Navarro v. SmileDirectClub, Inc.

Opinion

1 2 3 6 7 ARNOLD NAVARRO, Case No. 22-cv-00095-WHO

8 Plaintiff, ORDER GRANTING DEFENDANTS’ 9 v. MOTION TO COMPEL ARBITRATION AND DENYING 10 SMILEDIRECTCLUB, INC., et al., DEFENDANTS’ ADMINISTRATIVE MOTION TO STRIKE Defendants. 11 Re: Dkt. No. 18, Dkt. No. 53

13 Arnold Navarro, the plaintiff in this putative class action, alleges that SmileDirectClub, 14 Inc., SmileDirectClub, LLC, Jeffrey Sulitzer, and Jeffrey Sulitzer, D.M.D., P.C. (collectively 15 “SDC”), engage in the unauthorized practice of dentistry in violation of California law. SDC has 16 moved to compel arbitration. I previously identified evidentiary deficiencies in SDC’s motion and 17 ordered SDC to file a declaration under oath to address these deficiencies. SDC has done so. 18 Specifically, and in keeping with my order, it has produced sworn declarations and supporting 19 exhibits that demonstrate the design and appearance of the clickwrap agreement on April 23, 2020, 20 the date on which Navarro allegedly assented to the clickwrap agreement on SDC’s website. 21 Navarro denies that he assented to arbitration but he does not dispute that he enrolled on SDC’s 22 website so that he could receive SDC’s services. Nor does he challenge SDC’s evidence that 23 customers are required to consent to SDC’s terms and services—which include an arbitration 24 clause—as a precondition to receiving SDC’s services. 25 For the reasons set forth below, I GRANT SDC’s motion to compel arbitration. SDC has 26 met its burden to show that Navarro assented to the agreement. He has withdrawn his arguments 27 regarding the enforceability of the arbitration clause. SDC’s administrative motion to strike 1 Navarro’s supplemental brief is DENIED as moot. 3 Navarro filed a complaint in the Superior Court of the State of California for the County of 4 Alameda alleging that SDC engages in the unauthorized practice of dentistry. First Amended 5 Complaint (“FAC”) [Dkt. 28] ¶ 1. He claims that, among other things, SDC failed to comply 6 with consumer protection licensing requirements, negligently provided dental care, and made 7 misleading and false representations to consumers about the scope of the dental services that SDC 8 could lawfully provide. Id. ¶¶ 1, 10–12, 60–61, 74–75, 83. He has pleaded various causes of 9 action against SDC, including negligence, breach of fiduciary duty, fraudulent inducement, 10 violation of California’s Consumer Legal Remedies Act, and violation of California’s Unfair 11 Competition Law. Id. ¶¶ 32–110. 12 SDC characterizes itself as a “teledentistry platform” that connects consumers like Navarro 13 with orthodontic treatment. SDC’s Motion to Compel Arbitration (“MTC”) [Dkt. 18] at 3. It 14 claims that its business model facilitates access to orthodontic treatment and allows consumers to 15 straighten their teeth via clear aligners without the hassle and cost of in-person appointments. Id. 16 Consumers who are interested in SDC’s dental services may request a doctor-prescribed 17 impression kit from SDC’s website, visit a SDC retail location (known as a SmileShop), or visit 18 the office of a dentist or orthodontist that participates in SDC’s Partner Network. Id. All three 19 options require consumers to register and create an SDC account online before they can access any 20 of SDC’s products or services. Id. at 4. 21 In April of 2020, Navarro visited SDC’s website and reportedly created an online account. 