Vargison v. Paula's Choice LLC

Opinion

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5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 9 AT SEATTLE 10 11 JESSE VARGISON et al., individually and CASE NO. 2:24-cv-00342-TL on behalf of themselves and all others 12 similarly situated, ORDER ON MOTION FOR 13 Plaintiffs, CLARIFICATION v. 14 PAULA'S CHOICE, LLC, et al., 15 Defendants. 16

17 This matter is before the Court on Defendant Paula’s Choice, LLC’s “Motion for 18 Clarification Regarding January 30, 2025 Order.” Dkt. No. 66. Having reviewed the motion, 19 Plaintiffs’ response (Dkt. No. 69), Paula’s Choice’s reply (Dkt. No. 70), and the relevant record, 20 the Court GRANTS IN PART and DENIES IN PART Paula’s Choice’s motion. 21 I. BACKGROUND 22 This is a putative class action brought by 107 plaintiffs against Defendant Paula’s Choice, 23 a manufacturer and purveyor of skincare products, and two retailers that sell Paula’s Choice 24 products, Defendants Sephora USA and THG Beauty USA. See generally Dkt. No. 37 (“First 1 Amended Complaint”). At issue is the veracity of Paula’s Choice’s representations that its 2 products are “cruelty-free” and “never tested on animals,” and consumers’ reliance on those 3 representations. See id. ¶¶ 1–8. The Court assumes familiarity with Plaintiffs’ First Amended 4 Complaint (Dkt. No. 37) and will not recite its factual allegations herein. See Dkt. No. 65 at 2–3

5 (explaining background of case). The Court also assumes familiarity with the specifics of Paula’s 6 Choice’s arbitration agreement, which the Court discussed at length in a prior order. See id. 7 On October 15, 2024, Paula’s Choice filed a motion to compel arbitration and to stay 8 litigation as to eight specific plaintiffs: Julia Bartholomew-King, Paige Bridges, Dalit Cohen, 9 Joella Erriquez, Bridget Froelich, Maura McCartan, Dawn van der Steeg, and Kristiana Wright. 10 Dkt. No. 48. On November 19, 2024, Plaintiffs filed a response in opposition to Paula’s Choice’s 11 motion (Dkt. No. 57), and on December 20, 2024, Paula’s Choice filed a reply (Dkt. No. 61). In 12 its reply, Paula’s Choice added Plaintiff Samantha Simmons as a ninth plaintiff whom the Court 13 should compel to arbitrate her claims against the company. See Dkt. No. 61 at 20. 14 On January 30, 2025, the Court issued an order that granted in part and held in abeyance

15 in part Paula’s Choice’s motion to compel arbitration and stay litigation. Dkt. No. 65. In its 16 Order, the Court found that three of the Plaintiffs at issue—Cohen, Froelich, and McCartan— 17 were obliged to arbitrate their claims against Paula’s Choice. See Dkt. No. 65 at 21. These 18 plaintiffs, the Court found, had “made at least one additional purchase on the Paula’s Choice 19 website after Paula’s Choice filed its motion to compel arbitration.” Id. at 4 (emphasis in 20 original). The Court reasoned that, “As Named Plaintiffs in this case, and specifically as the 21 subjects of the instant motion to compel, these three Plaintiffs were put on notice of the existence 22 of the arbitration agreement (and their acceptance thereof upon making a purchase) when Paula’s 23 Choice raised the issue in the ongoing litigation.” Id. (first citing Nicosia v. Amazon.com, Inc.,

24 1 815 F. App’x 612, 613–14 (2d Cir. 2020); then citing In re Ring LLC Privacy Litig., No. C19- 2 10899, 2021 WL 2621197, at *7 (C.D. Cal. June 24, 2021)). 3 But as to the other five plaintiffs who were the original subjects of the motion to compel 4 arbitration, the Court could not make a determination based on the record before it and, pursuant

5 to the Federal Arbitration Act, held the motion in abeyance pending the outcome of a trial on the 6 arbitrability of these Plaintiffs’ claims. See id.; see also 9 U.S.C. § 4; Hansen v. LMB Mortg. 7 Serv., Inc., 1 F.4th 667, 670 (9th Cir. 2021). The Order did not discuss the arbitrability of 8 Plaintiff Simmons’s claims. See generally Dkt. No. 65. 9 On February 13, 2025, Paula’s Choice filed the instant motion (Dkt. No. 66), asserting 10 that the Court’s prior order “did not address whether Ms. Simmons also is compelled to 11 arbitrate” and “request[ing] confirmation that Ms. Simmons is compelled to arbitrate her claims 12 for the same reason that the referenced three Named Plaintiffs . . . must arbitrate theirs—‘post- 13 motion purchases’ obviously demonstrating assent” to Paula’s Choice’s arbitration agreement. 14 Dkt. No. 66 at 2. On February 19, 2025, Plaintiffs filed a response in opposition to Paula’s

