Jones v. Penney OpCo, LLC

• Court: District Court, E.D. California
• Decided: August 1, 2025
• Docket: 2:24-cv-02468
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ELLEN JONES, No. 2:24-cv-02468-DAD-AC 12 Plaintiff, 13 v. ORDER DENYING DEFENDANT’S MOTION TO COMPEL ARBITRATION AND 14 PENNEY OPCO, LLC, STAYING THIS ACTION FOR 30 DAYS 15 Defendant. (Doc. No. 13) 16 17 18 This matter is before the court on defendant’s motion to compel arbitration. (Doc. 19 No. 13.) On March 10, 2025, the pending motion was taken under submission on the papers. 20 (Doc. No. 20.) For the reasons explained below, the court will deny defendant’s motion to 21 compel arbitration. 22 BACKGROUND 23 Plaintiff alleges in her operative first amended complaint that defendant has engaged in a 24 false discount advertising scheme by advertising perpetual discounts on its products while rarely, 25 if ever, offering those products at their advertised listed price. (Doc. No. 10 at ¶¶ 2–3.) She 26 further alleges that on May 12, 2022, she visited defendant’s website and purchased a shirt at a 27 purported discount, but in fact defendant had never sold that shirt at its listed price. (Id. at ¶¶ 72– 28 80.) Based upon these allegations, plaintiff asserts three California state law claims against 1 defendant. (Id. at 1.) Defendant moves to compel arbitration of plaintiff’s claims on the grounds 2 of two purported arbitration agreements: (1) the terms and conditions page of defendant’s 3 website (“the Site Terms of Use”);1 and (2) the JCPenney Rewards Program Terms & Conditions 4 (“the RPTC”) that went into effect in 2019 and to which, according to defendant, plaintiff has 5 agreed.2 (Doc. No. 13 at 5–7.) 6 Defendant filed its pending motion to compel arbitration on December 30, 2024. (Doc. 7 No. 13.) Plaintiff filed her opposition on February 28, 2025. (Doc. No. 18.) Defendant filed its 8 reply thereto on March 21, 2025. (Doc. No. 21.) On June 24, 2025 and July 1, 2025, plaintiff 9 filed notices of supplemental authority directing the court’s attention to recent district court 10 decisions denying motions to compel arbitration on the basis of the Site Terms of Use and RPTC 11 where the plaintiff had asserted that defendant engaged in a similar false advertising and false 12 discount scheme. (Doc. Nos. 23, 27.) On July 18, 2025, defendant filed a response to plaintiff’s 13 notices, arguing that the court should find those decisions to be distinguishable or unpersuasive. 14 (Doc. No. 31.) 15 LEGAL STANDARD 16 A written provision in any contract evidencing a transaction involving commerce to settle 17 a dispute by arbitration is subject to the Federal Arbitration Act (“FAA”). 9 U.S.C. § 2. There is 18 generally a “liberal federal policy favoring arbitration agreements.” Epic Sys. Corp. v. Lewis, 584 19 U.S. 497, 504 (2018). The FAA confers on the parties involved the right to obtain an order 20 directing that arbitration proceed in the manner provided for in a contract between them. 9 21 U.S.C. § 4. In considering a motion to compel arbitration, the “court’s role under the [FAA] . . .

22 1 Defendant mistakenly submitted evidence regarding the state of its website as it existed in 2024 23 rather than as it existed at the relevant times. (See Doc. No. 21 at 17.) Because the differences in the layout of defendant’s website do not provide any basis upon which to grant the pending 24 motion, the court does not discuss the parties’ dispute over these immaterial facts. See Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1200 (9th Cir. 2024) (noting that “motions to 25 compel arbitration are subject to the summary judgment standard”).