22 Id. at 4–5. According to SDC, as part of the account creation process and before Navarro could 23 finalize his registration as an SDC clear aligner candidate, he was required to affirmatively check a 24 clickwrap checkbox in which he agreed to SDC’s Informed Consent, Terms & SmilePay 25 Conditions (“TOS”). Id. at 4. The checkbox is not pre-checked, and the full TOS are presented as 26 hyperlinks. Id. at 5. Id. When the hyperlinks are clicked, the consumer is taken to another screen 27 that displays the complete text of each of the policies. Id. Consumers have the option to read, 1 In support of its motion to compel arbitration, SDC initially provided some evidence 2 regarding the appearance of the clickwrap agreement but failed to show how the agreement would 3 have appeared to Navarro on April 23, 2020—the date on which Navarro allegedly accepted 4 SDC’s TOS. Id.; Declaration of Justin Skinner (“Skinner Decl.”) [Dkt. 20] ¶¶ 14–27. After I 5 ordered SDC to address this deficiency, it provided two declarations to establish the design and 6 appearance of the SDC clickwrap agreement on April 23, 2020. See Supplemental Declaration of 7 Justin Skinner (“Supp. Skinner Decl.”) [Dkt. 48] ¶¶ 9, 11, 13, 15, 18–19, 21, 24–31. Specifically, 8 it submitted a supplemental declaration from Justin Skinner, SDC’s Chief Information Officer, 9 that described the appearance of SDC’s website during each stage of the registration process and 10 explained what Navarro would have seen as he completed the SDC account-registration process. 11 Id. ¶¶ 9, 11, 13, 15, 18. Skinner explained that since he started at SDC in 2019, and “based on 12 research since at least 2017,” all of SDC’s customers have been required to affirmatively check a 13 clickwrap box indicating that they “agree to SmileDirectClub’s Informed Consent and Terms & 14 SmilePay Conditions.” Id. ¶¶ 2, 19–20. According to Skinner’s sworn declaration, the phrases 15 “Informed Consent,” “Terms,” and “SmilePay Conditions” have always appeared in the same 16 place during the registration process and have always been underlined and hyperlinked. Id. ¶¶ 20– 17 21. Skinner declared that clicking the Informed Consent hyperlink on April 23, 2020, would have 18 displayed the text of the Informed Consent agreement, which includes an arbitration clause. Id. 19 ¶¶ 29–31. 20 Additionally, SDC submitted a sworn declaration by Michael Meuti, SDC’s counsel, 21 which described Meuti’s retrieval of certain archived pages of SDC’s website from January 26, 22 2020, and June 18, 2020, via the Wayback Machine. Declaration of Michael Meuti (“Meuti 23 Decl.”) [Dkt. 49] ¶¶ 3–10. Meuti attached screenshots of the archived pages as exhibits to his 24 declaration. See Dkts. 49-1 to 49-4. These screenshots are consistent with Skinner’s description 25 of the SDC registration process. Compare Dkts. 49-1 to 49-4 with Supp. Skinner Decl. ¶¶ 9–11. 26 SDC also explained that its servers, which maintain an electronic file for each customer, log the 27 customer’s transactions and interactions. MTC at 5. These servers also log a customer’s 1 registration and agreed to the TOS at 2:25pm on April 23, 2020. Supp. Skinner Decl. ¶¶ 25, 27. 2 Although Navarro vigorously disputes that he assented to arbitration, he concedes that he 3 “enrolled on a website” so that he could receive patient services. See Declaration of Arnold 4 Navarro (“Navarro Decl.”) [Dkt. 23-2] ¶ 3; Supplemental Declaration of Arnold Navarro (“Supp. 5 Navarro Decl.”) [Dkt. 52-1] ¶ 3. Navarro contends that the website enrollment process did not put 6 him on notice of an arbitration policy, that no version of any rules of the American Arbitration 7 Association were provided to him, and that no medical service provider informed him that any 8 dispute would be subject to arbitration. Id. He does not, however, challenge SDC’s allegations 9 that he was required to affirmatively check a clickwrap checkbox on SDC’s website in which he 10 agreed to SDC’s TOS before he could receive any services from SDC. Nor does he assert that he 11 did not check the clickwrap checkbox on SDC’s website. 13 On January 6, 2022, SDC removed this case on the bases of diversity and the Class Action 14 Fairness Act (“CAFA”). Not. of Removal [Dkt. 1] ¶¶ 6, 20. On February 7, 2022, SDC filed its 15 motion to compel arbitration. On April 13, 2022, I heard oral argument regarding the motion. 