 17-1, Ex. E at ECF p. 29; and
(2) the contract involves interstate commerce as contemplated
by the FAA. See 9 U.S.C. § 2. Williams contends
that California law controls because: (1) the terms of
service state the parties' agreement will be
“governed by the laws of the State of California,
” Dkt. No. 17-1, Ex. E at ECF p. 30; and (2) the
contract does not involve interstate commerce.
governs the arbitration issues in this case. It applies to
contracts “evidencing a transaction involving
commerce.” 9 U.S.C. § 2. The Supreme Court has
interpreted “involving commerce” “as the
functional equivalent of the more familiar term
‘affecting commerce' -- words of art that
ordinarily signal the broadest permissible exercise of
Congress' Commerce Clause power.” Citizens Bank
v. Alafabco, Inc., 539 U.S. 52, 56 (2003) (per curiam).
activity covered by Eaze's terms of service are within
Congress's commerce power, and so the FAA applies here.
In Gonzales v. Raich, 545 U.S. 1, 17 (2005), the
Supreme Court determined that even purely intrastate
marijuana possession and distribution in compliance with
California's Compassionate Use Act had a
“substantial effect on interstate commerce, ” and
that regulation of that activity was within Congress's
commerce power. By similar reasoning, Williams's own
formation argument assumes the presence of interstate
commerce. Since Eaze's business is legal under California
state law, ...