Arbitration Clause and Class Action Waiver acclaimed by Ninth Circuit: Experian Advertising Suit

Arbitration Clause and Class Action Waiver acclaimed by Ninth Circuit: Experian Advertising Suit

The Ninth Circuit recently upheld a lower court order in an alleged class action suit involving Experian's marketing of its "Experian Credit Score" service. The Ninth Circuit confirmed the lower court order allowing Experian's move to force arbitration based on an arbitration clause in its terms and conditions. A class action waiver was also included in the arbitration clause, thereby effectually preventing the petitioner from bringing her claims on a class-wide basis.

In Stover versus Experian Holdings, petitioner Rachel Stover in June 2014 bought the Experian Credit Score service which provides periodic credit scores to subscribers. Stover in so doing agreed to the terms and conditions of Experian including an arbitration clause saying that all transaction-related claims were subject to arbitration "to the fullest extent permitted by law" and that Stover was renouncing her right to participate in a class action. The next month, the petitioner cancelled her subscription. Stover in 2018 sued Experian for falsely marketing its credit score as info examined by creditors when deciding creditworthiness. Experian had infringed the Fair Credit Reporting Act (FCRA) and the Florida and California unfair competition laws, Stover alleged.

Experian's move to force arbitration was granted by the district court. The petitioner on appeal argued that under California law, the 2014 arbitration clause was not enforceable. The 2014 arbitration clause forbids contract terms aiming to relinquish a person's right to get in court public injunctive relief. The Ninth Circuit rejected the argument noting that on the face of it, the arbitration agreement did not prevent a petitioner from seeking in court public injunctive relief which is why it was not facially unenforceable. The court also noted that the arbitration clause did not prevent Stover from getting public injunctive relief as her complaint failed to allege Article III standing to get an injunction against future supposedly misleading advertising.

The first time a request to amend her complaint to add claims regarding her Article III standing was raised by Stover's appellate reply brief - the Ninth Circuit said it would be inappropriate to grant this request as Stover did not ask for leave to amend in the district court. Skepticism was also expressed by the Ninth Circuit whether Stover would amend the complaint to claim the required facts. The case reminds of the significance of these clauses in barring allegedly false advertising-related class claims.