Nichols v. Google LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 23-cv-01022-RMR-NRN

STEVEN NICHOLS, individually and on behalf of all others similarly situated,

Plaintiff,

v.

GOOGLE LLC,

Defendant.

REPORT AND RECOMMENDATION ON

DEFENDANT GOOGLE LLC’S MOTION TO COMPEL ARBITRATION AND STAY

(Dkt. #7)

N. REID NEUREITER

United States Magistrate Judge

This matter is before the Court on an Order (Dkt. #8) referring Defendant Google

LLC’s (“Google”) Motion to Compel Arbitration and Stay. (Dkt. #7.) Plaintiff Steven

Nichols responded to the motion on June 28, 2023. (Dkt. #13.) Google filed its reply in

support on July 12, 2023. (Dkt. #15.)

The Court heard argument from the parties on July 27, 2023. (See Dkt. #16.) The

Court has taken judicial notice of the Court’s file and considered the applicable Federal

Rules of Civil Procedure and case law. Now being fully informed and for the reasons

discussed below, the Court RECOMMENDS that the Motion to Compel Arbitration and

Stay (Dkt. #7) be GRANTED.

BACKGROUND

In this putative class action, Mr. Nichols alleges that Google sells the Pixel 4a,

Pixel 5, and Pixel 5a mobile phones, which Google advertises as being capable of

accessing 5G broadband networks. However, Mr. Nichols contends that a recent

software update rendered the phones unable to access such networks. Mr. Nichols

alleges that he purchased a Pixel 5 phone in October 2020, and appears to allege that

he owned at least one additional Pixel 5 phone, believing that the devices could access

5G networks. He alleges he would not have paid as much for the phones had he known

that they would not remain capable of accessing such networks.

Mr. Nichols contends that Google’s conduct amounts to false or deceptive

advertising in violation of the Colorado Consumer Protection Act as well as other states’

consumer fraud acts. He also brings claims for breach of contract, breach of express

and implied warranties, negligent misrepresentation, fraud, and unjust enrichment. (See

Dkt. #1.)

Google argues that Mr. Nichols entered into an arbitration agreement whereby he

agreed to arbitrate all disputes with Google on an individual basis, that the lawsuit

cannot proceed in federal court, and that Mr. Nichols must be compelled to arbitrate.

Specifically, Google argues that as part of the Pixel 5 set-up process, all users

are notified that the device is subject to the Google Device Arbitration Agreement (the

“Arbitration Agreement.”)1 three times. (Dkt. ## 7 at 3–4; 7-1 at ¶¶ 4–9.) First, a

1 A complete copy of the Arbitration Agreement can be found at Dkt. #7-2. The Court

may properly “consider the Terms and Conditions submitted by defendant in

determining whether there is a valid and enforceable agreement to arbitrate.” BigBen

1613, LLC v. Belcaro Grp., Inc., No. 17- cv-00272-PAB-STV, 2018 WL 4257321, at *3

(D. Colo. Sept. 6, 2018). Additionally, Google has submitted the declaration of Victoria

conspicuous notice on the exterior of the Pixel 5 box notifies consumers of the

Arbitration Agreement when unboxing the device: “Requires: Google Account, internet

access, and or/ paid subscription for some features; acceptance of arbitration terms,

see g.co/devicearbitration.” (Dkt. #7-1 at ¶ 4.) Second, a printed notice inside the box

informs the user that the Pixel 5 is subject to the Arbitration Agreement. (Id. at ¶ 5.)

Third, Pixel 5 users are again notified of the Arbitration Agreement during device setup,

a process they must go through in order to use the device. (Dkt. #7 at 4.) Users are

shown a screen titled “Additional legal terms” in an easily legible font that informs them

that they agree to the Arbitration Agreement when they select a brightly colored “I

accept” button. (Dkt. #7-1 at ¶ 7.) Users are also notified that “[a]ll disputes regarding

your Google device will be resolved through binding arbitration on an individual, non-

class basis, as described in the Google Device Arbitration Agreement, unless you opt

out by following the instructions in the Arbitration Agreement.” (Id.) The Arbitration

Agreement states that users have 30 days from when a user first activates their device

to opt out of the Arbitration Agreement, either by returning the device or by “notifying

Google . . . by following the instructions at g.co/devicearbitration/optout.” (Dkt. #7-2 at ¶

9.) This Uniform Resource Locator (“URL”) instructs users who wish to opt out of the

Arbitration Agreement to input the serial number of their Pixel device and the email

Luu, a Legal Specialist on the Devices team for Google, in support of its Motion to

Compel Arbitration and Stay. (See generally Dkt. #7-1.) Plaintiff has not contested the

content of this declaration. The Court may properly consider this declaration when ruling

on the Motion to Compel Arbitration and Stay. See Hancock v. Am. Tel. & Tel. Co., 701

F.3d 1248, 1264 (10th Cir. 2012).

address used to activate the device, and to click a bright blue “Submit” button. (Dkt. #7-

1 at ¶ 21.)

