A state appeals panel has agreed Ring can’t invoke its user agreement to sidestep a class action accusing the video doorbell purveyor of misleading customers regarding footage access fees.
In November 2020, Brandon Jack and Jean Alda sued Ring in San Francisco County Superior Court, where Judge Ethan Schulman denied the company’s motion to compel arbitration in the dispute. The plaintiffs argued the arbitration provision in Ring’s user service agreement violates the precedent of a 2017 California Supreme Court opinion, McGill v. Citibank. Ring challenged that dismissal before the California First District Appellate Court.
Justice Marla Miller wrote the panel’s opinion, issued May 25; Justice James Richman concurred. Also concurring was Judge Michael Markman, an Alameda Superior Court judge assigned to hear the appeal.
According to court records, the consumer protection claims revolve around Jack and Alda’s allegations Ring didn’t inform them, when they bought doorbells and security cameras, “that the video recording playback and snapshot features” required a monthly $3 fee per device, or an annual $30, to access the “Protect Plan.” They seek an injunction forcing Ring to disclose such details going forward.
But Ring invoked its service terms, the versions in effect when both men bought their equipment, providing consumers “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” unless the dispute would fall into small claims court or involve intellectual property rights.
According to the panel, McGill established “a pre-dispute 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.” But on appeal, Ring argued the actual question of the provision’s validity is in itself meant for an arbitrator, not a court. It further suggested that even if some of the user agreement violates McGill, the “claims should be split by type of remedy sought so that, to the extent plaintiffs seek relief that is not a public injunction, that part of their claims should be sent to arbitration,” Miller wrote.
The panel agreed Ring’s “arbitration provision points in two directions” with one aspect stipulating an arbitrator must determine the enforceability of the arbitration provision, but another allowing for a court to find certain provisions unenforceable. That uncertainty, in light of McGill, defeat’s Ring’s argument that only arbitration is acceptable, and the fact Ring couldn’t show “clearly and unmistakably delegated exclusive authority to the arbitrator,” Miller wrote, means Judge Schulman didn’t err by considering if McGill applied.
Looking at McGill and other cases, the panel said, revealed a pattern of trying to keep plaintiffs from seeking public injunctions by taking a class claim to arbitration, creating a so-called “private attorney general” status. It further said the Federal Arbitration Act doesn’t pre-empt anything in McGill.
Calling a severability clause a “poison pill,” the panel rejected Ring’s argument the plaintiffs still must take their liability, damages and other non-injunctive relief to arbitration. Rather, “their three causes of action under the Consumer Legal Remedies Act, false advertising law, and (unfair competition law) respectively cannot be arbitrated and may be brought in court.”
The panel also said Judge Schulman didn’t abuse discretion in a variety of procedural rulings, such as denying Ring’s request to make supplemental allegations and declining to take up its motion to reconsider jurisdiction once the company filed its notice of appeal.
Plaintiffs are represented by Hattis & Lukacs and DeNittis Osefchen Prince.
Ring is represented by Davis Wright Tremaine.