Cordero v. Coinbase, Inc.

• Court: District Court, N.D. California
• Decided: August 5, 2025
• Docket: 3:25-cv-04024
• Status: Unknown

Opinion

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 RYAN CORDERO ET AL., Case No. 3:25-cv-04024-CRB

9 Plaintiffs,

ORDER GRANTING MOTION TO 10 v. COMPEL ARBITRATION

11 COINBASE, INC., 12 Defendant.

13 Defendant Coinbase, Inc. moves to compel arbitration in a class action alleging that 14 it charged customers hidden fees during cryptocurrency transactions. Plaintiffs argue that 15 Coinbase’s arbitration agreement, which they assented to, contains an unconscionable class 16 waiver and cannot be enforced. Their primary argument, which relies on the 2005 17 California Supreme Court decision Discover Bank v. Superior Court, is preempted by the 18 Federal Arbitration Act. Their remaining arguments also fail. And because the arbitration 19 agreement reflects the parties’ clear and unambiguous intent to delegate other questions of 20 arbitrability, any further inquiry into the arbitrability of Plaintiffs’ suit must be done before 21 an arbitrator. The Court therefore GRANTS Coinbase’s motion to compel arbitration. 22 I. BACKGROUND 23 Plaintiffs Ryan Cordero, Patrick B. Goodwin, Henry Hobson III, and Christopher 24 Johnson became Coinbase users between 2017 and 2021. Nacoste Decl. (dkt. 14-1) ¶¶ 7– 25 8. Each created an account and accepted Coinbase’s then-operative user agreement. Id. 26 In 2022, Coinbase updated its user agreement and emailed its users to notify them of the 27 changes. Id. ¶ 7; Update Email (dkt. 14-3). The email hyperlinked the 2022 terms and 1 their account. Nacoste Decl. ¶ 7; Update Email When users visited the Coinbase site, 2 Coinbase routed them to a landing page that directed them to “review and accept [the] 3 updated terms and conditions.” Nacoste Decl. ¶ 7. 4 Coinbase presented the full text of the new user agreement in a scroll box. See 5 Nacoste Decl. ¶ 7; Scroll Wrap Agreement (dkt. 14-4). A button below prompted users to 6 accept the new terms. Nacoste Decl. ¶ 7. The landing page also hyperlinked an article 7 explaining that users could “submit a request so Coinbase Support can help [them] close 8 [their] account and move [their] funds off the platform” if they did “not want to accept 9 these changes.” Id. Each plaintiff accepted the terms in February 2022. Id. ¶¶ 7–8. 10 The 2022 User Agreement includes an arbitration agreement. See Arbitration 11 Agreement (dkt. 14-7, App’x 5). The agreement provides: 12 Subject to the terms of this Arbitration Agreement, you and Coinbase agree that any dispute, claim, disagreements arising 13 out of or relating in any way to your access to or use of the Services or of the Coinbase Site, any Communications you 14 receive, any products sold or distributed through the Coinbase Site, the Services, or the User Agreement and prior versions of 15 the User Agreement, including claims and disputes that arose between us before the effective date of these Terms (each, a 16 “Dispute”) will be resolved by binding arbitration, rather than in court. 17 18 Id. § 1.1. 19 The arbitration agreement includes a class waiver, which states in all caps that 20 YOU AND COINBASE AGREE THAT, EXCEPT AS SPECIFIED IN SUBSECTION 1.8, EACH OF US MAY 21 BRING CLAIMS AGAINST THE OTHER ONLY ON AN INDIVIDUAL BASIS AND NOT ON A CLASS, 22 REPRESENTATIVE, OR COLLECTIVE BASIS, AND THE PARTIES HEREBY WAIVE ALL RIGHTS TO HAVE ANY 23 DISPUTE BE BROUGHT, HEARD, ADMINISTERED, RESOLVED, OR ARBITRATED ON A CLASS, 24 COLLECTIVE, REPRESENTATIVE, OR MASS ACTION BASIS. ONLY INDIVIDUAL RELIEF IS AVAILABLE, 25 AND DISPUTES OF MORE THAN ONE CUSTOMER OR USER CANNOT BE ARBITRATED OR CONSOLIDATED 26 WITH THOSE OF ANY OTHER CUSTOMER OR USER. 27 Id. § 1.3. It also includes the following batching provision governing how multiple claims 1 To increase the efficiency of administration and resolution of arbitrations, you and Coinbase agree that in the event that there 2 are one hundred (100) or more individual Requests of a substantially similar nature filed against Coinbase by or with 3 the assistance of the same law firm, group of law firms, or organizations, within a thirty (30) day period (or as soon as 4 possible thereafter), the AAA shall (1) administer the arbitration demands in batches of 100 Requests per batch (plus, 5 to the extent there are less than 100 Requests left over after the batching described above, a final batch consisting of the 6 remaining Requests); (2) appoint one arbitrator for each batch; and (3) provide for the resolution of each batch as a single 7 consolidated arbitration with one set of filing and administrative fees due per side per batch, one procedural 8 calendar, one hearing (if any) in a place to be determined by the arbitrator, and one final award. 