Kamath v. Coinbase, Inc.

1

2

3

4

5 IN THE UNITED STATES DISTRICT COURT

6 FOR THE NORTHERN DISTRICT OF CALIFORNIA

7

8 RESHMA KAMATH, Case No. 23-cv-03533-CRB

9 Plaintiff,

ORDER GRANTING MOTION TO

10 v.

COMPEL ARBITRATION

11 COINBASE, INC., et al.,

12 Defendant.

13 Plaintiff Reshma Kamath has sued Defendants Coinbase, Inc. and Wells Fargo

14 Bank, N.A. for damages relating to an allegedly fraudulent transaction whereby a client

15 gave Plaintiff a fraudulent check that Plaintiff deposited into her Wells Fargo bank account

16 and thereafter transferred, via Coinbase,1 to an unknown third party, at the behest of the

17 client—resulting in a loss of $35,0002 worth of Bitcoin. See Compl. Coinbase has moved

18 to compel arbitration and to dismiss under Rule 12(b)(1) of the Federal Rules of Civil

19 Procedure, or, in the alternative, to stay proceedings. See Mot.

20

21

1 Coinbase is an online platform for buying, selling, transferring, and storing cryptocurrency. See

22 Mot. (dkt. 17) at 3. Cryptocurrency “like Bitcoin, . . . is not issued by a government or a central

bank; it is created by developers and traded over the internet.” Bielski v. Coinbase, Inc., 87 F.4th

23 1003, 1007 (9th Cir. 2023). Because many traditional investment firms and banks do not sell

cryptocurrency, many people buy and sell it through cryptocurrency exchanges. See id. Coinbase

24 is one of these exchanges; it provides users with a digital wallet, which they fund with money

from their personal bank account. Id. Users can store currency and transfer it in and out of their

25 digital wallet. Id.

2 Plaintiff makes several seemingly conflicting assertions regarding her monetary loss as a result

26 of this incident. The damages Plaintiff seeks range from “$100,000 of crypto[currency]” to “over

a million dollars of crypto[currency].” See Opp’n (dkt. 27) at 8; Compl. (dkt. 1) at 7. However,

27 Plaintiff told Coinbase—via Coinbase’s “Complaint Referral Form Internet Crime Complaint

Center”—that she made three Bitcoin transactions to a third party, totaling $35,000 in United

1 The Court finds that these motions are suitable for resolution without oral argument

2 or further briefing, pursuant to Civil Local Rule 7-1(b). As explained below, the Court

3 VACATES the hearing currently set for March 8, 2024, GRANTS Coinbase’s motion to

4 compel arbitration, and STAYS this suit pending arbitration.

5 I. BACKGROUND

6 Coinbase operates an online platform for buying, selling, and transferring

7 cryptocurrencies like Bitcoin, the cryptocurrency at the center of Plaintiff’s claims. See

8 Nacoste Decl. (dkt 17-2) ¶ 2. Coinbase provides its online platform and services to its

9 users under the terms of a Coinbase User Agreement (UA). Id. ¶ 7. To create an account

10 and use Coinbase’s services, prospective users must expressly assent to be bound by the

11 UA. Id.

12 A. Agreement to the UA

13 Coinbase maintains a log of activities taken by Coinbase users. Id. ¶ 6. Coinbase’s

14 records reflect that Plaintiff created a Coinbase account and accepted the Coinbase UA on

15 June 9, 2017. Id. ¶ 10, Ex. A. The 2017 UA contained an arbitration provision that

16 provided that Coinbase “may amend or modify this agreement by posting on the Coinbase

17 Site or emailing to [the user] the revised Agreement, and the revised Agreement shall be

18 effective at such time.” Id. Ex. B § 8.5. Coinbase periodically updates the terms of its

19 UA. See Mot. at 3. Before the 2022 UA became active, Coinbase emailed Plaintiff on

20 January 25, 2022, to inform her that Coinbase would be updating its UA the following

21 week. See Nacoste Decl. Ex. C. The email explained that if she wanted to continue using

22 her account, she would need to accept the updated 2022 UA. See id. The email provided a

23 hyperlink to the full terms of the updated UA and encouraged users to “make sure [to] read

24 the updated User Agreement.” Id. The email also flagged the 2022 UA’s arbitration

25 clause. Id. (“We’ve reorganized and modified our User Agreement to make it more

26 understandable to [the user] and in line with our culture of clear communications.”).