16 Dkt. No. 45. During the oral argument, I issued a tentative ruling that SDC had not met its burden 17 to show that Navarro had assented to the arbitration agreement and said that I would order SDC to 18 provide more evidence on this issue. On April 15, 2022, I did so. See April 15, 2022 Order [Dkt. 19 46] at 2.1 I explained that “should Navarro wish to respond to SDC’s evidence, he may file a 20 declaration with supporting evidence by May 20, 2022,” and that I would rule on SDC’s motion to 21 compel arbitration following the submission of the supplemental evidence. Id. 22 On May 6, SDC submitted its supplemental evidence, which consisted of a supplemental 23 declaration by Justin Skinner, a declaration by Michael Meuti, and supporting exhibits. See Dkts. 24 48, 49. On May 20, 2022, Navarro submitted a twenty-four page opposition brief to SDC’s 25 supplemental evidence, along with sworn declarations by Navarro and Navarro’s counsel. See Pl. 26

27 1 I also ordered SDC to explain the circumstances under which Navarro received and allegedly assented to 1 Supp. Br. [Dkt. 52]. SDC then filed an administrative motion to strike Navarro’s supplemental 2 brief on the grounds that it exceeded the scope of what I had allowed and because it included legal 3 arguments not previously raised by the parties. Mot. to Strike [Dkt. 53] at 2. And Navarro filed 4 an opposition. Pl. Opp. to Mot. to Strike [Dkt. 54]. 6 The parties do not dispute that the Federal Arbitration Act (“FAA”) governs the motion to 7 compel arbitration. 9 U.S.C. §§ 1 et seq. Under the FAA, a district court determines: (i) whether 8 a valid agreement to arbitrate exists and, if it does, (ii) whether the agreement encompasses the 9 dispute at issue. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 10 2004). “In determining whether a valid arbitration agreement exists, federal courts apply ordinary 11 state-law principles that govern the formation of contracts.” Nguyen v. Barnes & Noble Inc., 763 12 F.3d 1171, 1175 (9th Cir. 2014) (internal quotation marks and citation omitted). If the court is 13 “satisfied that the making of the agreement for arbitration or the failure to comply therewith is not 14 in issue, the court shall make an order directing the parties to proceed to arbitration in accordance 15 with the terms of the agreement.” 9 U.S.C. § 4. “[A]ny doubts concerning the scope of arbitrable 16 issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury 17 Constr. Corp., 460 U.S. 1, 24–25 (1983). 19 SDC’s motion to compel Navarro to arbitration initially involved three disputes: (1) 20 whether Navarro assented to the arbitration agreement, (ii) whether the arbitration agreement (in 21 whole or in part) is valid and enforceable, and (iii) whether the arbitration agreement delegates 22 these “gateway” questions of arbitrability, meaning that the arbitrator, not the Court, should decide 23 these issues. Navarro has since withdrawn all of his arguments concerning the validity and 24 enforceability of the arbitration agreement and any delegation of arbitrability. Pl. Supp. Brief at 25 11 (“Plaintiff no longer challenges the delegation of other arbitrablity [sic] issues, nor does he seek 26 decision on all other issues concerning the enforceability of the arbitration clause . . .”). 27 As a result, should I find that Navarro assented to the arbitration agreement, then I must 1 2000) (explaining that a court must enforce a valid arbitration agreement that encompasses the 2 || dispute at issue). 