9 10 Id. § 1.8. The provision explains that parties can dispute a batching decision before an 11 arbitrator. Id. 12 The arbitration agreement also grants the arbitrator the “exclusive authority to 13 resolve any Dispute, including … disputes arising out of or related to the interpretation or 14 application of the Arbitration Agreement, including the enforceability, revocability, scope, 15 or validity of the Arbitration Agreement or any portion of the Arbitration Agreement.” Id. 16 § 1.6. The agreement exempts any dispute over the validity of the class waiver, which 17 must be adjudicated in court. Id. Further, the agreement provides that any party that 18 “invoke[s] the authority of a court of competent jurisdiction to compel arbitration” and 19 thereby “obtains an order compelling arbitration” can seek reasonable costs and attorney 20 fees associated with the motion to compel arbitration. Id. § 1.7. 21 Plaintiffs sued Coinbase, alleging that it charged consumers hidden fees in 22 cryptocurrency transactions on the website and thus violated California and New York 23 consumer-protection laws. See generally Compl. (dkt. 1). Coinbase moved to compel 24 arbitration based on the above arbitration agreement. Mot. (dkt. 14). Plaintiffs oppose on 25 the grounds that the class waiver is unconscionable. Opp. (dkt. 27). 26 II. LEGAL STANDARD 27 Contracts relating to a commercial transaction are subject to the Federal Arbitration 1 The FAA provides that an arbitration agreement “shall be valid, irrevocable, and 2 enforceable, save upon such grounds as exist at law or in equity.” 9 U.S.C. § 2. The 3 grounds for invalidating an arbitration agreement include “generally applicable contract 4 defenses, such as fraud, duress, or unconscionability.” AT&T Mobility LLC v. 5 Concepcion, 563 U.S. 333, 339 (2011) (citation omitted). 6 “[A]ny party bound to an arbitration agreement that falls within the scope of the 7 FAA may bring a motion in federal district court to compel arbitration.” Magana v. 8 DoorDash, Inc., 343 F. Supp. 3d 891, 898 (N.D. Cal. 2018) (citing 9 U.S.C. §§ 3–4). 9 Although courts usually determine gateway issues of arbitrability, parties “may delegate 10 threshold arbitrability questions to the arbitrator, so long as the parties’ agreement does so 11 by ‘clear and unmistakable evidence.’” Henry Schein, Inc. v. Archer & White Sales, Inc., 12 586 U.S. 63, 69 (2019) (citation omitted). At bottom, a court must compel arbitration if it 13 finds that (1) a valid arbitration agreement exists and (2) the agreement applies to the 14 dispute at issue. Chiron, 207 F.3d at 1130. 15 III. DISCUSSION 16 Plaintiffs do not contest that they entered into an arbitration agreement with 17 Coinbase. Because both parties agreed to litigate the validity of the class waiver in court, 18 the Court begins by addressing Plaintiffs’ argument that the arbitration agreement is 19 unconscionable due to the class waiver. Concluding that it is not, the Court next addresses 20 the delegation provision and refers all remaining disputes to an arbitrator. 21 A. Unconscionability 22 Courts can invalidate agreements to arbitrate based on “generally applicable 23 contract defenses, such as fraud, duress, or unconscionability.” Concepcion, 563 U.S. at 24 339 (citation omitted). But they cannot rely on “defenses that apply only to arbitration or 25 that derive their meaning from the fact that an agreement to arbitrate is at issue.” Id. 26 Plaintiffs raise three reasons why they argue that Coinbase’s class waiver is 27 unconscionable: (1) that it violates the Discover Bank rule, a California rule of contract 1 otherwise bar them from effectively vindicating their claims, rendering the agreement 2 unconscionable, id. at 11–12; and (3) that it does not pass muster under traditional state- 3 law unconscionability analysis, id. at 14–17. 