27 The 2022 UA was programmed to appear when users logged into their accounts in

1 credentials, the user was routed to a landing page that announced the update. See id. The

2 landing page presented a scroll-box containing the full text of the 2022 UA. Id. Ex. B.

3 Above the scroll box was a directive to “review and accept [the] updated terms and

4 conditions to continue using [their] Coinbase account.” Id. Users could accept the terms

5 of the 2022 UA by clicking a blue “[a]ccept terms” button at the bottom of the page. Id. §

6 10.

7 Coinbase’s records reveal that Plaintiff accepted the updated UA on February 28,

8 2022. See Nacoste Decl. ¶ 16, Ex. D.

9 B. Arbitration Provisions

10 The 2022 UA included the following arbitration provision:

11 1.1 Applicability of Arbitration Agreement. Subject to the

terms of this Arbitration Agreement, you and Coinbase agree

12 that any dispute, claim, disagreements arising out of or relating

in any way to your access to or use of the Services or the

13 Coinbase Site, any Communications you receive, any products

sold or distributed through the Coinbase Site, the Services, or

14 the User Agreement and prior versions of the User Agreement,

including claims and dispute that arose between us before the

15 effective date of these terms (each, a “Dispute”) will be resolved

by binding arbitration, rather than in court, except that: (1)

16 you and Coinbase may assert claims or seek relief in small

claims court if such claims qualify and remain in small claims

17 court; and (2) you or Coinbase may seek equitable relief in court

for infringement, or other misuse of intellectual property rights

18 (such as trademarks, trade dress, domain names, trade secrets,

copyrights, and patents). For purposes of this Arbitration

19 Agreement, “Dispute” will also include disputes that arose or

involve facts occurring before the existence of this or any prior

20 versions of the User Agreement as well as claims that may arise

after the termination of this User Agreement.

21

Id. Ex. E at Appendix 5 (emphasis in original).

22

The 2022 UA also contained a jury trial waiver:

23

1.2. Waiver of Jury Trial. YOU AND COINBASE HEREBY

24 WAIVE ANY CONSTITUTIONAL AND STATUTORY

RIGHTS TO SUE IN COURT AND HAVE A TRIAL IN

25 FRONT OF A JUDGE OR A JURY. You and Coinbase are

instead electing that all Disputes shall be resolved by

26 arbitration under this Arbitration Agreement, except as

specified in the subsection entitled “Applicability of

27 Arbitration Agreement” above. There is no judge or jury in

arbitration, and court review of an arbitration award is

1 Id. (emphasis in original).

2 The Preamble of the 2022 UA contained the following language:

3 Dispute Resolution: PLEASE BE AWARE THAT

SECTION 7 (CUSTOMER FEEDBACK, QUERIES,

4 COMPLAINTS AND DISPUTE RESOLUTION) AND

APPENDIX 5 OF THIS AGREEMENT, CONTAIN

5 PROVISIONS GOVERNING HOW TO RESOLVE

DISPUTES BETWEEN YOU AND COINBASE. AMONG

6 OTHER THINGS, APPENDIX 5 INCLUDES AN

AGREEMENT TO ARBITRATE WHICH REQUIRES,

7 WITH LIMITED EXCEPTIONS, THAT ALL DISPUTES

BETWEEN YOU AND US SHALL BE RESOLVED BY

8 BINDING AND FINAL ARBITRATION. APPENDIX 5

ALSO CONTAINS A CLASS ACTION AND JURY TRIAL

9 WAIVER. PLEASE READ SECTION 7 AND APPENDIX

5 CAREFULLY.

10

Id. at Preamble. (emphasis in original).

11

Finally, the 2022 UA contained a delegation provision giving the arbitrator

12

exclusive authority to determine the enforceability of the arbitration agreement:

13

1.6. Authority of Arbitrator. The arbitrator shall have

14 exclusive authority to resolve any Dispute, including, without

limitation, disputes arising out of or related to the interpretation

15 or application of the Arbitration Agreement, including the

enforceability, revocability, scope, or validity of the Arbitration

16 Agreement or any portion of the Arbitration Agreement[.]

17 Id. (emphasis in original).

18 II. LEGAL STANDARD

19 Contracts “evidencing a transaction involving commerce” are subject to the Federal

20 Arbitration Act (“FAA”). See Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126,

21 1130 (9th Cir. 2000) (citing 9 U.S.C. § 2). The FAA provides that an agreement to

22 arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at

23 law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “[A]ny party bound to

24 an arbitration agreement that falls within the scope of the FAA may bring a motion in

25 federal district court to compel arbitration.” Magana v. DoorDash, Inc., 343 F. Supp. 3d

26 891, 898 (N.D. Cal. 2018) (citing 9 U.S.C. §§ 3–4).

