The Published Justice Project’s latest publication victory, in Costa v. Road Runner Sports, is the first published decision to clarify that consumers cannot be assumed to have agreed to arbitration just because their lawyers know about a company’s arbitration provision.
After being charged for several years for a membership he no longer used, the plaintiff sought relief based on California’s Automatic Renewal Law and joined a class action against Road Runner Sports. Road Runner argued that by joining the class action, the plaintiff should have theoretically learned about — and implicitly agreed to — the arbitration provision through his attorneys. The Fourth District Court of Appeal disagreed and made clear that the attorneys’ theoretical knowledge of an arbitration provision could not be imputed to their client.
Instead, the company needed to prove that the plaintiff himself had actually agreed to arbitrate. While Road Runner claimed that the plaintiff’s failure to take certain actions (such as calling a toll-free number to cancel his membership) manifested his consent to arbitrate, the opinion explains that the plaintiff’s inaction did not demonstrate mutual assent to arbitration. Instead, the plaintiff took actions that indicated he wanted to cancel his membership once he realized he was continuing to be charged for a service he no longer wanted.
This decision touches on several important issues: forced arbitration, sneaky automatic subscriptions, and impediments to class action lawsuits. Class actions are an important tool for enforcing consumer protection statutes, and forced arbitration often acts as a barrier to holding companies accountable. Given the ubiquity of dark patterns — including hidden automatic subscription renewals — it can be hard for consumers to know when companies are taking money from their accounts. Adding forced arbitration to a surreptitious automatic subscription is one unknown consequence on top of another — which is why this opinion will help clarify when and how companies can use it.
The Center was joined in its publication request by a group of prominent legal services organizations: Consumers for Auto Reliability and Safety, Housing and Economic Rights Advocates, the National Consumer Law Center, and the Public Law Center.