Case 3:16-cv-03533-WHA Document 39 Filed 11/14/16 Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`GREGORY INGALLS and TONY HONG,
`individually and on behalf of all others
`similarly situated,
`Plaintiffs,
`
` v.
`SPOTIFY USA, INC., a Delaware
`corporation, DOES 1–10, inclusive,
`Defendants.
` /
`
`No. C 16-03533 WHA
`
`ORDER DENYING MOTION
`TO COMPEL ARBITRATION
`
`INTRODUCTION
`In this putative class action, plaintiffs claim that a subscription music streaming service
`violated a California law provision restricting automatic renewal of a subscription. Defendant,
`which operated that streaming service, moves to compel arbitration and to stay the case pending
`arbitration. For the reasons stated below defendant’s motion is DENIED.
`STATEMENT
`Plaintiff Gregory Ingalls signed up to use the free version subscription music streaming
`service provided by defendant Spotify, Inc., in November 2012. Spotify required subscribers to
`affirmatively accept an agreement titled “Terms and Conditions of Use” before using the
`service. Ingalls later signed up for a series of free trials of Spotify’s premium service (which
`offered music without advertisements and included additional features). Ingalls cancelled his
`premium subscription in 2013, but continued to use the free service.
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`Case 3:16-cv-03533-WHA Document 39 Filed 11/14/16 Page 2 of 12
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`In September 2015, Spotify updated its Terms and Conditions and presented all users,
`including Ingalls, with the following notice upon accessing the service:
`Updated terms. We have revised our Terms and Conditions of
`Use and our Privacy Policy. By clicking “Accept” you accept and
`agree to these updates, so please take a few minutes to read and
`understand them.
`Users could access the referenced agreements by clicking on the words in the notice. In order
`to continue using Spotify’s service, Ingalls had to affirmatively click “Accept,” which he did on
`January 7, 2016. Ingalls continued to use the free service.
`Plaintiff Tony Hong registered for Spotify’s free service in November 2011. Like
`Ingalls, he was required to accept Spotifiy’s Terms and Conditions when registering. In
`December 2015, Hong signed up for Spotify’s premium service with a three-month discount
`offer. In March 2015, after the three-month discount period ended, Hong’s account converted
`to the regular price for premium service. Hong cancelled his subscription two days later but
`restarted it (at full price) in May 2015.
`As stated, Spotify updated its Terms and Conditions in September 2015, and required
`users, including Hong, to affirmatively accept the new Terms and Conditions (or quit the
`service). Users that rejected the amended Terms and Conditions could receive a refund for their
`monthly subscription fee pro-rated for the part of the month following the amendment, though
`none sought such a refund.1
`Hong accepted the updated agreement that month by clicking the “Accept” button.
`Hong continued to use his subscription until he canceled it in June 2016 — just days after filing
`this action. Hong again restarted his subscription in July 2016.
`Spotify’s updated Terms and Conditions agreement was a lengthy document, but its
`table of contents included hyperlinks allowing users to navigate from section to section
`throughout the document. The first section, titled “Introduction,” included a bolded warning
`that the Terms and Conditions contained, inter alia, a class action waiver and an agreement to
`resolve disputes by arbitration.
`
`1 Counsel for Spotify represented that such a refund would be available at the hearing on this motion.
`Although this appears contrary to Section 16 of the Terms and Conditions agreement, this order accepts
`counsel’s unsworn representation purely for the sake of argument but notes that if users could not seek a refund
`for the balance of the month, that would heighten the procedural unconscionability of the arbitration provision.
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`Case 3:16-cv-03533-WHA Document 39 Filed 11/14/16 Page 3 of 12
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`Section 2 noted that Spotify could, in its discretion, make changes to the Terms and
`Conditions agreement, but that it would provide prompt notice of material changes.
`Section 24 of the Terms and Conditions agreement was titled “Choice of law, mandatory
`arbitration and venue.” Paragraph 24.3.1 provided:
`You and Spotify agree that any dispute, claim, or controversy
`between you and Spotify arising in connection with or relating in
`any way to these Agreements or to your relationship with Spotify
`as a user of the Service (whether based in contract, tort statute,
`fraud, misrepresentation, or any other legal theory, and whether the
`claims arise during or after the termination of the Agreements) will
`be determined by mandatory binding individual arbitration.