27 When deciding whether to compel arbitration under the FAA, a court’s role is

1 whether the agreement encompasses the dispute at issue.” Chiron Corp., 207 F.3d at 1130.

2 If the answer to both questions is “yes,” the court must enforce the arbitration agreement.

3 See id. “When deciding whether the parties agreed to arbitrate a certain matter (including

4 arbitrability), courts generally . . . apply ordinary state-law principles that govern the

5 formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944

6 (1995).

7 III. DISCUSSION

8 Coinbase argues primarily that the parties agreed to delegate the issue of

9 arbitrability to the arbitrator. See Mot. at 8. Plaintiff counters that the Court, not an

10 arbitrator, must decide the issue of arbitrability, that Plaintiff did not unambiguously

11 manifest assent to Coinbase’s 2022 UA, and that even if she did, the arbitration agreement

12 is unconscionable and therefore unenforceable. See Opp’n at 2–3. This order will discuss

13 (A) the issue of contract formation; (B) the issue of arbitrability; (C) Plaintiff’s assertion of

14 unconscionability; and (D) Coinbase’s stay request.

15 A. Contract Formation

16 Plaintiff argues that she did not assent to the UA and therefore that no contract was

17 ever formed. See id. at 16. The Court will decide this issue rather than letting the

18 arbitrator decide it. See Belyea v. GreenSky, Inc., No. 20-cv-1693-JCS, 2020 WL

19 3618959, at *3 (N.D. Cal. July 2, 2020) (“The question of contract formation, however, is

20 not a delegable gateway issue.”) (quoting Kum Tat Ltd. v. Linden Ox Pasture, LLC, 845

21 F.3d 979, 983 (9th Cir. 2017) (“[a]lthough challenges to the validity of a contract with an

22 arbitration clause are to be decided by the arbitrator, challenges to the very existence of the

23 contract are, in general, properly directed to the court.”); Galilea, LLC v. AGCS Mar. Ins.

24 Co., 879 F.3d 1052, 1056 (9th Cir. 2018) (courts “must first make a threshold finding that

25 the document [evidencing an agreement] at least purports to be . . . a contract”) (internal

26 quotation marks omitted).

27 As the party seeking to compel arbitration, Coinbase “bears the burden of proving

1 Dave Inc., No. 22-cv-4160-VC, 2022 WL 17089824, at *1 (N.D. Cal., Nov. 21, 2022)

2 (internal quotation marks omitted). “Arbitration is a matter of contract.” Knutson v. Sirius

3 XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (internal quotation marks omitted).

4 “[A] party cannot be required to submit to arbitration any dispute which he has not agreed

5 so to submit.” Id. at 565 (internal quotation marks omitted). “In determining whether the

6 parties have agreed to arbitrate a particular dispute, federal courts apply state-law

7 principles of contract formation.” Berman v. Freedom Fin. Network, LLC, 30 F.4th 849,

8 856 (9th Cir. 2022). The parties here appear to agree that California law governs. See

9 Mot. at 9; Opp’n at 3. The 2022 UA has a provision stating the same. See Nacoste Decl.

10 Ex. E § 9.5 (“Governing Law. You agree that the laws of the State of California . . . will

11 govern this dispute . . . ”) (emphasis in original).

12 Plaintiff argues that Coinbase’s landing page did not provide reasonably

13 conspicuous notice of Coinbase’s terms of service or its arbitration provision and that

14 Plaintiff did not manifest assent to either. See Opp’n at 14–16.3 These are indeed the two

15 issues the Court must address. See Sellers v. JustAnswer LLC, 73 Cal. App.5th 444, 466–

16 71 (2021) (holding that the sign-in wrap at issue was not sufficiently conspicuous to bind

17 consumers to the contract); see also Berman, 30 F.4th at 856 (“[A]n enforceable contract

18 will be found based on an inquiry notice theory only if: (1) the website provides

19 reasonably conspicuous notice of the terms to which the consumer will be bound; and (2)

20 the consumer takes some action, such as clicking a button or checking a box, that

21 unambiguously manifests his or her assent to those terms.”) (citing Meyer v. Uber Techs.,

22 Inc., 868 F.3d 66, 74 (2d Cir. 2017); Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1173

23 (9th Cir. 2014)).