26 2 The parties dispute whether plaintiff agreed to the 2019 version of the RPTC, a prior version, or 27 neither. (See Doc. Nos. 13, 18, 21.) As discussed below, the court will assume without deciding that plaintiff agreed to the 2019 version of the RPTC as defendant contends and nevertheless deny 28 the pending motion to compel arbitration. 1 is limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) 2 whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., 3 Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The party seeking to compel arbitration bears the 4 burden of proving by a preponderance of the evidence the existence of an agreement to arbitrate. 5 Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015); Knutson v. Sirius 6 XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citing Rosenthal v. Great W. Fin. Sec. Corp., 7 14 Cal. 4th 394, 413 (1996)). “When deciding a motion to compel arbitration, a district court 8 must treat the facts as they would when ruling on a motion for summary judgment, construing all 9 facts and reasonable inferences that can be drawn from those facts in a light most favorable to the 10 non-moving party.” Turner v. Tesla, Inc., 686 F. Supp. 3d 917, 922 (N.D. Cal. 2023) (internal 11 quotation marks and citation omitted); see also Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 12 670 (9th Cir. 2021) (“The summary judgment standard is appropriate because the district court’s 13 order compelling arbitration is in effect a summary disposition of the issue of whether or not there 14 had been a meeting of the minds on the agreement to arbitrate.”) (internal quotation marks and 15 citation omitted). 16 ANALYSIS 17 In its pending motion, defendant argues that plaintiff’s claims must be compelled to 18 arbitration on the basis of either of two arbitration agreements: (1) the Site Terms of Use, and/or 19 (2) the Rewards Program Terms and Conditions. (Doc. No. 13 at 5–7.) The court will address 20 whether defendant’s motion will be granted on the basis of each purported agreement. 21 A. The Site Terms of Use 22 “First, a court must resolve any challenge that an agreement to arbitrate was never formed, 23 even in the presence of a delegation clause.” Caremark, LLC v. Chickasaw Nation, 43 F.4th 24 1021, 1030 (9th Cir. 2022). “That principle follows from the fundamental premise that arbitration 25 is strictly a matter of consent.” Id. (internal quotation marks and citation omitted). “In 26 determining whether the parties have agreed to arbitrate a particular dispute, federal courts apply 27 state-law principles of contract formation.” Godun v. JustAnswer LLC, 135 F.4th 699, 708 (9th 28 Cir. 2025). 1 The Ninth Circuit recently summarized the law regarding the formation of internet 2 contracts: 3 Online contracts are subject to the same elemental principles of contract formation as paper contracts. “To form a contract under 4 California . . . law, there must be actual or constructive notice of the agreement and the parties must manifest mutual assent.” . . . A party 5 may manifest assent through conduct. To do so, the party must intend the conduct and know, or have reason to know, the other party 6 may infer her assent from the conduct. 7 In the world of internet contracts, there are browsewrap, clickwrap, scrollwrap, and sign-in wrap agreements, each of which purport to 8 bind users through different “assent” mechanisms. In a browsewrap, the “user accepts a website’s terms of use merely by browsing the 9 site,” although those terms are not always immediately apparent on the screen. Courts consistently decline to enforce browsewraps. In 10 a clickwrap, the website presents its terms of use in a “pop-up screen” and the user accepts those terms by clicking or checking a box stating 11 she agrees. Courts routinely enforce clickwraps. In a scrollwrap, which provides “the strongest notice” and are usually enforced, the 12 user must scroll through all the terms before the website allows her to click a box to agree. Finally, a sign-in wrap lives somewhere in 13 the middle: the website provides a link to terms of use and indicates that some action may bind the user but does not require that the user 14 actually review those terms. 15 Chabolla v. ClassPass Inc., 129 F.4th 1147, 1154 (9th Cir. 2025) (internal citations omitted) 16 (emphasis added). 17 Plaintiff contends, and defendant does not dispute, that the Site Terms of Use constitute a 18 browsewrap. (See Doc. Nos. 18 at 20; 21 at 17); cf. Oberstein v. Live Nation Ent., Inc., 60 F.4th 19 505, 515 (9th Cir. 2023) (describing “pure browsewrap” as “hidden in links located at the bottom 20 of webpages”). “Courts are more reluctant to enforce browsewrap agreements because 21 consumers are frequently left unaware that contractual terms were even offered, much less that 22 continued use of the website will be deemed to manifest acceptance of those terms.” Berman v. 23 Freedom Fin. Network, LLC, 30 F.4th 849, 856 (9th Cir. 2022). “Unless the website operator can 24 show that a consumer has actual knowledge of the agreement, an enforceable contract will be 25 found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous 26 notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, 27 such as clicking a button or checking a box, that unambiguously manifests his or her assent to 28 those terms.” Id. 1 1. Whether the Site Terms of Use Provide Reasonably Conspicuous Notice 2 Defendant argues that “California law does not categorically state that a contract can 3 never be formed on the basis of browsewrap.” (Doc. No. 21 at 17) (quoting Weeks v. Interactive 4 Llife Forms, LLC, 100 Cal. App. 4th 1077, 1085 (2024)). Defendant contends that plaintiff was 5 put on inquiry notice of the Site Terms of Use because of the hyperlink at the bottom of each page 6 going to the Site Terms of Use. (Id.; Doc. No. 13 at 12–13.) In fact, the tiny gray hyperlink at 7 the bottom of the relevant pages (see Doc. Nos. 18-3 at 1–6) is, as plaintiff describes it, 8 “prototypical browsewrap” (Doc. No. 18 at 20) of the kind courts regularly find not to constitute 9 an agreement. 