4 1. Discover Bank 5 In 2005 the California Supreme Court decided in Discover Bank v. Superior Court 6 that a class waiver is unconscionable when it “is found in a consumer contract of adhesion 7 in a setting in which disputes between the contracting parties predictably involve small 8 amounts of damages, and when it is alleged that the party with the superior bargaining 9 power has carried out a scheme to deliberately cheat large numbers of consumers out of 10 individually small sums of money.” 36 Cal. 4th 148, 162–63 (2005). California courts 11 applied this rule, known as the Discover Bank rule, to invalidate as unconscionable 12 arbitration agreements with class waiver provisions. E.g., Gatton v. T-Mobile USA, Inc., 13 152 Cal. App. 4th 571, 586–88 (2007) (finding that an arbitration agreement was 14 unconscionable because it contained a class waiver). But in 2011 the Supreme Court held 15 that, as applied to arbitration agreements, the Discover Bank rule “stands as an obstacle to 16 the accomplishment and execution of the full purposes and objectives of Congress” and is 17 therefore preempted by the FAA. Concepcion, 563 U.S. at 352 (citation omitted). The 18 Discover Bank rule interfered with the principle that “a court may not ‘rely on the 19 uniqueness of an agreement to arbitrate as a basis for’” finding unconscionability. Id. at 20 341 (citation omitted). The Discover Bank rule also interfered with the FAA’s purpose of 21 “ensur[ing] that private arbitration agreements are enforced according to their terms.” Id. 22 at 344 (citation omitted). 23 The Ninth Circuit recently addressed the continued viability of the Discover Bank 24 rule in Heckman v. Live Nation Entertainment, Inc. 120 F.4th, 670 (9th Cir. 2024), 25 petition for cert. filed sub nom. Live Nation Ent., Inc. v. Heckman, No. 24-1145 (filed 26 May 7, 2025). A group of plaintiffs had brought a class action antitrust suit against Live 27 Nation and Ticketmaster. Heckman, 120 F.4th at 676–77. But those plaintiffs had signed 1 arbitrator, using its newly established “Expedited Mass Arbitration” rules. Id. at 677–78. 2 New Era’s mass arbitration included the following components: 3 • Unilateral Discretion over the Arbitrator. Though consumers would be entitled to 4 participate in the selection of an arbitrator, New Era could replace the agreed-upon 5 arbitrator at its sole discretion. Id. at 678. 6 • Bellwether Trials. Three bellwether trials would be litigated individually and 7 confidentially, and any outcome would become precedent on all common issues in 8 all batched cases. Id. at 678–79. 9 • Truncated Discovery and Briefings. Discovery was limited to 10 files totaling 250 10 pages, and closing briefs were limited to 15,000 characters. Id. at 679. 11 • One-Sided Injunctive Relief. The parties could appeal only awards, not denials, of 12 injunctive relief. Id. at 680. 13 The Ninth Circuit held that the FAA did not protect Ticketmaster and New Era’s mass 14 arbitration model. Id. at 689–90. As the court explained, Congress contemplated bilateral 15 arbitration—not class-wide arbitration—when they passed the FAA. Id. Thus, the Ninth 16 Circuit distinguished Concepcion, concluded that “the FAA does not preempt California’s 17 Discover Bank rule as it applies to mass arbitration,” and from there held that the Discover 18 Bank rule rendered Ticketmaster’s class waiver unconscionable. Id. at 690. 19 Against this backdrop, Plaintiffs argue that Heckman, not Concepcion, governs 20 here, and so the Discover Bank rule applies and renders Coinbase’s class waiver 21 unconscionable. Opp. at 9–11. Plaintiffs contend that Coinbase’s batching provisions 22 deviate from the bilateral arbitration that Congress envisioned when it passed the FAA. Id. 23 In doing so, they argue for a narrow understanding of “bilateral arbitration,” asserting that 24 it depends on the number of parties involved in a proceeding and that bilateral arbitration 25 covers only individualized arbitration. Id. 26 Coinbase, for its part, does not appear to contest the basic premise that Congress 27 intended the FAA to protect bilateral arbitration. Reply (dkt. 28) at 2–3. Rather, it argues 1 whether the proceeding has a representative nature—that is, whether the arbitration 2 procedures would bind absent plaintiffs to decisions in bellwether trials, like in a class 3 action or MDL. Id. at 3. They therefore contend that any non-representative arbitration, 4 whether individual or consolidated, is bilateral for purposes of the FAA. Id. at 3, 5–6. 