15 Choice’s “request” (Dkt. No. 69), and on February 26, 2025, Paula’s Choice filed a reply (Dkt. 16 No. 70). 17 II. DISCUSSION 18 Plaintiff Simmons made purchases on the Paula’s Choice website after Defendant Paula’s 19 Choice filed its Motion to Compel (Dkt. No. 48) but before it filed its Reply (Dkt. No. 61). Dkt. 20 No. 66 at 2. The issue here is whether a valid agreement to arbitrate exists between Paula’s 21 Choice and Plaintiff Simmons. See Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 22 1130 (9th Cir. 2000). For the purpose of deciding this motion, the central texts are Paula’s 23 Choice’s Motion to Compel Arbitration and Stay Proceedings as to Certain Named Plaintiffs

24 1 (Dkt. No. 48), Paula’s Choice’s reply in support of that motion (Dkt. No. 61), and the Court’s 2 Order denying the motion in part and holding it in abeyance in part (Dkt. No. 65). 3 Paula’s Choice observes that the Court’s Order “did not address whether Ms. Simmons is 4 compelled to arbitrate her claims.” Dkt. No. 66 at 2. Paula’s Choice argues that, like the three

5 Plaintiffs whom the Court compelled to arbitrate in that order, Plaintiff Simmons “recently made 6 a purchase—indeed, two purchases—from Paula’s Choice’s website that were subject to its 7 Terms of Use after the Motion to Compel was filed.” Id. at 3 (emphasis in original). “As a 8 Named Plaintiff, Ms. Simmons too was on notice of the arbitration agreement, and her 9 acceptance of it by making a purchase, once the Motion to Compel was filed.” Id. 10 Plaintiffs respond that Plaintiff Simmons is not similarly situated to the three Plaintiffs 11 whom the Court compelled to arbitrate. See Dkt. No. 69 at 2. Unlike Plaintiffs Cohen, Froelich, 12 and McCartan, Plaintiffs argue, “Plaintiff Simmons was not the specific subject of the Motion to 13 Compel,” and was not therefore “put on notice of the existence of the arbitration agreement” or 14 the ramifications of her acceptance of it. Id. The Court agrees.

15 When a defendant in a lawsuit such as this one updates its terms of use to include an 16 arbitration agreement, and a class action is filed on claims that accrued before that update—that 17 is, before the existence of an arbitration agreement—a class member’s (or putative class 18 member’s) acceptance of the new terms can have significant consequences on their accrued 19 claims. In this case, for example, the Plaintiffs are customers whose purchases of Paula’s Choice 20 products pre-date Paula’s Choice’s arbitration agreement. See Dkt. No. 37 ¶¶ 1228–1231. When 21 they made those purchases, they did not agree to arbitrate with Paula’s Choice any disputes that 22 might arise (or might have arisen) between themselves and the company. And, indeed, the instant 23 class action covers disputes that arose before the existence of the arbitration agreement. See id.

24 1 On or about March 14, 2023, Paula’s Choice updated its terms of use to include a new 2 arbitration agreement. Id. ¶ 1226. The arbitration agreement sweeps into its purview “any and all 3 disputes or claims that arise or have arisen between [a customer] and Paula’s Choice.” Dkt. No. 4 65 at 2. Given this language, if a court found that a plaintiff in this case had agreed to the

5 updated terms—which contain the new arbitration agreement—then that plaintiff’s claims as a 6 class member might be shunted out of court and directed toward arbitration, even those claims 7 that had accrued before the arbitration agreement even existed. 8 Courts have recognized that this can pose a problem for class members and putative class 9 members. It might be unfair when a company adds an arbitration agreement to its terms of 10 service that, if executed, can claw back into arbitration claims that might already be the subject 11 of pending class-action lawsuits—i.e., “claims that have arisen” between customer and 12 company. To protect class members and putative class members from “forfeiting their rights 13 without really knowing what they are,” courts “have found that a defendant’s attempt to foist a 14 new arbitration provision on putative class members is an improper communication” under

15 Federal Rule of Civil Procedure 23(d). Kater v. Churchill Downs Inc., 423 F. Supp. 3d 1055, 16 1062 (W.D. Wash. 2019) (collecting cases). 17 In practice, this leads to the principle that it is not appropriate to enforce an arbitration 18 agreement that does not provide a class member—or putative class member—sufficient notice 19 that their ability to participate in an existing class action against the defendant might be 20 jeopardized by their assent to an arbitration agreement. See, e.g., Jimenez v. Menzies Aviation 21 Inc., No. C15-2392, 2015 WL 4914727, at *6 (N.D. Cal. Aug. 17, 2015) (“Courts routinely 22 exercise their discretion to invalidate or refuse to enforce arbitration agreements implemented 23 while a putative class action is pending if the agreement might interfere with members’ rights.”).