According to Google, Mr. Nichols accepted the Arbitration Agreement by clicking

“I accept” on October 29, 2020, and again in October and November 2022 when setting

up a second and third Pixel 5 device. (Dkt. #7 at 6–7.) At no point did Mr. Nichols opt

out of the Arbitration Agreement. (Dkt. #7-1 at ¶ 22.)

For his part, Mr. Nichols argues that the Arbitration Agreement is not

enforceable. He contends that the “Additional legal terms” screen that Google displays

for users during the device set up process contains ambiguous language, making it

unclear whether Mr. Nichols was agreeing to arbitration or opting out of arbitration by

pressing the “I accept” button on the screen. (Dkt. #13 at 3.) He further argues that the

URL containing opt-out instructions was buried deep within the Arbitration Agreement.

(Id. at 5.) Mr. Nichols also argues that he was fraudulently induced to accept the

Arbitration Agreement because the Arbitration Agreement misrepresented the benefits

of arbitration as opposed to litigation. (See id. at 5–6.)

LEGAL STANDARDS

There is no dispute that the Arbitration Agreement in this case is subject to and

governed by the Federal Arbitration Act, 9 U.S.C. §§ 1–14 (“FAA”). Under the FAA,

agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The

United States Supreme Court has “long recognized and enforced a liberal federal policy

favoring arbitration agreements,” and accordingly, any “doubts concerning the scope of

arbitrable issues should be resolved in favor of arbitration.” Nat’l Am. Ins. Co. v. SCOR

Reinsurance Co., 362 F.3d 1288, 1290 (10th Cir. 2004) (quoting Howsam v. Dean

Witter Reynalds, Inc., 537 U.S. 79, 83 (2002), and Spahr v. Secco, 330 F.3d 1266,

1269–70 (10th Cir. 2003)).

Motions to compel arbitration are governed by 9 U.S.C. § 4, which provides in

relevant part:

The court shall hear the parties, and upon being satisfied that

the making of the agreement for arbitration or the failure to

comply therewith is not in issue, the court shall make an order

directing the parties to proceed to arbitration in accordance

with the terms of the agreement. . . . If the making of the

arbitration agreement or the failure, neglect, or refusal to

perform the same be in issue, the court shall proceed

summarily to the trial thereof.

9 U.S.C. § 4 (emphasis added). Therefore, if the “making” of an agreement for

arbitration is in question, judicial resolution of that issue is required. Spahr, 330 F.3d at

1269–70 (citing Prima Paint Corp. v. Flood & Conklin Mfg., 388 U.S. 395, 403–04

(1967)); see also Bess v. Check Express, 294 F.3d 1298, 1304 (11th Cir. 2002) (“If ‘the

making of the arbitration agreement’ is in issue . . . the court must first adjudicate

whether the agreement is enforceable against the parties.”). “The party moving to

compel arbitration must present ‘evidence sufficient to demonstrate the existence of an

enforceable agreement.’” Hickerson v. Pool Corp., No. 19-cv-02229-CMA-STV, 2020

WL 5016938, at *3 (D. Colo. Aug. 25, 2020) (quoting Bellman v. i3Carbon, LLC, 563 F.

App’x 608, 612 (10th Cir. 2014)).

If the Court finds that a valid arbitration agreement exists, it must then determine

whether the dispute falls within the scope of the agreement. Pikes Peak Nephrology

Assocs., P.C. v. Total Renal Case, Inc., No. 09-cv-00928-CMA-MEH, 2010 WL

1348326, at *5 (D. Colo. Mar. 30, 2010). A claim is arbitrable if it has “a reasonable

factual connection to the contract.” Brown v. AutoNation Chrysler Dodge Jeep Ram Sw.,

No. 21-CV-00897-MEH, 2021 WL 2514524, at *2 (D. Colo. June 18, 2021) (quoting

Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1516 (10th Cir. 1995)). Once a

court concludes a valid arbitration agreement exists, the FAA mandates a stay of a

judicial proceeding “upon any issue referable to arbitration under an agreement in

writing for such arbitration.” 9 U.S.C. § 3; see also Am. Family Mut. Ins. Co. v. TAMKO

Bldg. Prods., 178 F. Supp. 3d 1121, 1129 (D. Colo. 2016).