5 Coinbase has the better argument. Heckman, when read alongside the Supreme 6 Court’s arbitration jurisprudence, just holds that the FAA does not protect representative 7 arbitration, a form of arbitration that did not remotely exist when Congress passed the 8 FAA. For instance, Heckman cites Concepcion for the principle that “[a]rbitration is 9 poorly suited to the higher stakes of class litigation.” 120 F.4th at 690 (emphasis added) 10 (quoting Concepcion, 563 U.S. at 350). And since Concepcion the Supreme Court has 11 expressly rejected the argument that “a proceeding is ‘bilateral’ in the relevant sense if— 12 but only if—it involves two and only two parties and the arbitration ‘is conducted by and 13 on behalf of the individual named parties only.’” Viking River Cruises, Inc. v. Moriana, 14 596 U.S. 639, 656 (2022) (citation omitted). Plaintiffs’ reading of Heckman, which would 15 exclude all non-individualized arbitration from the FAA’s protection, would put Heckman 16 in tension with Concepcion and Viking River Cruises. The Court will not create such 17 discord where a more harmonious reading is possible. See Mitcheson v. El Antro LLC, 18 No. CV-19-1598-PHX-GMS, 2020 WL 7075239, at *16 (D. Ariz. Dec. 3, 2020) (“Indeed, 19 district courts have a duty to reconcile Ninth Circuit precedent … with Supreme Court 20 Authority.” (citing FTC v. Consumer Def., LLC, 926 F.3d 1208, 1213 (9th Cir. 2019))).1 21 Following Heckman, the Ninth Circuit has itself suggested that this is the correct 22 approach. In Jones v. Starz Entertainment, LLC, the court evaluated whether an arbitration 23 agreement that barred parties from engaging in “class or representative” proceedings also 24

25 1 Plaintiffs also contend that “Heckman teaches that the Discover Bank rule is preempted only where it poses an obstacle to Congress’ goal of promoting ‘arbitration as envisioned 26 by the FAA in 1925.’” Surreply (dkt. 35) at 2 (emphasis in original) (citing Heckman, 120 F.4th at 690). While Heckman could possibly be read to suggest that the FAA preempts 27 the Discover Bank rule only with respect to arbitration as Congress understood the term in 1 prohibited consolidated proceedings. 129 F.4th 1176, 1182 (9th Cir. 2025). The court 2 explained that it did not: 3 Consolidation is not the same as class or representative arbitration. Some similarities exist in that both procedures 4 encompass multiple disputes and heighten the commercial stakes. There is a critical difference, however. In a class or 5 representative arbitration, an individual brings claims on behalf of others, whereas a claimant in a consolidated arbitration 6 brings the claim in her individual capacity. It is that representative feature, not the mere numerosity of parties, that 7 forms the critical element of the “fundamental changes brought about by the shift from bilateral arbitration to class-action 8 arbitration.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 686 (2010). The Supreme Court cautioned that 9 “a proceeding in which two and only two parties arbitrate exclusively in their individual capacities is not the only thing 10 one might mean by ‘bilateral arbitration.’” Viking River Cruises, 596 U.S. at 657–58. 11 12 Id. (emphasis in original). In reaching this result, the court distinguished New Era’s mass 13 arbitration procedures at issue in Heckman (which “contained all the red flags associated 14 with classwide arbitration”) from the consolidated, batched arbitration before it. Id. 15 Like the arbitration agreement in Jones, Coinbase’s arbitration agreement provides 16 for consolidated, not class-wide, arbitration. There are no bellwether or representative 17 proceedings that bind absent parties. Arbitration Agreement § 1.8. Each batched 18 arbitration operates “as a single consolidated arbitration with one set of filing and 19 administrative fees due per side per batch, one procedural calendar, one hearing … and one 20 final award.” Id. In fact, the provision clarifies that “in no way” shall it “be interpreted as 21 authorizing a class, collective, and/or mass arbitration or action of any kind.” Id. Further, 22 the problematic attributes of New Era’s mass arbitration model from Heckman are not 23 present here. Coinbase’s arbitration agreement and the AAA rules does not involve 24 bellwether trials, impose strict file or page limits for discovery or briefs, or restrict appeals 25 only to those brought by one side. 26 As a final point, a narrow reading of Heckman is consistent with the FAA’s “liberal 27 federal policy favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury 1 and revive the Discover Bank rule in additional contexts, which would risk imposing a 2 special disadvantage on arbitration agreements. Id. The Court rejects Plaintiffs’ invitation 3 to so contravene the FAA and the Supreme Court’s guidance. 