10 Defendant further argues that plaintiff is a member of the Rewards Program who has 11 shopped with defendant for over 20 years, and that this establishes an “ongoing relationship” with 12 defendant that put plaintiff on inquiry notice of the Site Terms of Use. (Doc. No. 21 at 17) (citing 13 Oberstein, 60 F.4th at 515–16). However, the Ninth Circuit’s decision in Oberstein addressed a 14 ‘hybrid’ form of agreement. See Oberstein, 60 F.4th at 515 (“Appellees’ Terms are not pure 15 clickwrap . . . . Nor are they pure browsewrap, as they are not hidden in links located at the 16 bottom of webpages. Rather, they lie somewhere in between.”). Moreover, defendant does not 17 cite any authority suggesting that enrolling in a company’s rewards program establishes a 18 continuing relationship such that an individual is on inquiry notice of the separate terms of 19 conditions for the use of the company’s website. Cf. Sellers v. JustAnswer LLC, 73 Cal. App. 5th 20 444, 471 (2021) (“[T]he transactions at issue in the federal cases addressing sign-in wrap 21 agreements mostly involve a consumer signing up for an ongoing account and, thus . . . 22 contemplat[ing] entering into a continuing, forward-looking relationship.”); Sellers, 73 Cal. App. 23 5th at 476 (noting that “the typical consumer would not expect to enter into an ongoing 24 contractual relationship, regardless of whether the transaction occurs online or in person” where 25 they are “buying a single pair of socks, or signing up for a free trial”). 26 In any event, even if some form of continuing relationship was present here, defendant has 27 not cited any authority finding that such a relationship would be sufficient to put the plaintiff on 28 inquiry notice in the browsewrap context. Nor has the court located any such authority. To the 1 contrary, another district court recently concluded in virtually identical circumstances that the Site 2 Terms of Use failed to provide reasonably conspicuous notice where the plaintiff was a member 3 of the Rewards Program: 4 Defendant argues that although Plaintiff never clicked a button or checked a box indicating that she agreed to the website’s Terms and 5 Conditions, “Plaintiff had inquiry notice of the Website Terms of Use based on her longstanding and ongoing relationship with 6 JCPenney[.]” In support, Defendant argues that “browsewrap agreements are not categorically invalid under Oregon law[.]” The 7 question, however, is not whether browsewrap agreements are categorically invalid, but whether the agreement at issue provided 8 reasonably conspicuous notice and Plaintiff “unambiguously manifest[ed]” assent to those terms. . . . 9 Neither the Terms and Conditions link nor the Legal link are 10 conspicuous when viewed in the context of the entire webpage. The links are buried at the bottom of a page essentially overridden with 11 an abundance of other links of the same size and color. Although some of the dozens of links are underlined—suggesting to the user 12 that the link is a hyperlink—neither relevant link is underlined. Additionally, the user’s eye is driven not to the bottom of the page, 13 where these links are essentially lost amongst a plethora of other links, but to the top of the page. The top of the page, in contrast to 14 the link-littered bottom, has four large, red circles advertising different services (like same–day pickup and the Rewards Program). 15 The red circles are set off against the white background, drawing the user’s eyes to that portion of the webpage. Ordinary website users 16 expect that hyperlinks with “important provisions—such as those that disclose the existence of proposed contractual terms—will be 17 prominently displayed, not buried in fine print.” In short, neither the Legal link nor the Terms & Conditions link provide 18 “reasonably conspicuous notice of the terms to which the consumer will be bound.” . . . 19 Additionally, that Plaintiff used Defendant’s website on multiple 20 occasions does not mean that she had inquiry notice of the arbitration terms. “Together with the visual prominence of an advisal, we also 21 consider under the first step the full context of the transaction, such as whether the type of transaction contemplates entering into a 22 continuing, forward–looking relationship that would be governed by terms and conditions.” [Godun, 135 F.4th at 710.] Although 23 Plaintiff used the website to shop on multiple occasions, nothing in that relationship indicates a user would believe they entered a 24 “continuous relationship” with Defendant merely by using the website. Id. (examples indicating a “continuing relationship” 25 include creating an account requiring completion of a registration process, entering a free trial period, and downloading an application 26 to their phone). 