24 There was conspicuous notice here. To open a Coinbase account, Plaintiff had to

25

26

3 Plaintiff contends that the 2022 UA is a “browsewrap” and a “sign-in wrap,” Opp’n at 8, 12,

while Coinbase contends that it is a “clickwrap agreement.” Reply (dkt. 29) at 3. Even assuming

27 that the UA agreement could be both a “browsewrap” and a “sign-in wrap” (it cannot), the Court is

inclined to agree with Coinbase on this matter, as users must click that they agree to the UA. See

1 accept the 2017 UA, which alerted users that Coinbase could “amend or modify” the

2 agreement by posting on the Coinbase website or sending an email to the user. Nacoste

3 Decl. Ex. B § 8.5. Plaintiff does not argue that she did not assent to the 2017 UA; rather,

4 Plaintiff argues that she did not assent to the updated 2022 UA. See Opp’n at 16. Plaintiff

5 was first informed of the 2022 UA on January 25, 2022, when Coinbase emailed her about

6 the upcoming changes to the UA. See Nacoste Decl. ¶14. The email was concise,

7 providing only a handful of bullet points for users to read. See id. Ex. C. One of the bullet

8 points specifically flagged the UA’s arbitration clause: “Clarity on Dispute Resolution:

9 We’ve revised our arbitration to streamline the process for resolving problems you may

10 experience.” Id. (emphasis in original). The email also provided a hyperlink to the full

11 terms of the updated UA and encouraged users to “make sure [to] read the entire

12 agreement.” Id.

13 The email and Plaintiff’s continued use of Coinbase’s services is enough to

14 establish reasonably conspicuous notice and assent to the terms of the 2022 UA. See

15 Sadlock v. Walt Disney Co., No. 22-CV-09155-EMC, 2023 WL 4869245, at *12 (N.D.

16 Cal. July 31, 2023) (holding user unambiguously manifested assent to a subscriber

17 agreement by continuing to use website following an email of the update to the terms and

18 conditions); In re Facebook Biometric Info. Priv. Litig., 185 F. Supp. 3d 1155, 1167 (N.D.

19 Cal. 2016) (concluding that email regarding updates to the user agreement and continued

20 use is enough for notice and assent); In re Uber Techs., Inc., No. ML 18-2826 PSG (GJSx),

21 2019 WL 6317770, *4 (C.D. Cal. Aug. 19, 2019) (“Courts have found that when

22 consumers receive emails such as this one [e.g., having a subject line stating that Uber had

23 updated its terms of use, including in the body that the arbitration agreement had been

24 revised, and providing a link to the updated terms], continued use of the service or product

25 constitutes assent to the updated terms”); West v. Uber Techs., No. 18-CV-3001-PSG-GJS,

26 2018 WL 5848903, at *5 (C.D. Cal. Sept. 5, 2018) (stating the same).

27 Plaintiff here received even more notice than a single email. See Zia Decl. Ex. B.

1 landing page. Id. The landing page had the following phrases in bold and in a larger font

2 size than the rest of the text on the page: “We’re updating your User Agreement with

3 Coinbase” and “Coinbase User Agreement.” Id. Underneath the bold text was a scroll box

4 containing the full text of the 2022 UA. Id. The landing page also informed users that

5 they could access a summary of the changes by clicking a hyperlink that directed them to

6 an article that depicted those changes. See id. Coinbase’s landing page was therefore

7 conspicuous and varies from the notice in Berman, where the link to the terms and

8 conditions to which the user allegedly agreed was “printed in a tiny gray font considerably

9 smaller than the font used in the surrounding website elements . . . barely legible to the

10 naked eye.” 30 F.4th at 856–57.