3 | I. MUTUAL MANIFESTATION OF INTENT 4 The internet has not fundamentally changed the requirement that “mutual manifestation of 5 assent, whether by written or spoken word or by conduct, is the touchstone of contract.” Nguyen, 6 || 763 F.3d at 1175; see also Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855, 862 7 (2016) (relying on Nguyen and describing this as a “pure question of law”). Mutual assent does 8 not require that the consumer have actual notice of the terms of an arbitration agreement. Nguyen, 9 || 763 F.3d at 1177. Instead, a consumer is bound by an arbitration clause if “‘a reasonably prudent” 10 || Internet consumer would be put on “inquiry notice” of the terms of the agreement. Id. 11 “Contracts formed on the Internet come primarily in two flavors: ‘clickwrap’ (or ‘click- 12 || through’) agreements, in which website users are required to click on an ‘I agree’ box after being 13 || presented with a list of terms and conditions of use; and ‘browsewrap’ agreements, where a 14 || website’s terms and conditions of use are generally posted on the website via a hyperlink at the 3 15 || bottom of the screen.” Jd. at 1175-76. Unlike a clickwrap agreement, a browsewrap agreement 16 || does not require an express manifestation of assent to the terms and conditions. /d. at 3 17 1176. Rather, a party gives its assent by simply using the website. /d. at 1176. “The defining 18 feature of browsewrap agreements is that the user can continue to use the website or its services 19 without visiting the page hosting the browsewrap agreement or even knowing that such a webpage 20 || exists.” Jd. (internal quotation marks and citation omitted). 21 SDC’s website uses a clickwrap agreement. SDC provided evidence showing that all of its 22 || customers, including Navarro, were required to affirmatively check a “clickwrap checkbox” (as 23 depicted below) in which they agree to SDC’s TOS as a condition of partaking in SDC’s clear 24 aligner therapy process. MTC at 4-5; Supp. Skinner Decl. J] 7-8, 19. 25 26 agree to SmileDirectClub's armed Consent and Terms &

1 According to Justin Skinner, SDC’s Chief Information Officer, the phrases “Informed Consent,” 2 “Terms,” and “SmilePay Conditions” have been underlined and hyperlinked since at least 2019, if 3 not earlier. Id. ¶¶ 2, 20–21. Skinner also declared that clicking the Informed Consent hyperlink 4 on April 23, 2020, would have displayed the text of the Informed Consent agreement, which 5 includes an arbitration clause. Id. ¶¶ 29–31. 6 Despite Navarro’s contention to the contrary, SDC has provided evidence based on 7 Navarro’s customer file that Navarro electronically accepted the TOS on April 23, 2020. Skinner 8 Decl. ¶ 27 (“SDC’s electronic records establish that Navarro affirmatively checked the box 9 agreeing to the Informed Consent on April 23, 2020 at 9:25 p.m. Coordinated Universal Time 10 (UTC).”); see also Supp. Skinner Decl. ¶¶ 25–30. The notice provided to Navarro via clickwrap 11 agreement during the enrollment process is sufficient to establish his assent to the TOS. Courts in 12 this District have upheld similar agreements that require a computer user to consent to terms and 13 conditions before proceeding with an internet transaction, even where the user is not required to 14 check a separate dialog box to indicate assent. See, e.g., Lee v. Ticketmaster LLC, No. 18-cv- 15 05987-VC, 2019 WL 9096442, at *1 (N.D. Cal. Apr. 1, 2019), aff’d, 817 F. App’x 393 (9th Cir. 16 2020) (finding “Lee was required to assent to the terms whenever he placed orders for tickets” and 17 even though “Lee was not required to check a separate box to indicate his assent . . . Ticketmaster 18 provided notice of the terms of use adjacent to the ‘Place Order’ button, included a hyperlink to 19 the terms in a contrasting color, and informed the user that ‘continuing past this page’ (i.e., placing 20 an order) would indicate assent to the terms”); Peter v. DoorDash, Inc., 445 F. Supp. 3d 580, 587 21 (N.D. Cal. 2020) (enforcing arbitration agreement where terms of service were hyperlinked on the 22 sign-in page); cf. Berman v. Freedom Fin. Network, LLC, 30 F.4th 849, 956 (9th Cir. 2022) 23 (“[C]ourts have routinely found clickwrap agreements enforceable.”). 