27 Gamble v. Penney Opco LLC, __ F. Supp. 3d __, 2025 WL 1806608, at *1 n.1, *3–4 (D. Or. 28 July 1, 2025), appeal filed (9th Cir. July 15, 2025). The district court’s analysis in Gamble 1 quoted above is entirely applicable to the pending motion, notwithstanding that Oregon state law 2 was being considered in that case.3 The court also finds that analysis to be well-reasoned and 3 persuasive.4 4 2. Whether Plaintiff Unambiguously Manifested Her Assent 5 While the discussion above is a sufficient basis upon which to deny the pending motion to 6 the extent it is predicated on the Site Terms of Use, the court additionally notes that defendant has 7 provided no evidence that plaintiff “[took] some action, such as clicking a button or checking a 8 box, that unambiguously manifest[ed] . . . her assent to those terms.” Berman, 30 F.4th at 856. 9 Indeed, defendant does not advance any argument as to the requirement of unambiguous 10 manifestation of assent in its briefing. The court again finds the district court’s analysis in 11 Gamble to be persuasive in this regard: 12 Finally, nothing in this record indicates that Plaintiff took any action—such as checking a box—indicating that she agreed to the 13 arbitration terms. Instead, Plaintiff simply shopped on a website that had Terms and [Conditions] available via clicking on a link that was 14 essentially buried under dozens of other similar looking links. The Court is unable to find, and Defendant fails to point to, any case in 15 any jurisdiction where a court concluded a website user was on inquiry notice under facts remotely analogous to those present here. 16 Because the relevant links were not “reasonably conspicuous,” and because Plaintiff took no affirmative action indicating her 17 3 The district court in Gamble relied primarily on Ninth Circuit authority applying California 18 law. See, e.g., Gamble, 2025 WL 1806608, at *4 n.4 (“Although this case deals with Oregon law 19 and Godun dealt with California law, the Ninth Circuit has ‘consistently stated that no differences exist in the law of the different states as to internet contract formation.’”). Indeed, the 20 circumstances are so similar to those presented here that defendant also filed a declaration from its vice president of marketing, William Cunningham, in Gamble with the same errors as the 21 declaration filed by Cunningham in this action. See id. at *2 n.3 (“As outlined below, although Cunningham’s declaration describes how the website appears today, the relevant portions of the 22 website operated differently when Plaintiff made her purchase in August 2023. At that time, one 23 had to click on the ‘Legal’ link, located next to the ‘Terms and Conditions’ link, to reach the website’s Terms of Use.”); (Doc. No. 13-2 at ¶ 6) (erroneously stating that the “Terms and 24 Conditions” link at the bottom of defendant’s website, rather than the “Legal” link, would have taken plaintiff to the Site Terms of Use at the time she made her purchase). 25

4 In its supplemental brief addressing the district courts’ decisions in Gamble and Close, 26 defendant argues that Gamble should not be found persuasive as to another issue regarding the 27 RPTC, i.e., whether the evidence submitted by plaintiff is sufficient to establish that she is not sophisticated. (Doc. No. 31 at 3.) However, defendant advances no argument as to why the court 28 should not adopt the analysis in Gamble as to the Site Terms of Use. 1 unambiguous manifestation of her intent to be bound by the arbitration agreement found in Defendant’s Terms and Conditions, 2 she is not bound by that agreement. 3 Gamble, 2025 WL 1806608, at *5. 4 Accordingly, defendant’s motion to compel arbitration, to the extent it is based on 5 plaintiff’s purported agreement to the arbitration provision contained in the Site Terms of Use, 6 will be denied. See Brooks v. IT Works Mktg., Inc., No. 1:21-cv-01341-DAD-BAK, 2022 WL 7 2079747, at *6–*7 (E.D. Cal. June 9, 2022) (“[T]he Terms of Use are only made available 8 through a tiny grey hyperlink displayed against a slightly lighter grey background and located in 9 the very bottom left corner of each webpage. The text of that hyperlink is so small that it is 10 barely visible to the naked eye, and coupled with its muted grey color and background, it is 11 considerably deemphasized in relation to the other text on the webpage. . . . Next, even assuming 12 defendants had provided conspicuous notice (which they did not), they must also show that 13 plaintiff unambiguously manifested her assent to be bound by the Terms of Use.”) (internal 14 citations omitted); id. at *7 n.6 (“When faced with pure browsewrap agreements, ‘[w]here the 15 link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure 16 corners of the website where users are unlikely to see it, courts have refused to enforce the 17 browsewrap agreement.’”) (alterations in original).5 18

19 5 While the Site Terms of Use contain a choice-of-law provision stating that the agreement is governed by Texas law (see Doc. No. 13 at 6), the parties exclusively brief the question of 20 whether a valid arbitration agreement was formed on the basis of the Site Terms of Use under California law. (See Doc. Nos. 13 at 8, 11–13; 18 at 17–21; 21 at 17–18.) California and Texas 21 law are similar in the relevant respects with Texas courts essentially relying on California law. See StubHub, Inc. v. Ball, 676 S.W.3d 193, 201 n.4 (Tex. Ct. App. 2023) (citing “the Second 22 Circuit’s treatment of browsewrap agreements in . . . Specht v. Netscape Communications Corp., 23 306 F.3d 17 (2d Cir. 2002)”); Specht, 306 F.3d at 35 (“After reviewing the California common law . . . we conclude that . . . plaintiffs’ downloading of SmartDownload did not constitute 24 acceptance of defendants’ license terms. Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential 25 if electronic bargaining is to have integrity and credibility.”) (applying California law). Consequently, the court agrees that California law applies here. See Brooks, 2022 WL 2079747, 26 at *4 n.2 (“[A] court will apply California substantive law unless the party timely invoking 27 another state’s law ‘show[s] it materially differs from the law of California.’”). In any event, because California and Texas law are the same in the relevant respects, the choice of law is not 28 material to the resolution of the pending motion. 1 B. The Rewards Program Terms and Conditions 2 Defendant also moves to compel arbitration on the basis of the RPTC. (Doc. No. 13 at 5.) 3 As recognized above, “[f]irst, a court must resolve any challenge that an agreement to arbitrate 4 was never formed, even in the presence of a delegation clause.” Caremark, 43 F.4th at 1030. 5 The court will assume for the purposes of the pending motion that the parties formed a valid 6 arbitration agreement on the basis of the 2019 RPTC. See Gamble, 2025 WL 1806608, at *1 n.2, 7 *5 (assuming the existence of an agreement to arbitrate on the basis of the RPTC and proceeding 8 to analyze the gateway issues of arbitrability); see also Gill v. US Data Management, LLC, 2:24- 9 cv-05255-MCS-MAR, 2024 WL 5402494, at *2 (C.D. Cal. Dec. 2, 2024). 10 1. Whether the Parties Agreed to Delegate Arbitrability to the Arbitrator 11 Next, the court must resolve whether the parties delegated the arbitrability of a particular 12 issue to the arbitrator. Caremark, 43 F.4th at 1030. “While the general rule is that a district court 13 decides whether a claim falls within the scope of an arbitration agreement, such questions ‘can be 14 expressly delegated to the arbitrator where the [contracting] parties clearly and 15 unmistakably provide otherwise.’” Patrick v. Running Warehouse, LLC, 94 F.4th 468, 480 (9th 16 Cir. 2024). “[I]ncorporation of the [American Arbitration Association (“AAA”)] rules constitutes 17 clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.” 18 Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). 19 Defendant notes that the AAA rules were expressly incorporated into the RPTC. (Doc. 20 No. 13 at 13–14.) Plaintiff argues that she has provided evidence as to her lack of sophistication 21 and that defendant has not provided any evidence or argument to the contrary in its pending 22 motion. (Doc. No. 18 at 22 & n.8.) “District courts have split over whether Brennan impacts 23 cases involving unsophisticated parties[.]” Fischer v. Kelly Servs. Glob., LLC, No. 23-cv-01197- 24 JLS-JLB, 2024 WL 382181, at *9 (S.D. Cal. Jan. 31, 2024). The undersigned has consistently 25 found the better view to be that incorporating the AAA rules into an agreement is not clear and 26 unmistakable evidence of the intent to arbitrate arbitrability when one party is unsophisticated. 27 See Ruiz v. Kelly Serv. Glob. LLC, No. 23-cv-02682-DAD-JDP, 2024 WL 3618222, at *5 (E.D. 28 Cal. Aug. 1, 2024); Fox v. Experian Info. Sols., Inc., 718 F. Supp. 3d 1231, 1238 (E.D. Cal. 1 2024); Calzadillas v. Wonderful Co., LLC, No. 1:19-cv-00172-DAD-JLT, 2019 WL 2339783, at 2 *4–*5 (E.D. Cal. June 3, 2019). 3 Defendant argues in reply that the Ninth Circuit’s decision in Patrick, where individual 4 parties purchased goods from an online retailer, is applicable here. (Doc. No. 21 at 12) (citing 5 Patrick, 94 F.4th 468). According to defendant, the Ninth Circuit in Patrick “rejected the 6 plaintiffs’ argument that incorporation of the JAMS rules by reference did not mandate delegation 7 of arbitrability because they [were] unsophisticated parties, in part because plaintiffs offered no 8 evidence concerning their sophistication or lack thereof to the district court.” (Id.) (emphasis 9 added). In fact, the lack of evidence regarding sophistication of one of the parties was the only 10 basis for the court’s holding in that decision. See Patrick, 94 F.4th at 481 (“Our circuit has not 11 yet decided whether Brennan’s holding should extend to arbitration clauses in consumer contracts 12 between a sophisticated entity and an average unsophisticated consumer. However, as 13 Defendants observe, Plaintiffs offered no evidence concerning their sophistication or lack thereof 14 to the district court. Accordingly, we need not decide the issue in order to resolve this case.”).6 15 Here, plaintiff has provided a declaration stating that she is “an ordinary consumer” and 16 “an unsophisticated layperson who is untrained in the law.” (Doc. No. 1801 at ¶ 2.) Defendant 17 does not directly contest plaintiff’s lack of sophistication, but instead argues only that her 18 declaration is insufficient. (Doc. No. 21 at 13.) Notably, defendant has “offered no evidence 19 concerning [plaintiff’s] sophistication or lack thereof[.]” Patrick, 94 F.4th at 481; cf. Fli-Lo 20 Falcon, 97 F.4th at 1200 (noting that “motions to compel arbitration are subject to the summary 21 judgment standard” and rejecting the plaintiffs’ “unconscionability challenge to the Delegation 22 Provision because their arguments are solely based on their supposed lack of sophistication and 23 they have pointed to nothing in the record creating a dispute of material fact regarding their 24 ‘sophistication’”), 1201 (“Because we have rejected plaintiffs’ only challenge to the Delegation 25 Provision, and in doing so have found that plaintiffs are sophisticated, we must enforce the 26 6 The Ninth Circuit still has yet to resolve this issue. See Faucett v. Move, Inc., No. 24-2631, 27 2025 WL 1112935, at *1 n.1 (9th Cir. Apr. 15, 2025) (“We have ‘not yet decided whether Brennan’s holding should extend to arbitration clauses in consumer contracts between a 28 sophisticated entity and an average unsophisticated consumer.’”). 