11 Plaintiff’s unambiguous assent to the 2022 UA is further illustrated by her conduct

12 of clicking Coinbase’s “[a]ccept terms” button. See Zia Decl. Ex. C. At the bottom of the

13 landing page was a bright blue button that users needed to click to accept the terms of the

14 UA in order to continue to use Coinbase services. See id. Ex. B ¶ 10. The blue button had

15 the following text inside it in bold and white font: “Accept terms.” See id. That text put

16 Plaintiff on notice. See Peter v. DoorDash, Inc., 445 F. Supp. 3d 580, 586 (N.D. Cal.

17 2020) (plaintiffs on notice where “text contrasts clearly with the background and is plainly

18 readable”). Near the “[a]ccept terms” button was a statement informing users to “[p]lease

19 review and accept your updated terms and conditions to continue using your Coinbase

20 account.” Zia Decl. Ex. B. Coinbase’s records indicate that Plaintiff clicked the button on

21 February 28, 2022, and continued to access her Coinbase account. Id. Ex. C. Coinbase’s

22 landing page is far superior to the websites in Berman and Sellers, which did not state that

23 clicking the “[c]ontinue” button manifested assent to the terms and conditions. See

24 Berman, 30 F.4th at 858 (“This notice defect could easily have been remedied by including

25 language such as, ‘By clicking the Continue >> button, you agree to the Terms &

26 Conditions.’”); Sellers, 73 Cal. App.5th at 453 (consumer clicked “[s]tart my trial” and

27 only “in very small print further down the page” did the webpage state: “‘By clicking

1 old.’”).

2 Plaintiff argues that she did not manifest assent because she did not physically sign

3 the 2022 UA. See Opp’n at 11. Plaintiff also argues that Coinbase needed to provide her

4 with a “detailed application” and was required to “collect . . . [her] personal information”

5 for her electronic signature to be authentic. Id. at 17–18. Plaintiff cites no authority for

6 these assertions. Plaintiff’s affirmative act of clicking “[a]ccept terms” qualifies as an

7 electronic signature under federal and California law because it is “an electronic sound,

8 symbol, or process . . . adopted by a person with the intent to sign the record.” 15 U.S.C. §

9 7006(5); see Cal. Civ. Code § 1633.2(h) (“electronic signature” means an electronic sound,

10 symbol, or process attached to or logically associated with an electronic record and

11 executed or adopted by a person with the intent to sign the electronic record.”). Further,

12 this Court has recognized that “[e]lectronic signatures and clicking “[a]ccept” are valid

13 means of expressing assent to a contract.” Mikhah v. University of Phoenix, No. C16-

14 00901 CRB, 2016 WL 3401763, at *6 (N.D. Cal. June 21, 2016) (citing Cal Civ. Code §

15 1633.7(b)).

16 Accordingly, Plaintiff agreed to the 2022 UA. See Alfia v. Coinbase Global, Inc.,

17 No. 21-cv-8689-HSG, 2022 WL 3205036, at *2 (N.D. Cal. July 22, 2022) (holding, where

18 “Plaintiff had to click a ‘check box’ next to the language ‘I certify that I am 18 years of

19 age or older, and I agree to the User Agreement and Privacy Policy,’ with both agreements

20 accessible via hyperlink,” that plaintiff had “clear notice . . . and took physical action to

21 manifest his assent.”).

22 B. Arbitrability

23 Plaintiff argues that the Court must determine whether a valid arbitration exists

24 before referring the dispute to the arbitrator. See Opp’n at 2. Therefore, the Court will

25 next address whether it may resolve gateway issues of arbitrability or whether an arbitrator

26 must resolve those issues.

27 1. Governing Law

1 the applicable law that governs the dispute. “[F]ederal law governs the arbitrability

2 question by default because the Agreement is covered by the FAA” except where the

3 parties have “clearly and unmistakably designated that nonfederal arbitrability law

4 applies.” Brennan v. Opus Bank, 796 F.3d 1125, 1129 (9th Cir. 2015) (emphasis in

5 original). The 2022 UA does not explicitly state whether California or federal law governs

6 the question of arbitrability. See Nacoste Decl. Ex. E § 9.5. Because there is ambiguity as

7 to whether the question of arbitrability is governed by California law, there is not “clear

8 and unmistakable evidence that the parties agreed to apply non-federal arbitrability law.”

