INJUNCTIONS
Kramer v. Coinbase, Inc., 105 Cal. App. 5th 741
McBurnie v. RAC Acceptance East LLC, 95 F. 4th 1188
Patrick v. Running Warehouse LLC, 93 F. 4th 468
Kramer v. Coinbase, Inc., 105 Cal. App. 5th 741
The plaintiffs filed suit against Coinbase seeking an injunction under the CLRA, UCL, and False Advertising Law (FAL) after they suffered losses from a hacking of their Coinbase accounts. The trial court ruled that the plaintiffs were seeking a public injunction and denied Coinbase’s motion to compel arbitration. Coinbase appealed, arguing that the plaintiffs were seeking a private injunction.
The Court of Appeal affirmed. The complaint alleged violations of the CLRA, UCL, and FAL and that Coinbase was aware of the importance of security to consumers and thus advertised itself to the public as the “‘most trusted’ and ‘most secure’ cryptocurrency platform.” It did so via information on its website and in online, television, and newspaper advertisements. The complaint further alleged ongoing harm toward the public, including: (1) “Coinbase‘s misrepresentations about its security continue to deceive members of the general public”; (2) “These misrepresentations are targeted to entice consumers into creating accounts and depositing their hard-earned funds with Coinbase”; (3) “Coinbase knew that its various claims about being a ‘secure’ platform were false and misleading but made those statements to induce members of the general public (including Plaintiffs) to do business with Coinbase”; and (4) “If Coinbase is permitted to continue its deceptive and misleading practices, members of the public will suffer irreparable injuries”. These allegations asserted harm against the general public. While the complaint contained allegations specific to the individual harm suffered by each plaintiff, those allegations exemplified how Coinbase's actual conduct differed from its marketing statements to the public. And the complaint did not seek relief for those plaintiff-specific injuries. An injunction that seeks to prohibit a business from engaging in unfair or deceptive practices and marketing does have the primary purpose and effect of protecting the public.
McBurnie v. RAC Acceptance East LLC, 95 F. 4th 1188
The plaintiffs filed a class action alleging that the processing fee that defendant charged for renting tools was illegal. The defendant moved to compel arbitration. The arbitration at issue was the same that was held to be unenforceable in Blair v. Rent-A-Center, Inc., 928 F. 3d 819 (9th Cir. 2019) because its class action waiver violated the rule against arbitration of public injunction claims brought under the consumer protection statutes that was set forth in McGill v. Citibank N.A., 2 Cal. 4th 945 (2017). The defendant argued that Blair was overruled by Viking River, supra. The motion was denied and the defendant appealed.
The Ninth Circuit affirmed. Viking River dealt with PAGA claims, which are different from public injunction claims brought under the consumer protection statutes at issue in Blair and this case. In Viking River, the Supreme Court was concerned that PAGA's mandatory joinder rule forced parties to resolve their individual PAGA disputes in court, thereby violating "the fundamental principle that 'arbitration is a matter of consent.'" 596 U.S. at 659. But the mandatory joinder rule is specific to California's PAGA statute. It does not exist under the consumer statutes at issue in Blair and in the case here. To state it another way, the only rule at issue in this case is the McGill rule. The McGill rule forbids a party to waive the right to seek a public injunction. The McGill rule forbids a party to waive the right to bring a representative claim in any forum. We held in Blair that the McGill rule was not preempted by the FAA. Far from overruling our holding in Blair, Viking River reaffirmed it.
Patrick v. Running Warehouse LLC, 93 F. 4th 468
The plaintiffs argued that a clause in the arbitration agreement that barred class actions violated the rule set forth in McGill v. Citibank N.A., supra. The Ninth Circuit rejected the argument. The arbitration agreement did not bar the arbitrator from awarding public injunctive relief. Plaintiffs cited two provisions: (1) "No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the arbitration," and (2) "All Claims shall be brought solely in the parties' individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding." Neither provision conflicted with McGill. The first merely provided that the arbitration award could not be used by or against a non-party to establish an issue or claim in a separate and subsequent proceeding—i.e., the default rule in California. The second did not bar the arbitrator from awarding public injunctive relief. Under California law, a plaintiff requesting a public injunction files the lawsuit on his or her own behalf and retains sole control over the suit. To implicate McGill, the arbitration provision must also prohibit the arbitrator from awarding relief that would affect those other than plaintiff. No such prohibition existed here.