Washington Magistrate Judge Recommends Amazon’s Motion to Compel Arbitration be Denied in Children’s Privacy Lawsuit

A United States Magistrate Judge has reportedly recommended that retail giant Amazon’s motion to compel arbitration in a proposed class action lawsuit that was brought against the company over alleged children’s privacy violations be denied.  As discussed in another Disputing blog post:

In the case, a group of parents filed a putative collective action complaint against Amazon in the Western District of Washington in Seattle over the company’s Alexa technology.  The parents claim the merchant violated the law in several states when Alexa-enabled devices recorded their children speaking in their homes without first obtaining consent.

Amazon countered by filing a motion to compel arbitration arguing the children were bound to the company’s agreement to arbitrate based on several theories of equitable estoppel.  The Magistrate Judge disagreed:

The Court agrees with Plaintiff that the “intertwined/close relationship” theory of equitable estoppel is inapplicable here. Amazon has cited no authority, and the Court is aware of none, holding that this theory should bind nonsignatories to arbitration agreements they have not consented to. As the Ninth Circuit explained in Comer, where a defendant is invoking equitable estoppel against a nonsignatory, only the line of cases holding that nonsignatories may be compelled to arbitrate where they knowingly exploited the agreement containing the arbitration clause is relevant. See Comer, 436 F.3d at 1101. The “intertwined/close relationship” theory of equitable estoppel applies only where “signatories have been required to arbitrate claims brought by nonsignatories at the nonsignatories’ insistence because of the close relationship between the entities involved.” Id. (emphasis in original and internal quotation marks omitted). Accordingly, the Court declines Amazon’s invitation to extend this theory to Plaintiffs’ claims, simply by virtue of Plaintiffs’ close relationship with their parents. This position has no basis in “ordinary contract and agency principles.” Id.

After that, the Judge said:

The Court concludes that neither principles of equitable estoppel nor “ordinary contract and agency principles” supports the logic and policy advanced by Amazon in this case, i.e., that any individual can be bound to arbitrate simply because he or she directly benefited in some way from using the product or service obtained by another via the contract. As federal courts have noted, compelling any non-primary user of a particular service to arbitration under the theory of equitable estoppel would lead to absurd results, as even a casual visitor to a residence could be bound by an agreement without notice because any use of those services could constitute receipt of a direct benefit. See e.g., Brown v. Comcast Corp., Case No. 16-cv00264ABSPX, 2016 WL 9109112, at *8 (C.D. Cal. Aug. 12, 2016) (declining to bind plaintiff to arbitration under a theory of equitable estoppel because “by this same logic, every time a person uses services such as cable or Internet at another person’s residence, no matter how long the use was, he or she would be bound to the underlying service agreement in perpetuity because the use of services would be considered a direct benefit”). That is neither the law of Washington, nor the law of this Circuit.

Amazon’s related argument that “the crux of Plaintiffs’ claims – i.e., their voices were recorded allegedly without consent – directly arise out of and are inseparable from the contract” is also unpersuasive. (Amazon’s Reply at 11.) Amazon points out that the Alexa Terms provide that Alexa users’ voices are recorded and retained by Amazon, and Amazon asserts that the parents have agreed they are responsible for access to their accounts and oversight of minors’ use. (Id.) Amazon contends that Plaintiffs cannot disclaim the fact that their parents’ contract was indispensable to their access to Alexa in the first place. (Id.)

Without more, however, the fact that Plaintiffs’ claims relate in some fashion to their parents’ contracts with Amazon (in that their parents were required to enter into contractual agreements with Amazon to obtain and operate the Alexa-enabled devices) is not sufficient to bind Plaintiffs to arbitration under Townsend and its progeny. Amazon has not cited any case (and the Court is aware of none) holding that a close relationship between the signatory and nonsignatory, without the nonsignatory also asserting claims under the contract, is sufficient to bind the nonsignatory to an arbitration provision contained therein. See Comer, 436 F.3d at 1102; Townsend, 173 Wash. 2d at 461-162; Payne, 2018 WL 4489275, at *7.

The Magistrate Judge added:

The Court finds the facts of Nicosia and Bridge easily distinguishable from this case. Unlike the Nicosia’s use of his wife’s password-protected Amazon.com account, or Bridge’s use of his mother’s confidential information to gain access to her financial information, Alexa can be used by anyone within a reasonable proximity of an Alexa-enabled device – regardless of that person’s identity as an accountholder, adult, child, houseguest, or stranger off the street. Unlike the plaintiffs in Nicosia and Bridge, Plaintiffs did not need to “implicitly represent” that they were another person to gain access to the Alexa-enabled devices. See Nicosia, 384 F.Supp.3d at 259; Bridge, 2016 WL 1298712, at *3. They were not asked to verify their identity, provide a password, or take any other steps to impersonate a registered accountholder to use the Alexa-enabled devices.

Amazon argues that failure to adopt this “account sharing” theory of equitable estoppel “will amount to a categorical rule that a parent’s agreement to arbitrate disputes can never bind minors within the household – no matter how extensive an individual plaintiff’s use, or how pervasive and intentional the ‘account sharing.’” (Amazon’s Reply at 13.) Of course, this is not true. Amazon has not cited any authority holding that the parents could not, on behalf of their children, have expressly agreed by contract to submit their children’s claims to arbitration. Such a provision was simply not part of Amazon’s COUs and Alexa Terms. Accordingly, the Court does not find the reasoning of Nicosia and Bridge persuasive, or applicable to this matter

Finally, the United States Magistrate Judge recommended Amazon’s motion to compel arbitration in the case be denied.

Photo by: Rahul Chakraborty on Unsplash