9 See Shierkatz RLLP v. Square, Inc., No. 15-cv-02202-JST, 2015 WL 9258082, at *5 (N.D.

10 Cal. Dec. 17, 2015) (citing Brennan, 796 F.3d at 1129); see also Cape Flattery Ltd., 647

11 F.3d at 921 (holding that “courts should apply federal arbitrability law absent ‘clear and

12 unmistakable evidence’ that the parties agreed to apply non-federal arbitrability law.”)

13 (citing Kaplan, 514 U.S. at 944). Therefore, the Court applies federal arbitrability law.

14 2. Clear and Unmistakable Delegation

15 The “gateway” question of arbitrability asks “whether the parties have submitted a

16 particular dispute to arbitration.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83

17 (2002). The parties can agree that this question, like any other, will be decided by an

18 arbitrator. See Rent-A-Ctr., West, Inc. v. Jackson, 561 U.S. 68–69 (2010); see also Henry

19 Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019) (“[I]f a valid

20 agreement exists, and if the agreement delegates the arbitrability issue to an arbitrator, a

21 court may not decide the arbitrability issue.”). Courts should presume that they determine

22 arbitrability “‘[u]nless the parties clearly and unmistakably provide otherwise.’” Howsam,

23 537 U.S. at 83 (quoting AT&T Techs., Inc. v. Commc’ns Workers, 475 U.S. 643, 649

24 (1986)). Clear and unmistakable evidence can be “a course of conduct demonstrating

25 assent . . . or . . . an express agreement.” Momot v. Mastro, 652 F.3d 982, 988 (9th Cir.

26 2011) (omissions in text). Silence or ambiguity must be construed in favor of the court

27 deciding the issue of arbitrability. Kaplan, 514 U.S. at 945–47.

1 delegates arbitrability questions to the arbitrator. See Mot. at 12. There is support in the

2 case law for that position. Other courts have found that Coinbase’s arbitration provision

3 has clearly and unmistakably delegated arbitrability to an arbitrator. See, e.g., Aggarwal v.

4 Coinbase, No. 22-CV-04829-JSW, 2023 WL 4935003, at *8 (N.D. Cal. Aug. 2, 2023)

5 (interpreting Coinbase’s 2022 UA and concluding that “the parties clearly and

6 unmistakably agreed to submit arbitrability issues to an arbitrator.”); Donovan v. Coinbase

7 Globe., Inc., 649 F. Supp. 3d 946, 954 (N.D. Cal. 2023) (same); Flores v. Coinbase, Inc.,

8 No. CV 22-8274-MWF (KS), 2023 WL 3564756, at *1 (C.D. Cal. Apr. 6, 2023) (same).

9 And only a few months ago, the Ninth Circuit held that a substantially similar delegation

10 clause in an earlier version of Coinbase’s UA was not unconscionable and required that

11 threshold disputes be resolved by an arbitrator. See Bielski, 87 F.4th at 1015.

12 A recent Ninth Circuit ruling further supports the delegation here. See Patrick v.

13 Running Warehouse, LLC, No. 22-56078, 2024 WL 542831, at *8 (9th Cir. Feb. 12,

14 2024). In Patrick, the delegation provision was attached to a “terms of use” hyperlink. Id.

15 at 2. When consumers were in the process of creating an account, they had to check a box

16 next to a statement that informed them that by creating an account, they were agreeing to

17 the “terms of use.” Id. The court found that the following delegation provision clearly and

18 unmistakably delegated questions of arbitrability to the arbitrator, explaining:

19

[J]urisdictional and arbitrability disputes, including disputes

20 over the formation, existence, validity, interpretation or scope of

the agreement under which Arbitration is sought and who are the

21 proper parties to the Arbitration, shall be submitted to and ruled

on by the Arbitrator. The Arbitrator has the authority to

22 determine jurisdiction and arbitrability issues as a preliminary

matter.

23

24 Id. at 7.

25 Given the similarity of the Patrick delegation provision to the delegation provision

26 here, the Court concludes that Coinbase’s delegation provision clearly delegated

27 arbitrability to the arbitrator. See id.

1 While Plaintiff references the “clear and unmistakable” standard for delegation in her

2 opposition, see Opp’n at 21, she fails to articulate why Coinbase does not meet it. It is

3 unclear to this Court why Coinbase’s alleged “false attestations” regarding discovery and

4 Plaintiff’s desire to “engage in arbitration concurrently together with this federal case” is

5 relevant to whether the delegation provision is enforceable. Id. at 22. (emphasis in

6 original). Plaintiff goes on to cite Burzdak v. Universal Screen Arts, Inc., No. 21-CV-

7 02148-EMC, 2021 WL 3621830, at *1 (N.D. Cal. Aug. 16, 2021)—a case that held that a

8 browsewrap agreement did not put a reasonably prudent website user on inquiry notice.

