Wesley Hunter v. Pre-Paid Legal Services, Inc.

Summary

The United States District Court for the Northern District of California grants Pre-Paid Legal Services, Inc.'s motion to compel arbitration of Wesley Hunter's proposed wage-and-labor-law class action. The court applies California law, finds that Hunter assented to the online Associate Agreement, and holds that the Oklahoma choice-of-law and forum provisions are unconscionable under California Labor Code section 925. The court severs those provisions, orders arbitration in the Northern District of California with LegalShield paying Hunter's arbitration-specific legal fees, denies dismissal of the class claims as moot, and stays the case.

Holdings

1. California law governs the enforceability of the arbitration clause because, although Oklahoma had a substantial relationship to LegalShield, applying Oklahoma law would contravene California's fundamental policy under Labor Code section 925 and California had a materially greater interest in protecting a California resident from allegedly unlawful employment practices performed in California.
2. Hunter assented to the Associate Agreement and its arbitration clause because the online enrollment process required an affirmative click accepting all terms and provided conspicuous hyperlinks to the incorporated Associate Terms and Policies and Procedures.
3. The arbitration clause was not rendered unenforceable by the agreement's adhesive nature, noncompete provision, interim-relief provision, unilateral-modification clause, or cost provisions, but the Oklahoma choice-of-law and choice-of-forum provisions were substantively unconscionable under California law.
4. The unconscionable Oklahoma choice-of-law and choice-of-forum provisions could be severed, leaving the remainder of the arbitration agreement enforceable.

Questions Presented

1. Whether California or Oklahoma law governed the enforceability of the Associate Agreement's arbitration clause.
2. Whether the online enrollment process established Hunter's assent to the Associate Agreement and its arbitration provision.
3. Whether the arbitration clause was unconscionable under California law.
4. Whether the unconscionable Oklahoma choice-of-law and choice-of-forum provisions could be severed while enforcing the remainder of the arbitration agreement.
5. Whether the court should compel arbitration and dismiss the putative class claims.

Disposition

other