Jack v. Ring LLC
| Docket Number | A165103,A165386 |
| Decision Date | 25 May 2023 |
| Parties | BRANDON JACK, et al., Plaintiffs and Respondents, v. RING LLC, Defendant and Appellant. |
| Court | California Court of Appeals |
Court San Francisco County Superior Court No. CGC-20-588258 Hon Ethan P. Schulman Trial Judge
Davis Wright Tremaine, Scott R. Commerson, Rochelle L. Wilcox James H. Moon, Daniel H. Leigh, for Defendant and Appellant
Hattis & Lukacs, Daniel M. Hattis, Paul Karl Lukacs; DeNittis Osefchen Prince, Stephen DeNittis, Shane T. Prince, for Plaintiff and Respondent
Ring LLC (Ring) manufactures and sells home security and smart home devices including video doorbells, security cameras, and alarms. Brandon Jack and Jean Alda (together, plaintiffs) purchased video doorbell and security camera products from Ring and subsequently filed a class action complaint against Ring asserting claims under various consumer protection statutes. In their lawsuit, plaintiffs seek injunctive relief requiring Ring to prominently disclose to consumers certain information about its products and services.
Ring moved to compel arbitration based on an arbitration provision in its terms of service. Opposing the motion, plaintiffs did not dispute that they agreed to Ring's terms of service but they argued the applicable arbitration provision violates the California Supreme Court's holding in McGill v Citibank, N.A. (2017) 2 Cal.5th 945, 961 (McGill) that a predispute arbitration agreement is invalid and unenforceable under state law insofar as it purports to waive a party's statutory right to seek public injunctive relief. The trial court denied the motion to compel arbitration, and Ring appeals.
We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs filed their lawsuit on November 19, 2020. They alleged Ring did not inform them "at the time of purchase that the video recording, playback, and snapshot features[,] which were key components of these products[,] would only operate if Plaintiffs paid an additional fee of $3 per month (or $30 per year) per device for a . . . 'Protect Plan.'" They alleged Ring's failure to clearly disclose the necessity of the Protect Plan before purchase constitutes a deceptive and misleading practice, and brought three causes of action under (1) the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.; CLRA), (2) the false advertising law (Bus. &Prof. Code, § 17500 et seq.), and (3) the Unfair Competition Law (id., § 17200 et seq.; UCL). Plaintiffs sought "a public injunction" requiring Ring to disclose on its website and on the packaging for its products that many features are not available unless the purchaser also buys a plan from Ring for an additional fee of $3 per month or $30 per year, per device.
Ring filed a motion to compel arbitration and stay the action. Ring submitted 10 versions of its terms of service-attached as Exhibits B through K to John Modestine's supporting declaration-without identifying which version or versions it believed controlled. However, in describing the arbitration provision, Ring cited two versions of its terms of service: (1) Exhibit C to Modestine's declaration, which appeared on Ring's website August 18 to October 2, 2017, and was, according to Ring, in effect "[a]t the time of Mr. Alda's purchase" and (2) Exhibit G, which appeared on Ring's website August 1, 2018, to October 23, 2019, and was in effect "at the time of purchase for Mr. Jack."
These versions of Ring's terms of service provide, "You and Ring agree that any dispute, controversy, or claim arising out of, or relating to your use of the services and or products, to this agreement, or to the content, any relationship between us and/or any recording on the services and/or products shall be resolved only by final and binding, bilateral arbitration" except that (1) "you" [i.e., customers] may bring claims that qualify for its jurisdiction in small claims court and (2) either party may seek injunctive or other equitable relief in state or federal court in Los Angeles County to protect that party's intellectual property rights. (Capitalization omitted.)[1]
Ring asserted the arbitration provision includes an express delegation clause delegating issues of arbitrability to the arbitrator, again citing Exhibits C and G. These versions of the arbitration provision specify that "the arbitrator, and not any federal, state or local court or agency, shall have exclusive authority to resolve all disputes arising out of or relating to the interpretation, applicability, enforceability or formation of these Terms, including, but not limited to any claim that all or any part of these Terms are void or voidable, or whether a claim is subject to arbitration."[2] Opposing the motion, plaintiffs pointed out that Ring never identified which version of the terms of service it was attempting to enforce, and they urged that Ring's vagueness "waived its right and obligation to identify which version governs." In any event, plaintiffs argued that each of the 10 versions "(1) specifies that a court decides the enforceability of the prohibition of public injunctive relief, (2) violates McGill due to the prohibition of public injunctive relief; and (3) contains a poison pill which states that, in the event of a McGill violation, the entire claim or set of claims is to be tried in a court." (Bolding and italics omitted.)
Plaintiffs took the position that the terms of service in effect at the time their lawsuit was filed, Exhibit J to Modestine's Declaration, governed.[3]
Plaintiffs argued that, despite the delegation clause relied on by Ring, the trial court could decide whether the arbitration provision was enforceable under McGill because the provision includes "a carve-out" from the delegation clause "for McGill-style issues." They quoted the following language (citing Exhibit J): (Capitalization omitted, italics added.)[4]
Plaintiffs asserted the quoted subsection of the arbitration provision "explicitly specifies that a court must decide the enforceability of this public injunctive relief prohibition." (Italics omitted.) They also called the final sentence of the quoted subsection a "poison pill," which requires, once a court finds a McGill violation as to a claim, that such claim be litigated in court, not in arbitration.
On the merits, plaintiffs quoted language in the arbitration provision that (1) prohibits a claimant from pursuing claims in a "private attorney general action," (2) limits the arbitrator to awarding relief "on an individual basis,"[5] and (3) provides that 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 claim,"[6] and cited cases in which these types of provisions were found to void arbitration agreements under McGill.
In its reply, Ring argued for the first time that Exhibit K (and not Exhibits C and G, which it had cited in its memorandum of points and authority) embodied the applicable terms of service.[7]
Three days before the scheduled hearing on Ring's motion to compel arbitration, plaintiffs filed an ex parte application for leave to file a sur-response. They argued Ring used its reply in support of its motion to raise new arguments and plaintiffs "wish[ed] to briefly address" these arguments. (Bolding, italics and underlining omitted.)
On the day of the hearing, Ring filed a request to supplement the record and for leave to respond to plaintiffs' ex parte application. Ring asserted that, although its "position has always been that both Plaintiffs are bound by Ring's Terms of Service dated December 8, 2020" (Exhibit K), it now had "additional facts demonstrating that [plaintiff] Jack affirmatively accepted the December 2020 Terms." Ring requested leave to respond to plaintiffs' sur-response, which Ring claimed, "improperly raises new arguments and rehashes prior arguments."
After the scheduled hearing, the trial court issued a written order, filed March 18, 2022, denying Ring's motion to compel arbitration and denying both parties' "last-minute" ex parte applications for leave to file supplemental briefs and to supplement the record.
On March 28, 2022, Ring filed a motion for reconsideration of the court's order denying its motion to compel arbitration. Nine days later (April 6), Ring filed a notice of appeal from the trial court's order of March 18, 2022, denying its motion to compel arbitration.
On May 24, 2022, the trial court issued an order taking Ring's motion for reconsideration off calendar. The court explained it lacked jurisdiction to reconsider its ruling on the motion to compel arbitration because Ring had appealed that ruling and the appeal was pending. Two days later (May 26), Ring filed another notice of appeal from the trial court's order of March 18, 2022, denying its motion to compel arbitration and from all other appealable...
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