In Stover v. Experian Holdings, Inc., No. 19-55204, 2020 U.S. App. LEXIS 33176 (9th Cir. Oct. 21, 2020), the Court of Appeals for the Ninth Circuit affirmed a district court’s arbitration order.
The Court of Appeals also held that McGill/Blair were no impediment to enforceability of the arbitration clause because the clause referred all matters to arbitration except those prohibited by state law.
The 2014 terms dictate that all disputes between the parties must be submitted to arbitration to the fullest extent allowed by law. HN5 A contract that purports to waive a person’s right to seek public injunctive relief in court is unenforceable under California law. McGill, 393 P.3d at 93-94. Consequently, we must consider whether the 2014 terms are unenforceable, either because they prohibit judicial resolution of all claims for public injunctive relief, or because they would close the courthouse doors to Stover’s specific claim of this nature. “[P]ublic injunctions benefit the public directly by the elimination of deceptive practices, but do not otherwise benefit the plaintiff, who has already been injured, allegedly, by such practices and is aware of them.” Blair v. Rent-A-Center, Inc., 928 F.3d 819, 824 (9th Cir. 2019) (internal quotation marks and alteration omitted). In Blair, after concluding that the contract purported to “waive [the plaintiff’s] right to seek a public injunction ‘in any forum,'” we—without an individualized assessment of the plaintiff’s claims—held that the contract was unenforceable. Id. at 831 (quoting McGill, 393 P.3d at 87). Stover characterizes Blair as standing for the proposition that no other analysis is necessary in order to exempt a plaintiff from binding arbitration once a court has determined that the contract would prohibit judicial resolution of a claim for public injunctive relief. However,HN7 to seek public injunctive relief in federal court, Stover must also allege that she has Article III standing. “[A] previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase[.]” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 969 (9th Cir. 2018). Davidson further states: Knowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future. In some cases, the threat of future harm may be the consumer’s plausible allegations that she will be unable to rely on the product’s advertising or labeling in the future, and so will not purchase the product although she would like to. In other cases, the threat of future harm may be the consumer’s plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved. Id. at 969-70 (citation and footnote omitted). Stover’s arguments that the agreement is unenforceable on its face and as applied to the specific relief she seeks are meritless. First, the arbitration agreement does not flatly prohibit a plaintiff seeking public injunctive relief in court. Instead, the agreement subjects to arbitration all disputes to the fullest extent allowed by law—which would presumably exclude claims for public injunctive relief in California. This means that the arbitration provision is not facially unenforceable under Blair. Furthermore, Stover’s complaint does not allege the threat of future harm that Davidson held is required for Article III standing in a case seeking public injunctive relief. Because Stover has not done so, the McGill rule does not preclude arbitration of her California UCL claim.