Judge criticizes 9th Circuit's own arbitration doctrine in subscription case

A 9th U.S. Circuit Court of Appeals panel on Tuesday affirmed a San Francisco judge's ruling denying a website's motion to compel individual arbitration in a putative class action by several consumers who said they did not realize they were obligated to pay a recurring monthly subscription under its terms of service.

But 9th Circuit Judge Ryan D. Nelson, an appointee of President Donald Trump who wrote the decision affirming U.S. District Judge James Donato that cited a 2022 9th Circuit case, also wrote a concurring opinion saying 9th Circuit judges "have committed to an erroneous doctrinal path" and argued that the notice was visually conspicuous.

The question in the case concerns whether San Francisco-based JustAnswer LLC - which offers people answers from subject matter experts for between $1 to $5 - violated the federal Electronic Funds Transfer Act and several state laws, including California's - by automatically enrolling them in a recurring monthly subscription that cost between $46 to $60 per month.

Nelson affirmed Donato's ruling that denied JustAnswer LLC's motion to compel arbitration by citing a ruling by former 9th Circuit Judge Paul J. Watford.

"Some Plaintiffs were presented with advisals that were insufficiently conspicuous to put them on inquiry notice," Nelson wrote in his main opinion. "Others weren't explicitly advised of what actions would be taken to signal assent to contractual terms. Thus, as we conclude below, no Plaintiff agreed to arbitrate a claim." Godun et al. v. JustAnswer LLC, 2025 DJDAR 3118 (9th Circ., filed April 4, 2024).

Nelson's affirmance cited a ruling by former 9th Circuit Judge Paul J. Watford that has since divided judges on the 9th Circuit and prompted a split, he wrote, with the 2nd U.S. Circuit Court of Appeals.

"Website users are entitled to assume that important provisions - such as those that disclose the existence of proposed contractual terms - will be prominently displayed, not buried in fine print," Watford wrote for the panel. "The designer of the webpages at issue here did not take that obligation to heart." Berman et al. v. Freedom Financial Network LLC et al., 30 F.4th 849, 856-57 (9th Circ., filed Oct. 1, 2020).

That decision followed a ruling a year before by California's 4th District Court of Appeal against another motion to compel arbitration by JustAnswer. Sellers et al. v. JustAnswer LLC, 73 Cal. App. 5th 444 (2021).

Nelson, in his concurring opinion, said the 9th Circuit got it wrong in Berman, saying that his JustAnswer decision should be reconsidered, in part because he didn't think the plaintiffs who said they didn't see the underlined link to the company website's terms of service were being "reasonably prudent."

"We got it wrong, the Second Circuit got it right [in a 2012 decision], and we should pivot to follow its lead by revisiting Berman's explicit advisement rule," he added.

Dominic E. Draye, a shareholder with Greenberg Traurig LLP who represents JustAnswer and argued the company's appeal, could not be reached for comment about whether his client would seek en banc review of the panel decision. The company also did not return phone or email messages.

Mark R. Sigmon of Milberg Coleman Bryson Phillips Grossman PLLC, who represents the putative class, also could not be reached Tuesday.

9th Circuit Judge Sandra S. Ikuta and Senior 9th Circuit Judge Richard A. Paez concurred with Nelson's affirmance.