`It further explained that arbitration lacked the formality of court proceedings and had no judge
`or jury, among other limitations.
`Paragraph 24.2 provided a class action waiver:
`WHERE PERMITTED UNDER THE APPLICABLE LAW, YOU
`AND SPOTIFY AGREE THAT EACH MAY BRING CLAIMS
`AGAINST THE OTHER ONLY IN YOUR OR ITS
`INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR
`CLASS MEMBER IN ANY PURPORTED CLASS OR
`REPRESENTATIVE ACTION. Unless both you and Spotify
`agree, no arbitrator or judge may consolidate more than one
`person's claims or otherwise preside over any form of a
`representative or class proceeding.
`Paragraph 24.3.3 provided that arbitration would occur before the American Arbitration
`Association and would be resolved under the “Commercial Dispute Resolution Procedures and
`the Supplementary Procedures for Consumer Related Disputes of the American Arbitration
`Association (‘AAA’) then in force.” The arbitrator’s fees would be paid pursuant to the
`limitations on fees set forth in the AAA’s consumer rules with any balance to be paid by
`Spotify. Paragraph 24.3.3 noted that the AAA procedures and other information about
`arbitration could be found at adr.org or by calling the AAA’s phone number (which was
`provided in the agreement).
`In actuality, at the time the arbitration agreement was drafted, the AAA website did not
`include any document with the title “Commercial Dispute Resolution Procedures” or
`“Supplementary Procedures for Consumer Related Disputes of the American Arbitration
`Association” as indicated in Paragraph 24.3.3. AAA had discontinued those publications and
`had begun offering the “Consumer Arbitration Rules” in 2014. (Section R-1(a) of the
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`Case 3:16-cv-03533-WHA Document 39 Filed 11/14/16 Page 4 of 12
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`Consumer Arbitration Rules stated that the procedures therein would apply in any arbitration
`agreement that specified the AAA’s “Supplementary Procedures for Consumer-Related
`Disputes.”) Spotify concedes this was a drafting error.
`Plaintiffs brought this action in June 2016, claiming that Spotify failed to adequately
`inform them that it would automatically renew their subscriptions at the full price once their
`trial periods had ended and that Spotify failed to obtain plaintiffs’ affirmative consent for that
`renewal in violation of California law. Spotify now moves to compel arbitration pursuant to the
`updated Terms and Conditions agreement. It contends the threshold issue of arbitration must be
`decided by an arbitrator. Failing that, it contends the Court must order arbitration. This order
`follows full briefing and oral argument.2
`
`ANALYSIS
`Spotify’s motion to compel arbitration is governed by the Federal Arbitration Act. 9
`U.S.C. 1, et seq. The FAA requires the resolution of two “gateway” issues: (1) whether a valid
`agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute
`at issue. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). If a valid arbitration
`clause exists, arbitration is mandatory unless the party resisting arbitration can prove a defense
`to enforcement of the agreement, such as unconscionability. Pinnacle Museum Tower
`Association v. Pinnacle Market Development (US), LLC, 55 Cal. 4th 223 (2012).
`Spotify moves to compel arbitration of this action and also moves to compel arbitration
`of the threshold issue of arbitrability. This order first turns to the threshold issue.
`1.
`DELEGATION CLAUSE.
`The determination of whether an arbitration clause is valid, applicable, and enforceable
`is reserved to the district court unless “the parties clearly and unmistakably provide[d]
`otherwise,” such as by delegating the issue of arbitrability to arbitration. AT&T Technologies,
`Inc. v. Communications Workers of America, 475 U.S. 643, 649 (1986). Even if a delegation of
`
`2 The day after plaintiffs filed their opposition brief, our court of appeals decided Mohamed v. Uber
`Technologies, Inc., No. 15-16178, __ F.3d ___, 2016 WL 4651409 (9th Cir. Sept. 7, 2016), reversing the district
`court's denial of the motion to compel arbitration. Because our plaintiffs had relied heavily on the district court
`decision, an order adjusted the briefing schedule to allow them to supplement their opposition to address
`Mohamed v. Uber before Spotify filed its reply.