24 In sum, SDC has provided sufficient evidence showing that Navarro assented to SDC’s 25 TOS when he clicked the “I agree” box, as required before he could complete his account. By 26 assenting to the TOS, Navarro also assented to the arbitration provision. 1 the Skinner Decl., Supp. Skinner Decl., and Meuti Decl. See Pl. Supp. Brief at 11–22. As a 2 threshold matter, I agree with SDC that Navarro’s supplemental brief exceeds the scope of my 3 April 15, 2022, Order. I granted Navarro the option to submit “a declaration with supporting 4 evidence” in response to SDC’s supplemental evidence. April 15, 2022 Order at 2. The 5 supplemental brief is not a declaration and was thus neither invited nor desired. By filing the 6 supplemental brief, Navarro has overstepped the boundaries of my Order and the Local Rules. Id.; 7 see also Civil L.R. 7-3(d) (“Once a reply is filed, no additional memoranda, papers, or letters may 8 be filed without prior Court approval . . .”). 9 Nevertheless, I have exercised my discretion and reviewed the thirty-two evidentiary 10 objections that Navarro has lodged. Pl. Supp. Brief at 11–12. I conclude that these objections are 11 not appropriate at this stage in response to this type of evidence in support of a motion to compel 12 arbitration. A district court ruling on a motion to compel arbitration applies a standard similar to 13 the summary judgment standard of Rule 56. Tabas v. MoviePass, Inc., 401 F. Supp. 3d 928, 936 14 (N.D. Cal. 2019). “On a motion to compel arbitration . . . the Court ‘does not focus on the 15 admissibility of the evidence’s form,’ so long as the contents are capable of presentation in an 16 admissible form at trial.” Lomeli v. Midland Funding, LLC, No. 19-cv-01141-LHK, 2019 WL 17 4695279, at *7 (N.D. Cal. Sept. 26, 2019) (quoting McKee v. Audible, Inc., No. 17-cv-1941, 2017 18 WL 7388530, at *4 (C.D. Cal. Oct. 26, 2017)); accord Hughes v. United States, 953 F.2d 531, 543 19 (9th Cir. 1992) (district court could base its grant of summary judgment in part on government 20 employee’s affidavit despite hearsay and best evidence rule objections). “Objections on the basis 21 of a failure to comply with the technicalities of authentication requirements or the best evidence 22 rule are, therefore, inappropriate.” McKee, 2017 WL 7388530, at *4. 23 None of the evidentiary objections call into question what Justin Skinner or Michael Meuti 24 declared with regard to the appearance of the SDC website on April 23, 2020.2 Nor do the 25

26 2 For instance, Navarro’s first objection to the Supp. Skinner Decl. is “lack of sworn statement.” Pl. Supp. 27 Brief at 12. Navarro objects that the declaration includes an e-signature, and that it does not include a city and state as part of the affiant’s signature block. Id. at 13. But the Supp. Skinner Decl. includes an 1 objections call into question that Navarro assented to the TOS as part of his registration for SDC’s 2 || services, and that the TOS contains an arbitration clause. Navarro’s evidentiary objections are 3 || OVERRULED. 5 For the foregoing reasons, SDC’s motion to compel arbitration is GRANTED and its 6 || administrative motion to strike Navarro’s supplemental brief is DENIED as moot. This 7 || proceeding is STAYED pending resolution of the arbitration. See 9 U.S.C. § 3. 8 The parties shall submit a joint case management statement six months from the date of 9 || this Order and every six months thereafter until this matter is resolved. They shall notify the court 10 || within 14 days of the resolution of the arbitration, indicating whether the case should be dismissed 11 or will proceed; if the latter, the parties should contact Ms. Davis, my Courtroom Deputy, to 12 || request a case management conference. 5 13 Dated: June 1, 2022

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