4 2. Effective Vindication 5 Plaintiffs next argue that “the Class Action Waiver effectively deprives Plaintiffs of 6 any meaningful right to pursue their statutory claims in arbitration,” and so the FAA does 7 not require arbitration. Opp. at 11–12. This argument fares no better. 8 First, though Plaintiffs suggest that an “effective vindication” principle requires the 9 Court to apply the Discover Bank rule even after Concepcion, they do not identify any 10 precedent that would require this outcome. Quite the opposite—the Supreme Court has 11 explained that litigating the issue of effective vindication would create a “hurdle [that] 12 would undoubtedly destroy the prospect of speedy resolution that arbitration in general and 13 bilateral arbitration in particular was meant to secure.” Am. Express Co. v. Italian Colors 14 Rest., 570 U.S. 228, 239 (2013). 15 Second, even if the lack of effective vindication could be sufficient grounds for 16 lifting Concepcion’s preemption ruling, Plaintiffs fail to show that they are barred from 17 effectively vindicating their claims. As the party “seek[ing] to invalidate an arbitration on 18 the ground that the arbitration would be prohibitively expensive,” Plaintiffs bear the 19 burden of showing “the likelihood of incurring such costs.” Green Tree Fin. Corp.-Ala. v. 20 Randolph, 531 U.S. 79, 92 (2000). If a risk of incurring prohibitively expensive costs is 21 too speculative, then it cannot justify invalidating the arbitration agreement. Id. at 91. 22 Plaintiffs have not sufficiently demonstrated that arbitration would be prohibitively 23 expensive. Their argument that the $225 filing fee makes it economically unappealing to 24 pursue their claims is unsupported by evidence that their claims are, in fact, worth less than 25 $225. See Taylor Decl. (dkt. 27-1) ¶ 2 (transaction logs do not indicate how much 26 Plaintiffs spent in spread fees). Indeed, for at least one of Plaintiffs’ claims they request 27 the greater of actual damages or $500—and that is not considering statutory penalties of up 1 not require invalidation of the class waiver. 2 3. Traditional Unconscionability Analysis 3 Plaintiffs argue that even if the class waiver is not subject to the Discover Bank 4 rule, the Court can still invalidate it using traditional unconscionability analysis. To 5 demonstrate that a contractual provision is unconscionable, Plaintiffs need to show both 6 procedural and substantive unconscionability. Poublon v. C.H. Robinson Co., 846 F.3d 7 1251, 1260 (9th Cir. 2017). These two factors work on a sliding scale: “[T]he more 8 substantively oppressive the contract term, the less evidence of procedural 9 unconscionability is required to come to the conclusion that the term is unenforceable, and 10 vice versa.” Id. (quoting Sanchez v. Valencia Holding Co., 61 Cal. 4th 899, 910 (2015)). 11 The standard for unconscionability “is, as it must be, the same” for arbitration agreements 12 as for any other contract. Id. (quoting Sanchez, 61 Cal. 4th at 912). 13 a. Procedural Unconscionability 14 The first inquiry in determining procedural unconscionability is whether an 15 agreement is a contract of adhesion, in which a party with superior bargaining strength 16 presents a subscribing party with terms on a take-it-or-leave-it basis. Id. at 1260–61. 17 There is no dispute that Coinbase’s 2022 User Agreement is a contract of adhesion. Yet an 18 adhesive contract without more is only minimally procedurally unconscionable. Id. at 19 1261–62. In looking beyond the mere adhesive nature of a contract to determine whether 20 there is meaningful procedural unconscionability, California courts consider whether the 21 parties were relatively similar in bargaining power and sophistication, whether the 22 complaining party had access to reasonable market alternatives, and whether the provision 23 is buried in a lengthy agreement. Aggarwal v. Coinbase, Inc., 685 F. Supp. 3d 867, 880– 24 81 (N.D. Cal. 2023). 