ANALYSIS

The Court finds that the Arbitration Agreement is valid and enforceable.

Concerning the first prong of the analysis, “[t]he existence of an agreement to arbitrate

‘is simply a matter of contract between the parties; [arbitration] is a way to resolve those

disputes—but only those disputes—that the parties have agreed to submit to

arbitration.’” Avedon Eng’g, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir. 1997)

(quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943–45 (1995)).

“Generally, courts should apply ordinary state-law principles that govern the

formation of contracts to determine whether a party has agreed to arbitrate a dispute.”

Vernon, 857 F. Supp. 2d 1135, 1149 (D. Colo. 2012), aff’d, 925 F. Supp. 2d 1185 (D.

Colo. 2013). Mr. Nichols does not expressly argue which state’s law governs the

arbitrability of his claims, but relies almost exclusively on case law from the District of

Colorado and Tenth Circuit Court of Appeals. The Arbitration Agreement itself contains

a California choice-of-law provision. (See Dkt. #7-2 at 3.) Google argues, and the Court

agrees, that because neither party has identified an outcome-determinative conflict

between Colorado law and California law as to contract formation, this Court may apply

Colorado law at this stage. (See Dkt. #15 at 3 n.2 (citing Fuentes v. Dish Network

L.L.C., No. 16-cv-02001-JSW, 2016 WL 11752207, at *5 (N.D. Cal. Oct. 13, 2016) (“The

Court concludes it need not resolve the choice of law dispute on questions of [contract]

formation, because under either California law or Colorado law, the outcome is the

same.”).)

Mr. Nichols contends that the Arbitration Agreement is unenforceable because

ambiguous and confusing language on the “Additional legal terms” screen meant that

there was no “meeting of the minds” or mutual assent between Mr. Nichols and Google,

and thus no contract formation. (Dkt. #13 at 3–4.) Specifically, Mr. Nichols argues that

the page was unclear as to whether the act of clicking the “I accept” button meant that

he was agreeing to or opting out of arbitration. (Id.) This argument is unpersuasive.

“In determining whether a contract existed between the parties, ‘evidence of the

parties’ conduct, their oral statements and their writings, and other evidence illuminating

the circumstances surrounding the making of an agreement are admissible to clarify the

intent and purpose of the parties.’” Vernon, 857 F. Supp. 2d at 1149 (quoting I.M.A., Inc.

v. Rocky Mountain Airways, Inc., 713 P.2d 882, 888 (Colo. 1986)). However, “[a]n

objective manifestation of assent is not rebutted by that same party’s uncommunicated,

subjective intent.” Id. (quoting Avemco Insurance Co. v. N. Colo. Air Charter, Inc., 38

P.3d 555, 559 (Colo. 2002)).

The evidence in this case demonstrates that Mr. Nichols manifested his assent to

the Arbitration Agreement twice: first when he clicked “I accept” to the clickwrap2

2 “Consumers may be presented with a ‘clickwrap’ or ‘click-through’ agreement in

which the internet purchaser is required to affirmatively click an ‘I agree’ box after being

presented with a list of terms and conditions of use.” Vernon, 857 F. Supp. 2d at 1149.

agreement during set up of his devices, and again when he did not timely opt-out.

Courts have held that clicking “accept” to the terms of a clickwrap agreement, even

when the terms do not appear on the same screen as the “accept” button but are

available with the use of a hyperlink, is sufficient to form a contract. See id at 1150–51;

see also Hancock, 701 F.3d at 1257–58 (holding clickwrap agreement valid and

enforceable); Health Grades, Inc. v. Hamot Med. Cent., No. 05-cv-02163-REB-MEH,

2006 WL 8454634, at *3 (D. Colo. Feb. 27, 2006) (finding clickwrap agreement binding

and collecting cases from other jurisdictions finding the same). The terms must be

“sufficiently conspicuous as to permit a reasonable user the opportunity to review them

and either agree to them or to cancel the . . . service.” Grosvenor v. Qwest Corp., 854 F.

Supp. 2d 1021, 1030 (D. Colo. 2012).

