Peter v. Doordash, Inc.

• Decision Date: 23 April 2020
• Docket Number: Case No. 19-cv-06098-JST
• Citation: 445 F.Supp.3d 580
• Parties: Jennifer PETER, et al., Plaintiffs, v. DOORDASH, INC., Defendant.
• Court: U.S. District Court — Northern District of California

445 F.Supp.3d 580

Jennifer PETER, et al., Plaintiffs,

v.DOORDASH, INC., Defendant.

Case No. 19-cv-06098-JST

United States District Court, N.D. California.

Signed April 23, 2020

Elise Rochelle Sanguinetti, Mike M. Arias, Alfredo Torrijos, Arias Sanguinetti Wang & Torrijos, LLP, Los Angeles, CA, Daniel Scott Levy, Pro Hac Vice, Richard S. Cornfeld, Pro Hac Vice, Law Office of Richard S. Cornfeld, LLC, St. Louis, MO, for Plaintiffs.

Joshua Seth Lipshutz, Gibson, Dunn and Crutcher LLP, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO COMPEL ARBITRATION AND STAY LITIGATION

Re: ECF No. 17

JON S. TIGAR, United States District Judge Before the Court is Defendant DoorDash, Inc.'s motion to compel arbitration and stay litigation. ECF No. 17. The Court will grant the motion.

I. BACKGROUND

A. Factual and Procedural Background

Plaintiffs Jennifer Peter and Karson Theiss are customers of DoorDash, an online and app-based food delivery platform. ECF No. 1 at 2. They allege that DoorDash has engaged in deceptive tipping practices, representing that consumers' tips would benefit drivers but instead using those tips to fund the minimum payments that DoorDash guarantees its drivers. Id. On September 25, 2019, Plaintiffs filed a complaint on behalf of themselves and a nationwide class of all consumers who placed a food delivery order via DoorDash within the applicable limitations period and used DoorDash's platform to provide tips to their drivers, as well as Missouri and Illinois subclasses. Id. at 15. Plaintiffs bring claims under California's, Missouri's, and Illinois's unfair practices laws, id. at 18-23, 25-28, as well as for unjust enrichment and money had and received in both Missouri and Illinois, id. at 23-25, 28-30. They seek damages, punitive damages, injunctive relief, and attorney's fees and costs. Id. at 30-31.

On November 15, 2019, DoorDash filed this motion to compel arbitration and stay the litigation. ECF No. 17. Plaintiffs filed an opposition, ECF No. 21, and DoorDash filed a reply, ECF No. 22. The Court took the motion under submission without a hearing.

B. Arbitration Provisions

Theiss signed up for a DoorDash account on March 4, 2019, and Peter signed up on May 8, 2019. ECF No. 17-1 ¶¶ 5-6. Both Plaintiffs entered their names, email addresses, phone numbers, and passwords on a sign-up screen. Id. ¶ 7. To complete the process and place an order, they clicked a "Sign Up" button below this information. Id. Directly below that button was a statement reading: "By tapping Sign Up, Continue with Facebook, or Continue with Google, you agree to our Terms and Conditions and Privacy Statement." Id. The words "Terms and Conditions" appeared in blue text and were hyperlinked to the DoorDash Terms and Conditions in effect at the time ("2018 T & C"). Id. ¶ 8. Plaintiffs and other DoorDash users were not required to click through to the T & C in order to complete the sign-up process. Id. ¶¶ 8-9.

Section 12 of the 2018 T & C, entitled "Dispute Resolution," contained an arbitration agreement. Id. at 22. The agreement read, in relevant part:

You agree that any dispute or claim relating in any way to your access or use of the Services as a consumer of our Services, to any advertising or marketing communications regarding the Company or the Services, to any products or services sold or distributed through the Services that you received as a consumer of our Services, or to any aspect of your relationship or transactions with Company as a consumer of our Services will be resolved by binding arbitration, rather than in court ....

Id. at 23.

The agreement also included a "delegation clause" providing that "[t]he arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Arbitration Agreement including, but not limited to any claim that all or any part of this Arbitration Agreement is void or voidable." Id. at 23.