25 Courts in this district have repeatedly rejected arguments that Coinbase’s 2022 User 26 Agreement is procedurally unconscionable on its face. E.g., Aggarwal, 685 F. Supp. 3d at 27 880–81; Kamath v. Coinbase, Inc., Case No. 23-cv-3533-CRB, 2024 WL 950163, at *8 1 1769190, at *6–7 (N.D. Cal. Feb. 3, 2023).2 The arbitration agreement is clearly presented 2 in bolded, all-caps font, and the provisions are clearly labeled. Aggarwal, 685 F. Supp. 3d 3 at 881. This includes the class waiver, which is clearly presented and labeled and is in all- 4 caps. Arbitration Agreement § 1.3. 5 Nonetheless, Plaintiffs insist that the class waiver is procedurally unconscionable 6 because it (1) gives Coinbase the unilateral right to make material changes to the 7 Arbitration Clause, (2) has conflicting terms about whether changes apply retroactively, 8 and (3) considers continued use of the Coinbase Site as an acceptance of the new terms. 9 Plaintiffs argue that the last point is especially problematic because users already have 10 currency held on the Coinbase site. Opp. at 15. 11 Plaintiffs’ first two arguments suffer from the same problem—Plaintiffs do not 12 allege that the unilateral modification or retroactivity clauses were actually enforced or 13 used to specifically alter the class waiver, let alone in a procedurally unconscionable way.3 14 See Loewen v. Lyft, Inc., 129 F. Supp. 3d 945, 956 (N.D. Cal. 2015) (rejecting argument 15 that a unilateral modification provision was procedurally unconscionable because plaintiffs 16 did “not argue that Lyft modified the [Terms of Service] so frequently or significantly as to 17 make it oppressive”); cf. McQueen v. Chevron Corp., No. C 16-2089 JSW, 2017 WL 18 6451803, at *3 (N.D. Cal. Dec. 18, 2017) (finding that because “no party [] sought to 19 enforce the mediation provision,” it was “irrelevant” to the unconscionability analysis). 20 2 Plaintiffs point out that after the court referred arbitrability questions to an arbitrator, 21 “the arbitrator in Mr. Pearl’s case concluded that the January 2022 Arbitration Agreement is unconscionable and unenforceable.” Surreply at 5. That is irrelevant and incomplete. It 22 is irrelevant because the arbitrator found the agreement unconscionable after analyzing the agreement as a whole, while the Court can consider only the class waiver at this juncture. 23 See Arbitration Agreement § 1.6 It is incomplete because a different arbitrator in the Pearl litigation actually rejected a similar unconscionability argument. Stip. Ex. 2 at 14, Pearl, 24 No. 22-cv-3561-MMC (N.D. Cal. Feb. 16, 2024), ECF 47. 3 Parties usually point to unilateral modification provisions as a source of substantive 25 unconscionability, not procedural unconscionability. That is because unilateral modification provisions are not facially unconscionable as a procedural matter in light of 26 the implied covenant of good faith and fair dealing, which prevents a party with unilateral modification rights from unilaterally modifying a contract in an unconscionable manner. 27 See Poublon, 846 F.3d at 1269 (“California courts have held that the implied covenant of 1 Plaintiff’s third argument does not give rise to procedural unconscionability because 2 Coinbase users were not beholden to the website nor forced to accept its terms. Users 3 were given the option to close their account and transfer their cryptocurrency elsewhere if 4 they objected to the 2022 User Agreement. See Nacoste Decl. ¶ 7. And as other courts 5 have already explained, “nothing in the record suggests that Coinbase was Plaintiffs’ only 6 option for cryptocurrency services.” Aggarwal, 685 F. Supp. 3d at 881 (citation omitted). 7 Contrast this with Heckman, where Ticketmaster retained the right to make unilateral and 8 retroactive changes without notice, such that consumers who had already purchased tickets 9 would be subject to new terms—terms that would apply to those tickets—by sole virtue of 10 revisiting the website. 120 F.4th at 682–83. Thus, Plaintiffs were not improperly 11 pressured or coerced into agreeing to the new terms, and there is no additional procedural 12 unconscionability on this basis. 