9 See id. at 23. Burzdak’s holding turned on contract formation, not the enforceability of a

10 delegation provision, so it is not relevant to this issue. See id.

11 Accordingly, the Court holds that the parties clearly and unmistakably delegated

12 questions of arbitrability to an arbitrator.

13 C. Unconscionability and Specificity

14 Next, the Court must assess whether a general contract principle—here, the

15 principle against enforcing unconscionable agreements—makes the delegation clause

16 unenforceable under the FAA. See Rent-A-Center, 561 U.S. at 71–74.

17 Courts may refuse to enforce an unconscionable contract or a specific clause within

18 a contract, or they may limit the application of any unconscionable clause. See Cal. Civ.

19 Code § 1670.5(a). “California’s ‘unconscionability standard is, as it must be, the same for

20 arbitration and nonarbitration agreements.’” Poublon v. C.H. Robinson Co., 846 F.3d

21 1251, 1260 (9th Cir. 2017) (quoting Sanchez v. Valencia Holding Col, LLC, 61 Cal. 4th

22 899, 912 (2015)).

23 “[T]he party opposing arbitration bears the burden of proving . . .

24 unconscionability.” Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC, 55

25 Cal. 4th 223, 236 (2012). That party “must demonstrate that the contract as a whole or a

26 specific clause in the contract is both procedurally and substantively unconscionable.”

27 Poublon, 846 F.3d at 1260. Procedural unconscionability and substantive

1 4th at 910). Instead, “there is a sliding scale.” Id. “[T]he more substantively oppressive

2 the contract term, the less evidence of procedural unconscionability is required to come to

3 the conclusion that the term is unenforceable, and vice versa.” Sanchez, 61 Cal. 4th at

4 910.

5 The Ninth Circuit recently held that “to sufficiently challenge a delegation

6 provision [on unconscionability grounds, for example], the party resisting arbitration must

7 specifically reference the delegation provision and make arguments challenging [its

8 unconscionability].” Bielski, 87 F.4th at 1011. “[A] party may use the same arguments to

9 challenge both the delegation provision and arbitration agreement, so long as the party

10 articulates why the argument invalidates each specific provision.” Id. The rule is

11 consistent with the approach in the Second, Third, and Fourth Circuits where if “a party’s

12 challenge mentions and specifically relates to the validity of the delegation provision in its

13 opposition[,] . . . the federal court has a green light to consider those arguments.” Id.

14 Plaintiff’s unconscionability challenge to the delegation provision is scant—she

15 argues that there is a “high degree” of procedural and substantive unconscionability, but

16 her only support for that assertion is that Coinbase failed to obtain her “informed written

17 consent.” Opp’n. at 20–21. Because there is a “low barrier to entry” to federal court for

18 unconscionability challenges, this Court will consider the procedural and substantive

19 unconscionability of Coinbase’s delegation provision. See Bielski, 87 F.4th at 1010.

20 1. Procedural Unconscionability

21 A determination of procedural unconscionability involves the analysis of two

22 factors: (1) oppression; and (2) surprise. Nagrampa v. MailCoups, Inc., 469 F.3d 1257,

23 1280 (9th Cir. 2006). Oppression is found when there is such an inequality in bargaining

24 power between two parties that there is no actual negotiation and a lack of meaningful

25 choice. Id. Surprise is found when the “supposedly agreed-upon terms are hidden in a

26 prolix printed form drafted by the party seeking to enforce them.” Id. (internal quotation

27 marks omitted).

1 makes no arguments about why the delegation provision is procedurally unconscionable.

2 She does not, for example, contend that she was an “unsophisticated layperson[s] who

3 could not have understood the delegation agreement.” See Pinela v. Neiman Marcus Grp.,

4 238 Cal. App. 4th 227, 243 (2015). Thus, at most, there is only “the minimum degree of

5 procedural unconscionability that is always present with an adhesive contract.” Id. at 244.

6 And because “the degree of procedural unconscionability . . . is low . . . the agreement will

7 be enforceable unless the degree of substantive unconscionability is high.” See Poublon,

8 846 F.3d at 1263 (citation omitted).