1 Delegation Provision under Brennan.”). Moreover, plaintiff’s declaration here addresses factors 2 such “whether the plaintiff is a consumer as opposed to a corporation” and “whether the plaintiff 3 ‘had legal training or experience dealing with complicated contracts.’” Fli-Lo Falcon, 97 F.4th at 4 1200; cf. id. (“[N]othing in plaintiffs’ declarations suggest[s], for example, that they are first-time 5 business owners or otherwise unfamiliar with commercial contracts[.]”). 6 In light of plaintiff’s declaration, and absent any evidence—or even argument—to the 7 contrary submitted by defendant, the court finds no genuine dispute of fact as to plaintiff’s lack of 8 sophistication. The court therefore concludes that the Brennan rule is inapplicable here, that 9 defendant has consequently failed to provide clear and unmistakable evidence of the parties’ 10 intention to delegate arbitrability to the arbitrator, and that the court must therefore analyze 11 whether plaintiff’s claims are covered by the RPTC’s arbitration provision. See Gamble, 2025 12 WL 1806608, at *5–6 & n.6 (finding no clear and unmistakable evidence where the plaintiff 13 provided a declaration similar to the one presented by plaintiff here and rejecting the defendant’s 14 same argument that the Ninth Circuit’s decision in Patrick was applicable because the plaintiffs 15 in Patrick had provided no evidence concerning their sophistication).7 16 ///// 17 /////

18 7 Despite initially citing Ninth Circuit authority, defendant argues in its pending motion that 19 Texas law applies to the question of whether the parties intended to arbitrate arbitrability. (Doc. No. 13 at 13–14.) In its reply, defendant relies exclusively on federal law. (See Doc. No. 21 at 20 11–14.) As plaintiff correctly notes (Doc. No. 18 at 25), “federal law governs the arbitrability question by default because the Agreement is covered by the FAA, and the parties have not 21 clearly and unmistakably designated that nonfederal arbitrability law applies.” Brennan, 796 F.3d at 1129. The RPTC states that “these terms will be governed by and construed under the 22 substantive laws of the State of Texas, without reference to conflict-of-laws considerations,” but 23 also provides that “the Federal Arbitration Act and federal arbitration law apply to this agreement to arbitrate.” (Doc. No. 13-2 at 24.) Under the Ninth Circuit’s decision in Brennan, federal law 24 therefore applies in resolving this question. See, e.g., Hong Kong Cont’l Trade Co. Ltd. v. Natural Balance Pet Foods, Inc., No. 22-cv-00571-JAK-AFM, 2023 WL 2664246, at *7 (C.D. 25 Cal. Mar. 28, 2023). In any event, Texas law appears to be similarly unsettled regarding the sophistication issue. See TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 26 694, 704–08 (discussing the consensus among courts in other jurisdictions, noting that court have 27 “often disagreed” when “the agreement involves an unsophisticated party,” and “agree[ing] with the vast majority of courts that, as a general rule,” incorporation of AAA rules constitutes clear 28 and unmistakable evidence). 1 2. Whether the RPTC Covers Plaintiff’s Claims 2 “Federal law governs the scope of an arbitration agreement.” Shivkov v. Artex Risk Sols., 3 Inc., 974 F.3d 1051, 1058–59 (9th Cir. 2020). “When deciding whether the parties agreed 4 to arbitrate a certain matter . . . courts generally . . . should apply ordinary state-law principles 5 that govern the formation of contracts.” Id. (quoting First Options of Chi., Inc. v. Kaplan, 514 6 U.S. 938, 944 (1995)). 7 The 2019 version of the RPTC states that “[a]ny dispute or claim arising out of or relating 8 in any way to a Member’s participation in the Program, including, without limitation, the issuance 9 of Points, the issuance or redemption of Rewards, or the receipt of any Program benefits, will be 10 resolved by binding arbitration[.]” (Doc. No. 13-2 at 24.) 11 Defendant argues that the RPTC “plainly cover[s] plaintiff’s suit.” (Doc. No. 13 at 14.) 12 In support of this argument, defendant recites only the text of the RPTC and notes the strong 13 presumption in favor of arbitration under Texas law, particularly when the arbitration clause is 14 “broad” as it contends is the case here. (Id.) 15 Plaintiff argues in opposition that her false advertising claims, which arise out of her 16 purchase of allegedly falsely discounted clothing from defendant’s website, do not relate in any 17 way to her participation in the Rewards Program. (Doc. No. 18 at 26.) Plaintiff further argues 18 that the Tenth Circuit rejected defendant’s precise arguments in its decision in Cavlovic v. J.C. 19 Penney Corp., 884 F.3d 1051 (10th Cir. 2018). (Id.) Any differences between the 2014 version 20 of the RPTC considered by the Tenth Circuit and the 2019 version of the RPTC at issue in this 21 case are, according to plaintiff, “immaterial.” (Id. at 27, 28.) In fact, plaintiff contends that it is 22 actually even clearer that the 2019 RPTC does not cover her claims presented in this action 23 because it includes examples of covered disputes that were not included in the 2014 version— 24 namely, “the Issuance of Points, the Issuance or redemption of Rewards, or the receipt of any 25 Program benefits”—and those examples are clearly distinct from plaintiff’s claims asserted in this 26 case. (Id. at 27.) Finally, plaintiff argues that “it is telling that JCPenney can list numerous 27 reasons for why Ms. Jones’s claims are covered under the Terms of Use; yet, JCPenney is silent 28 when it comes to how Ms. Jones’s claims are related to the Rewards Program. This, of course, is 1 because Ms. Jones’s claims are only covered under the Terms of Use (which she did not agree 2 to).” (Id. at 28.) 