The 2018 T & C allowed users to opt out of the arbitration agreement within 30 days of signing up for DoorDash. Id. The second paragraph of the T & C, in capitalized text, included a warning about the arbitration agreement and class waiver and a reference to the user's right to opt out. Id. at 16. The 2018 T & C also stated that "the Company reserves the right to modify the terms and conditions of this Agreement or its policies relating to the Website, Software or Services at any time, effective upon posting of an updated version of this Agreement on the Website or Software" and that "continued use of the Services after any such changes constitutes your agreement to such changes." Id. at 16.

After completing the sign-up process, neither Peter nor Theiss opted out of the arbitration agreement. Id. ¶ 13. In August 2019, DoorDash posted an updated Terms of Service ("2019 T & C"). Id. ¶ 14. The 2019 T & C contained a substantially similar arbitration agreement and warning as well as a materially identical class waiver and delegation clause. Id. at 29, 35-36. Peter did not use DoorDash after this point, but Theiss continued to use the company's services and did not opt out of the 2019 arbitration agreement. Id. ¶ 15.

II. JURISDICTION

The Court has jurisdiction pursuant to 28 U.S.C. § 1332(d). See ECF No. 1 at 3.

III. LEGAL STANDARD

The Federal Arbitration Act ("FAA") applies to arbitration agreements in any contract affecting interstate commerce. See Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ; 9 U.S.C. § 2. Under the FAA, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This provision reflects "both a liberal federal policy favoring arbitration, and the fundamental principle that arbitration is a matter of contract." AT & T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal citations omitted).

On a motion to compel arbitration, the court's role under the FAA is "limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000). If the court is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Where the claims alleged in a complaint are subject to arbitration, the Court may stay the action pending arbitration. Id. § 3.

"[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration."

Green Tree Fin. Corp. Alabama v. Randolph , 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).

IV. DISCUSSION

Plaintiffs contend the Court should deny DoorDash's motion because the parties never reached a valid, binding contract given that DoorDash failed to provide reasonable notice of the T & C. ECF No. 21 at 5-6. They further argue that the Court, and not an arbitrator, must determine the question of contract formation. DoorDash argues that the T & C's delegation clause extends to questions of arbitrability, meaning that the arbitrator, not the Court, should decide "whether there is a valid agreement to arbitrate" and "whether the agreement covers the dispute." ECF No. 17 at 15-17 (citing Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83-84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) ). In the alternative – if the Court reaches the question of contract formation – DoorDash argues that the parties reached a valid contract. Id. at 17-21.¹

A. Delegation

"[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Ctr., W., Inc. v. Jackson , 561 U.S. 63, 68-69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). "Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary power to decide arbitrability’ turns upon what the parties agreed about that matter." First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (emphasis in original) (internal citations omitted). Whether the court or the arbitrator decides arbitrability is "an issue for judicial determination unless the parties clearly and unmistakably provide otherwise." Howsam , 537 U.S. at 83, 123 S.Ct. 588 (quoting AT & T Techs., Inc. v. Commc'ns Workers of America , 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ).

However, while challenges to the validity of a contract containing an arbitration clause are decided by the arbitrator, "challenges to the very existence of the contract are, in general, properly directed to the court." Kum Tat Ltd. v. Linden Ox Pasture, LLC , 845 F.3d 979, 983 (9th Cir. 2017). This is because "[a]rbitration is a matter of contract and a party cannot be required to submit any dispute which he has not agreed so to submit." AT & T Techs. , 475 U.S. at 648, 106 S.Ct. 1415 (quoting United Steelworkers of Am. v. Warrior & Gulf Nav. Co. , 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ). While the Court generally resolves ambiguities in arbitration agreements in favor of arbitration, it resolves ambiguities as to the delegation of arbitrability in favor of court adjudication. See Kaplan , 514 U.S. at 944-45, 115 S.Ct. 1920.

Plaintiffs argue that they did not consent to the T & C and thus no contract was formed. ECF No. 21 at 9. Because this is a challenge to "the very existence of the contract," this question cannot be delegated to the arbitrator. Kum Tat , 845 F.3d at 983.

B. Contract Formation

"When deciding whether the...