9 2. Substantive Unconscionability

10 Substantive unconscionability occurs when the terms of the agreement are one-

11 sided. See Little v. Auto Stiegler, Inc., 29 Cal.4th 1064, 1071 (2003). A court will refuse

12 to enforce an agreement, rather than sever the offending unconscionable provision, where

13 the agreement is “permeated” with unconscionability. Armendariz v. Found. Health

14 Psychcare Servs., Inc., 24 Cal.4th 83, 122 (2000).

15 Plaintiff’s only argument on substantive unconscionability is that Coinbase failed to

16 obtain her “informed written consent,” but Plaintiff offers no legal support for why

17 “written” consent is required. See Opp’n at 21. Coinbase’s records show that Plaintiff

18 assented to the 2022 UA by providing her electronic signature when she clicked on a

19 clicked on a conspicuous “[a]ccept terms” button. See Zia Decl. ¶ 12, Ex. C. Plaintiff was

20 informed that by clicking the button, she was accepting to the terms and conditions of the

21 2022 UA. See id. ¶ 7. That is sufficient to demonstrate consent. See Berman 30 F.4th at

22 857 (“user’s click of a button can be construed as an unambiguous manifestation of assent

23 only if the user is explicitly advised that the act of clicking will constitute assent to the

24 terms and condition of an agreement.”)

25 The delegation agreement is therefore (at most) minimally procedurally

26 unconscionable and is not substantively unconscionable. Under the “sliding scale”

27 approach, see Poublon, 846 F.3d at 1260, it is valid and enforceable. Accordingly, the

1 delegates the question of arbitrability to the arbitrator. The Court GRANTS the motion to

2 compel.

3 D. Stay

4 Coinbase requests that this Court dismiss this case under Rule 12(b)(1), or, in the

5 alternative, stay this action pending completion of arbitration proceedings. See Mot. at 16.

6 Motions to compel arbitration are generally treated as motions to dismiss for lack of

7 subject matter jurisdiction under Rule 12(b)(1). See Harris v. Pac. Gas & Elec. Co., No.

8 21-CV-04096-JCS, 2022 WL 16637987, at *6 (N.D. Cal. Nov. 2, 2022).

9 The FAA provides that

10 If any suit or proceeding be brought in any of the courts of the

United States upon any issue referable to arbitration under an

11 agreement in writing for such arbitration, the court in which such

suit is pending, upon being satisfied that the issue involved in

12 such suit or proceeding is referable to arbitration under such an

agreement, shall on application of one of the parties stay the

13 trial of the action until such arbitration has been had in

accordance with the terms of the agreement, providing the

14 applicant for the stay is not in default in proceeding with such

arbitration.

15

9 U.S.C. § 2 (emphasis added). The plain language of the statute suggests that the Court

16

“shall” stay the action pending arbitration. See Johnmohammadi v. Bloomingdale’s Inc.,

17

755 F.3d 1072, 1074 (9th Cir. 2014); Magana v. DoorDash, Inc., 343 F. Supp. 3d 891, 902

18

(N.D. Cal. 2018) (applying plain language of the statute to hold that a “stay” is required);

19

Lloyd v. HOVENSA, LLC., 369 F.3d 263, 269 (3d Cir. 2004) (same); see also Green Tree

20

Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 88 (2000) (applying “the plain language of

21

the statutory text” in interpreting the FAA).

22

The Ninth Circuit, however, has held that “notwithstanding the language of § 3, a

23

district court may either stay the action or dismiss it outright when, as here, the court

24

determines that all of the claims raised in the action are subject to arbitration.”

25

Johnmohammadi, 755 F.3d at 1073–74. Coinbase offers no support for why the Court

26

should depart from the plain language of the text. Accordingly, the Court adheres to the

27

plain meaning of 9 U.S.C. § 2 and STAYS this suit pending arbitration.

IV. CONCLUSION

For the foregoing reasons, the Court GRANTS Coinbase’s motion to compel

2

arbitration and STAYS this suit pending arbitration.

3

IT IS SO ORDERED.

Dated: March >_, 2024

5 CHARLES R. BREYER

6 United States District Judge

7

8

9

10

11

12

13

«14

S

15

16

© 17

1g

zZ

19

20

21

22

23

24

25

26

27

28