24 If someone is a class member (or putative class member), they need to be advised that their 1 agreement to terms of service that include a new arbitration agreement might quash their right to 2 continue (or join) the pending class action. See O’Connor v. Uber Techs., Inc., No. C13-3826, 3 2013 WL 6407583, at *6 (N.D. Cal. Dec. 6, 2013) (finding interference where arbitration 4 provision “include[d] a class action waiver [that] purported to contractually bar Uber drivers

5 from participating and benefitting from any class actions,” including the “current class action”). 6 This is what has happened to Plaintiff Simmons. 7 Plaintiffs assert that “Plaintiff Simmons . . . was not presented with an arbitration clause 8 that would inform her that she was giving up her rights to continue as a class representative.” 9 Dkt. No. 69 at 4. Paula’s Choice does not refute this and focuses exclusively on whether Plaintiff 10 Simmons had any knowledge at all of the arbitration clause in its updated terms of use. See Dkt. 11 No. 70 at 3. Paula’s Choice’s argument misses the point. The issue is not whether Plaintiff 12 Simmons was aware of the new arbitration agreement; rather, it is whether Plaintiff Simmons 13 was aware that the new arbitration agreement could affect her rights to continue as a plaintiff in 14 the pending class action. And Paula’s Choice provides no argument or evidence to indicate that

15 the updated terms of use, as presented to class members such as Plaintiff Simmons, conveyed 16 that information. Absent such an advisory, the arbitration clause is not enforceable. See Jimenez, 17 2015 WL 4914727, at *6. Put differently, Paula’s Choice did not let Plaintiff Simmons know 18 what she was getting into. 19 As to Paula’s Choice’s argument that the Court should consider Plaintiff Simmons to be 20 similarly situated to Plaintiffs Cohen, Froelich, and McCartan, the Court disagrees. In 21 compelling these Plaintiffs to arbitrate their claims, the Court explained: “As Named Plaintiffs in 22 this case, and specifically as the subjects of the instant motion to compel, these three Plaintiffs 23 were put on notice of the existence of the arbitration agreement (and their acceptance thereof

24 1 upon making a purchase) when Paula’s Choice raised the issue in the ongoing litigation.” Dkt. 2 No. 65 at 4 (emphasis added). 3 Simply put, Plaintiffs Cohen, Froelich, and McCartan were specifically named in Paula’s 4 Choice’s motion to compel arbitration (see Dkt. No. 48 at 6); Plaintiff Simmons was not. The

5 motion provided Plaintiffs Cohen, Froelich, and McCartan with extensive notice as to the 6 ramifications of their acceptance of the arbitration agreement in the company’s updated terms of 7 use. See id. at 16–18 (discussing the new arbitration agreement and explaining its effects on the 8 claims of class members who agreed to it). Thus, when Plaintiffs Cohen, Froelich, and McCartan 9 made their “post-motion purchases” on the Paula’s Choice website, they did so with full 10 knowledge that the updated terms of use included an arbitration agreement with a class-action 11 waiver that applied to their existing claims. See Dkt. No. 48 at 17. Put another way, Paula’s 12 Choice’s motion to compel specifically targeted the eight plaintiffs named in the motion and 13 directly provided them with an advisory about their class-action rights vis-à-vis the arbitration 14 agreement.

15 Plaintiff Simmons did not receive such an advisory, because Paula’s Choice only sought 16 to compel Plaintiff Simmons to arbitrate her claims in its reply brief. See Dkt. No. 61 at 18. She 17 was not specifically targeted in the motion, and she was not directly provided with the advisory. 18 Paula’s Choice provided evidence demonstrating that Plaintiff Simmons had indeed made 19 purchases on the company’s website after it filed its motion to compel the other eight plaintiffs to 20 arbitrate their claims. See Dkt. No. 62 ¶ 23. But prior to making those purchases, Plaintiff 21 Simmons had not received the same notice regarding her rights as a class member that Plaintiffs 22 Cohen, Froelich, and McCartan received by dint of their being the subjects of the motion to 23 compel. Therefore, Plaintiff Simmons was not similarly situated to the other three Plaintiffs, and

24 it is thus inappropriate to compel her to arbitrate her claims on the same basis. See Kater, 423 F. 1 || Supp. 3d at 1065 (ordering defendant to “separate its communication with putative class 2 ||members from those with general customers” such that putative class members received notice 3 || of “what they [were] giving up by agreeing to the Terms’). 4 Therefore, the Court DENIES Paula’s Choice’s request that Plaintiff Simmons be 5 || compelled to arbitrate her claims. 6 TI. CONCLUSION 7 Accordingly, the Court ORDERS: 8 (1) Defendant Paula’s Choice’s “Motion for Clarification Regarding January 9 30, 2025 Order” (Dkt. No. 66) is GRANTED; this Order provides the 10 requested clarification. 11 (2) Defendant Paula’s Choice’s request that Plaintiff Simmons be compelled 12 to arbitrate her claims is DENIED. 13 14 Dated this 13th day of March 2025. 15 / | AA AC c 16 Tana Lin United States District Judge 17 18 19 20 21 22 23 24