13 b. Substantive Unconscionability 14 Substantive unconscionability addresses whether the terms of the agreement are so 15 “overly harsh” or “one-sided” that they “shock the conscience.” Poublon, 846 F.3d at 16 1261 (citing Sanchez, 61 Cal. 4th at 912). A court will not find “a simple old-fashioned 17 bad bargain” unconscionable; the terms must be “unreasonably favorable to the more 18 powerful party.” Id. Plaintiffs make four arguments why the class waiver is substantively 19 unconscionable. None is persuasive. 20 First, Plaintiffs argue that the class waiver is unconscionable because “the cost of 21 initiating an arbitration is greater than the value of each Plaintiff’s claim.” Opp. at 15. 22 Courts occasionally will find substantive unconscionability where the parties’ agreement 23 unreasonably increases the cost of pursuing arbitration, see Parada v. Superior Court, 176 24 Cal. App. 4th 1556, 1573–84 (2009), but the hallmarks of such a finding are not present 25 here. Plaintiffs do not identify any specific provisions of the arbitration agreement that are 26 unnecessary and unreasonable. Compare id. at 1580–81 (unreasonable to require a three- 27 arbitrator panel that would cost each consumer over $20,000 for a four-day arbitration). 1 Plaintiffs’ mere invocation of cost is not grounds to find substantive unconscionability. 2 Second, Plaintiffs argue that the class waiver is unconscionable because it 3 “unlawfully strips consumers of their statutory right to seek public injunctive relief under 4 California’s consumer protection statute.” Opp. at 16. But this argument applies only if 5 plaintiffs request public injunctive relief (as opposed to private injunctive relief). Clifford 6 v. Quest Software Inc., 38 Cal. App. 5th 745, 751 (2019); cf. Kramer v. Coinbase, Inc., 7 105 Cal. App. 5th 741, 747–53 (2024) (affirming denial of motion to compel arbitration in 8 case where plaintiffs sought public injunctive relief). Plaintiffs disavow any intent to 9 request public injunctive relief, Opp. at 16 n.13, so this argument does not create 10 substantive unconscionability. 11 Third, Plaintiffs argue that the arbitration agreement grants attorney fees to any 12 party who successfully compels arbitration in a judicial setting. Id. at 16; Arbitration 13 Agreement § 1.7. Yet the fee-shifting provision is not part of the class waiver, meaning 14 that its viability must be decided by an arbitrator, not the Court. Arbitration Agreement 15 § 1.6.4 And Plaintiffs’ argument is unpersuasive in any case. They rely exclusively on 16 case law from the employment context, in which California law prohibits employers from 17 requiring employees to bear any arbitration-related expenses that they would not have 18 incurred in court. Storms v. Paychex, Inc., No. LA CV21-1534 JAK, 2022 WL 2160414, 19 at *14–15 (C.D. Cal. Jan. 14, 2022). Either way, the Court cannot find that the attorney 20 fees provision gives rise to substantive unconscionability. 21 Fourth, Plaintiffs argue that “the Arbitration Clause unlawfully prohibits Plaintiffs 22 from challenging the validity of the Limitation of Liability provision.” Opp. at 16. Again, 23 this argument does not relate to the class waiver, but rather to the arbitration agreement as 24 a whole, so the Court cannot consider it. See Arbitration Agreement § 1.6. 25

26 4 Plaintiffs argue that the Court should evaluate the entire agreement when considering whether specific provisions are unconscionable. Surreply at 4. This is required only for 27 challenges to delegation provisions, since courts must consider how other provisions 1 Plaintiffs have therefore not made a showing that the class waiver is procedurally or 2 substantively unconscionable under California law. 3 B. Delegation Provision 4 The arbitration agreement requires the Court to refer all remaining disputes to an 5 arbitrator. Id.; see also Momot v. Mastro, 652 F.3d 982, 986 (9th Cir. 2011) (“Although 6 gateway issues of arbitrability presumptively are reserved for the court, the parties may 7 agree to delegate them to the arbitrator.”). This provision of the agreement constitutes 8 “clear and unmistakable evidence” that the parties intended an arbitrator to decide these 9 issues, and the Court must respect the parties’ decision. See Donovan v. Coinbase Glob., 10 Inc., 649 F. Supp. 3d 946, 951 (N.D. Cal. 2023); Aggarwal, 685 F. Supp. 3d at 878. 11 IV. CONCLUSION 12 For the foregoing reasons, the Court GRANTS Defendant’s motion to compel 13 arbitration and STAYS this action. 14 IT IS SO ORDERED. 15 Dated: August 5, 2025 CHARLES R. BREYER 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27