3 In reply, defendant contends that plaintiff’s claims relate “in some way” to the Rewards 4 Program because they “arise[ ] from an online purchase that Plaintiff made as a Rewards member, 5 for which she earned Rewards points.” (Doc. No. 21 at 14.) Defendant further argues that the 6 Tenth Circuit’s decision in Cavlovic is inapposite because the court was considering the 2014 7 version of the RPTC. (Id. at 15–16.) “More importantly,” defendant argues, the Tenth Circuit’s 8 decision in Cavlovic ignored Texas law construing the phrase “arising from and related to” 9 broadly. (Id. at 16.) However, defendant does not cite any Texas state court authority from 10 supporting this contention. 11 After defendant had filed its reply, plaintiff filed notices of supplemental authority 12 directing the court’s attention to the two recent district court decisions addressing similar 13 circumstances, namely Gamble and Close v. Penney Opco LLC, __ F. Supp. 3d __, 2025 WL 14 1721002 (W.D. Wash. June 20, 2025), appeal filed (9th Cir. July 7, 2025). (Doc. Nos. 23, 27.) 15 Plaintiff noted that both of the district courts in Gamble and Close concluded that false 16 advertising claims regarding allegedly fraudulent discounts did not “arise from or relate to” the 17 Rewards Program. (Id.) In its response to those notices, defendant argues that both courts erred 18 in relying on the Tenth Circuit’s decision in Cavlovic and that the court should conduct “an 19 independent analysis of Texas law.” (Doc. No. 31 at 4.) Again, defendant cites no Texas caselaw 20 supporting the argument presented in its response. 21 Defendant’s arguments are not persuasive. Importantly, while defendant contends that the 22 several federal courts addressing similar or identical language failed to properly consider Texas 23 law, defendant has not argued for—nor has the court identified—any material differences 24 between Texas and federal law on this issue. Defendant argues that Texas courts apply a “strong 25 presumption favoring agreements to arbitrate,” that this presumption is “so compelling that a 26 court should not deny arbitration ‘unless it can be said with positive assurance that an arbitration 27 clause is not susceptible of an interpretation which would cover the dispute at issue,’” and that 28 this is “particularly” true “when the clause is broad” and “provides for arbitration of . . . ‘any 1 controversy or claim arising out of or relating to the contract thereof[.]’” (Doc. No. 13 at 14) 2 (quoting Cedillo v. Immobiliere Jeuness Establishment, 476 S.W.3d 557, 567 (Tex. Ct. App. 3 2015)). However, Texas courts have taken all of these principles from federal law. (See id.) 4 (citing In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005) (considering the 5 FAA); Prudential Secs. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995) (considering the FAA 6 and citing decisions from the Fifth Circuit); Baty v. Bowen, Miclette & Britt, Inc., 423 S.W.3d 7 427, 440 (Tex. Ct. App. 2013) (citing a Texas Court of Appeals decision that in turns cites Fifth 8 Circuit decisions considering the FAA)); cf. Cedillo, 476 S.W.3d at 563 n.3 (“The FAA and 9 [Texas General Arbitration Act (“TGAA”)] address the same underlying substantive principles. 10 Because the substantive principles applicable to our analysis are the same under either act, we cite 11 cases decided under the FAA and TGAA interchangeably.”). Indeed, as the Tenth Circuit has 12 noted, all of these rules of law stem from Supreme Court decisions. See Brent Elec. Co. v. IBEW 13 Local Union No. 584, 110 F.4th 1196, 1211–12 (10th Cir. 2025). 14 Moreover, defendant’s argument that “Cavlovic does not cite Texas case law discussing 15 the broad interpretation of ‘arising under or related to’” (Doc. No. 21 at 16 n.6) is simply 16 incorrect. See Cavlovic, 844 F.3d at 1059 (“And under Texas law, our inquiry continues beyond 17 an initial determination that the arbitration provision is broad. See BBVA Compass Inv. Sols., Inc. 18 v. Brooks, 456 S.W.3d 711, 718 (Tex. App. 2015) (holding that ‘[w]hether a claim is subject to 19 arbitration turns on its substance’).”) (alterations in original); BBVA Compass, 456 S.W.3d at 722 20 (discussing “broad” arbitration provisions including “arising from or relating to” language). 21 Indeed, the Tenth Circuit expressly cited authority addressing all of the rules of Texas law 22 discussed above. See Cavlovic, 844 F.3d at 1059 (citing BBVA Compass, 456 S.W.3d at 718). 23 As noted, defendant simply does not explain in any meaningful detail how the application of 24 these rules by the Tenth Circuit in Cavlovic was incorrect. 