Applying Washington law, the Ninth Circuit Court of Appeals affirmed a California federal court’s ruling that Amazon’s Conditions of Use (COU) created a valid contract between Amazon and its customers, and there was no procedural unconscionability in the presentation of the arbitration clause. Further, the Court found that, “[w]hile the COU are adhesive in nature, adhesion is insufficient to support a finding of procedural unconscionability.”
Plaintiff made three arguments for substantive unconscionability which the Court found lacked merit: (1) “the unilateral modification clause does not render the arbitration provision substantively unconscionable because Amazon is limited by the implied covenant of good faith and fair dealing;” (2) “the arbitration clause’s exemption of intellectual property claims for injunctive relief does not make the provision overly harsh or one-sided;” and (3) “the attorneys’ fees provision does not create substantive unconscionability because it mirrors Washington’s statutory right to attorneys’ fees for frivolous claims” and “also complies with California law, which permits Amazon to seek fees as a sanction for frivolous claims.”
Class action waivers continue to be a hotly contested issue. We that the California Fifth District Court of Appeal held that, while California Private Attorneys General Act (PAGA) claims for civil penalties cannot be arbitrated or waived, the underlying worker claims for the wages themselves are subject both to arbitration and a class action waiver, which substantially undercuts an employer’s group exposure in wage and hour actions.