Here, as described above, Mr. Nichols was informed of the existence of the

Arbitration Agreement at least three times. The notice during the set-up process

specifically explained: “All disputes regarding your Google device will be resolved

through binding arbitration on an individual, non-class basis, as described in the

Google Device Arbitration Agreement, unless you opt out by following the instructions in

the Arbitration Agreement.” (Dkt. ## 7 at 5, 7-1 at ¶ 7 (emphasis in original).) The

Arbitration Agreement (which was hyperlinked in the aforementioned notice) is relatively

short, with only eleven paragraphs over three pages. (Dkt. #7-2.) As described above,

Section 9 of the Arbitration Agreement plainly sets forth the opt-out procedure. (Dkt. #7-

2 at 2–3.)

Mr. Nichols points to no specific ambiguity in this process, and the Court finds

none. Mr. Nichols affirmatively assented to the Arbitration Agreement by clicking “I

accept,” and he never subsequently opted out.3

The Court also rejects Mr. Nichols’ argument that he was fraudulently induced

into accepting the Arbitration Agreement. (See Dkt. #13 at 5–6.) Mr. Nichols has not

alleged with particularity (as required by Fed. R. Civ. P. 9(b)) that his assent to the

Arbitration Agreement “was the product of fraud or coercion.” Riley v. Kingsley

Underwriting Agencies, Ltd., 969 F.2d 953, 960 (10th Cir. 1992) (quoting Scherk v.

Alberto-Culver Co., 417 U.S. 506, 519 (1974)). Mr. Nichols argues that three statements

in the Arbitration Agreement were fraudulent. First, Mr. Nichols alleges that the

Arbitration Agreement “describe[es] arbitration as ‘the quickest and most cost-effective

way’ to resolve disputes” (Dkt. #13 at 5), but the Arbitration Agreement in actuality

states that “[i]t’s in both of [the parties’] interests to resolve disputes in the quickest and

most cost-effective way.” (Dkt. #7-2 at ¶ 1.) Second, Mr. Nichols alleges that the

statement that “[a]rbitration . . . uses a neutral arbitrator instead of a judge or jury” was

fraudulent. (Id.) Mr. Nichols argues that this statement “mischaracterizes the role of a

judge and jury” (Dkt. #13 at 6) but does not explain why. Mr. Nichols lastly argues that

because the Arbitration Agreement contains a provision preventing class actions (see

Dkt. #7-2 at ¶ 6), the statement that “arbitrators can award the same damages and

remedies that a court can award” is false. (Id.) The fact that the Arbitration Agreement

3 Moreover, the Northern District of California has already considered the same

Arbitration Agreement at issue in this case and found that it was enforceable. McCoy v.

Google, LLC, No. 20-cv-05427-SVK, 2021 WL 6882419, at *3 (N.D. Cal. Nov. 9, 2021).

contains a contractual provision preventing class actions is unrelated to a general

statement regarding the powers of arbitrators. Further, as a general matter, it is not

fraudulent for a party to express a preference for arbitration over traditional litigation,

particularly considering public policy favoring arbitration for dispute resolution. Vernon,

857 F. Supp. 2d at 1142.

Finally, there appears to be no dispute that the Arbitration Agreement applies to

disputes related to “device(s), related accessories or related subscription services” for

the Pixel 5 phone, or that 5G network access falls within the scope of the Arbitration

Agreement. Because the Arbitration Agreement is valid and Mr. Nichols’ claims are

within the scope of that agreement, Mr. Nichols must be compelled to arbitrate.

CONCLUSION

For the reasons set forth above, it is hereby RECOMMENDED that the Motion to

Compel Arbitration and Stay (Dkt. #7) be GRANTED.

NOTICE: Pursuant to 28 U.S.C. § 636(b)(1)(c) and Fed. R. Civ. P. 72(b)(2),

the parties have fourteen (14) days after service of this recommendation to serve

and file specific written objections to the above recommendation with the District

Judge assigned to the case. A party may respond to another party’s objections

within fourteen (14) days after being served with a copy. The District Judge need

not consider frivolous, conclusive, or general objections. A party’s failure to file

and serve such written, specific objections waives de novo review of the

recommendation by the District Judge, Thomas v. Arn, 474 U.S. 140, 148–53

(1985), and also waives appellate review of both factual and legal questions.

Makin v. Colo. Dep’t of Corr., 183 F.3d 1205, 1210 (10th Cir. 1999); Talley v. Hesse,

91 F.3d 1411, 1412–13 (10th Cir. 1996).

Dated at Denver, Colorado this 12th day of September, 2023

_______________________

N. Reid Neureiter

United States Magistrate Judge