25 Defendant also argues that the court’s decision in Cavlovic is inapposite because the 2014 26 version of the RPTC considered by the Tenth Circuit did not include the specific phrase “in any 27 way.” (Doc. No. 21 at 15); see also Cavlovic, 884 F.3d at 1059 (“The 2014 Rewards Program 28 agreement covers all claims ‘arising from or relating to’ the Rewards Program.”). However, 1 defendant fails to cite any authority suggesting that such language alters the analysis significantly, 2 or at all, under Texas law. To the contrary, the Texas Court of Appeals has suggested otherwise: 3 Cash America still contends that the premises liability claim falls within the scope of the agreement, emphasizing in particular the final 4 clause which states that the parties agreed to arbitrate any dispute “in any way arising out of or between the relationship between the 5 parties whether now existing or hereafter arising, and whether sounding in contract, tort, equity, or otherwise.” Cash America 6 believes that, through this language, the parties agreed to arbitrate any future dispute, so long as the dispute arose between 7 the parties’ “relationship,” even if that relationship exists as between an invitee and a premises owner. But to accept this argument, we 8 would have to conclude that the parties intended to arbitrate every possible dispute between them into perpetuity—no matter the 9 dispute's connection to the underlying pawn transaction. There is nothing to support a holding that the parties intended for such a 10 limitless scope. 11 Cash Am. Pawn LP v. Meza, 653 S.W.3d 340, 343 (Tex. Ct. App. 2022) (emphasis added). 12 The court finds the Tenth Circuit’s decision in Cavlovic and the district court’s decision in 13 Close to be persuasive. See Cavlovic, 884 F.3d at 1060 (“[A]s a Texas appellate court 14 determined in declining to compel arbitration, it is difficult to ‘see that this is a claim “arising out 15 of or relating to” the contract’ because even if the parties ‘honored their contractual obligations in 16 every respect’ under the Rewards Program agreement, the contractual compliance would not 17 affect Cavlovic’s allegations.”) (quoting Fridl v. Cook, 908 S.W.2d 507, 513 (Tex. Ct. App. 18 1995)); Close, 2025 WL 1721002, at *4 (“[T]he allegedly false advertised discounts not do not 19 ‘arise from’ or ‘relate’ to her membership in the rewards program or the number of points she 20 received for her purchases.”). The court also finds persuasive the decision in Gamble, in which 21 the district court addressed the identical provision as that at issue here as follows: 22 Here, Plaintiff’s claims do not arise out of, or relate in any way, to her membership in Defendant’s Rewards Program. And by including 23 specific examples of disputes that may be subject to the arbitration clause—i.e., “the issuance of Points, the issuance or redemption of 24 Rewards, or the receipt of any Program benefits”—the arbitration agreement here appears narrower than that analyzed in Cavlovic. 25 Finally, Defendant certainly knew how to draft a broad arbitration agreement. . . . In stark contrast, the Rewards Program contained 26 much narrower language [than the arbitration provision in the Site Terms of Use.] 27 28 Gamble, 2025 WL 1806608, at *7. 1 “Plaintiff’s claims do not fall within the scope of the [RPTC], as multiple courts have now 2 concluded. Thus, JCPenney’s motion to compel arbitration pursuant to those terms fails.” Close, 3 2025 WL 1721002, at *4. Accordingly, defendant’s motion to compel arbitration will be denied 4 in its entirety. 5 C. Whether to Stay this Action 6 Defendant argues that even if its pending motion is denied, the court must stay this action 7 pursuant to the Supreme Court’s decision in Coinbase, Inc. v. Bielski, 599 U.S. 736, 738 (2023). 8 (Doc. No. 13 at 16 n.2.) Plaintiff counters, arguing that the court “should not stay proceedings 9 unless and until JCPenney files a notice of appeal.” (Doc. No. 19 at 29 n.12.) 10 “[A] district court is ‘require[d]’ to enter an ‘automatic stay’ pending appeal when a party 11 exercises its statutory right under 9 U.S.C. § 16(a) . . . to an interlocutory appeal of the denial of a 12 motion to compel arbitration.” California ex rel. Harrison v. Express Scripts, Inc., 139 F.4th 763, 13 767 (9th Cir. 2025) (second alteration in original). Defendant does not address in its reply 14 whether an automatic stay is required prior to defendant exercising its right to appeal. Cf. 15 Coinbase, 599 U.S. at 747 (“We conclude that, after Coinbase appealed from the denial of its 16 motion to compel arbitration, the District Court was required to stay its proceedings.”) (emphasis 17 added). In any event, the court finds that a temporary stay of this case, specifically until 30 days 18 after the date of entry of this order, is appropriate pursuant to the court’s inherent authority and in 19 light of the Supreme Court’s decision in Coinbase. See Fed. R. App. P. 4(a)(1)(A) (“In a civil 20 case . . . the notice of appeal required by Rule 3 must be filed with the district clerk within 21 30 days after entry of the judgment or order appealed from.”); Landis v. N. Am. Co., 299 U.S. 22 248, 255 (1936) (“[T]he power to stay proceedings is incidental to the power inherent in every 23 court to control the disposition of the causes on its docket with economy of time and effort for 24 itself, for counsel, and for litigants.”). 25 ///// 26 ///// 27 ///// 28 ///// 1 CONCLUSION 2 For the reasons discussed above, 3 1. Defendant’s motion to compel arbitration (Doc. No. 13) is DENIED; 4 2. This action is STAYED until 30 days after the date of entry of this order pursuant 5 to the Supreme Court’s decision in Landis; 6 3. If defendant files a timely notice of appeal of this order, this action will be 7 automatically STAYED pending further order of this court pursuant to the 8 Supreme Court’s decision in Coinbase. 9 IT IS SO ORDERED. | Dated: _ August 1, 2025 Dal A. 2, □□□ 11 DALE A. DROZD UNITED STATES DISTRICT JUDGE

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