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`arbitrability is clear and unmistakable it may be found unenforceable if the delegation itself is
`unconscionable. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 71–74 (2010).
`Spotify contends that the parties clearly and unmistakably agreed to delegate the issue of
`arbitrability to an arbitrator because the Terms and Conditions agreement provided that any
`arbitration would be governed by the AAA’s procedures.3
`Rule 7(a) of the Commercial Arbitration Rules provided:
`The arbitrator shall have the power to rule on his or her own
`jurisdiction, including any objections with respect to the existence,
`scope, or validity of the arbitration agreement or to the arbitrability
`of any claim or counterclaim.
`Our court of appeals has held that “incorporation of the AAA rules constitutes clear and
`unmistakable evidence that contracting parties agreed to arbitrate arbitrability” based on the
`inclusion of the paragraph just recited. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir.
`2015). (Brennan did not specify which AAA rules it concerned, though nearly all of the AAA’s
`rules include the above paragraph.) Nevertheless, our court of appeals has not determined
`whether incorporation of the AAA rules can be clear and unmistakable evidence of delegation
`of arbitrability where one party is an unsophisticated consumer. Brennan expressly left that
`question unresolved. Id. at 1131.
`Every district court decision in our circuit to address the question since Brennan has
`held that incorporation of the AAA rules was insufficient to establish delegation in consumer
`contracts involving at least one unsophisticated party. See Money Mailer, LLC v. Brewer, No.
`15-1215, 2016 WL 1393492, at *2 (W.D. Wash. Apr. 8, 2016) (Judge Rober S. Lasnik);
`Galilea, LLC v. AGCS Marine Ins. Co., No. 15-0084, 2016 WL 1328920, at *3 (D. Mont. Apr.
`5, 2016) (Judge Susan P. Waters); Vargas v. Delivery Outsourcing, LLC, No. 15-03408, 2016
`WL 946112, at *8 (N.D. Cal. Mar. 14, 2016) (Judge Jon S. Tigar); Aviles v. Quik Pick Express,
`LLC, No. 15-5214, 2015 WL 9810998, at *6 (C.D. Cal. Dec. 3, 2015) (Judge Michael W.
`Fitzgerald); Meadows v. Dickey’s Barbecue Restaurants Inc., 144 F. Supp. 3d 1069, 1078 (N.D.
`Cal. 2015) (Judge Jon S. Tigar).
`
`3 The fact that Spotify’s Terms and Conditions incorporated the AAA procedures under a
`decommissioned title further refutes Spotify’s assertion that its delegation of arbitrability was clear and
`unmistakable.
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`Before Brennan, decisions from district courts in our circuit split on the issue. Compare
`Tompkins v. 23andMe, Inc., No. 13-05682, 2014 WL 2903752, at *11 (N.D. Cal. June 25, 2014)
`(Judge Lucy H. Koh), affirmed on other grounds No. 14-16405, 2016 WL 4437615 (9th Cir.
`Aug. 23, 2016), with Zenelaj v. Handybook Inc., 82 F. Supp. 3d 968, 973 (N.D. Cal. 2015)
`(Judge Thelton Henderson).
`Additionally, several decisions enforced delegation clauses even though the parties
`resisting arbitration were not corporations with extensive legal teams, but each such decision
`found a minimal level of sophistication, particularly in the context of commercial, rather than
`consumer, agreements. See Mike Rose’s Auto Body, Inc. v. Applied Underwriters Captive Risk
`Assurance Co., Inc., 16-01864, 2016 WL 5407898, at *8 (N.D. Cal. Sept. 28, 2016) (Judge
`Edward M. Chen); Capelli Enterprises, Inc. v. Fantastic Sams Salons Corp., No. 16-03401,
`2016 WL 4492588, at *5 (N.D. Cal. Aug. 26, 2016) (Judge Edward J. Davila); Mikhak v.
`University of Phoenix, No. 16-0901, 2016 WL 3401763, at *5 (N.D. Cal. June 21, 2016) (Judge
`Charles R. Breyer);; Khraibut v. Chahal, No. 15-04463, 2016 WL 1070662, at *5 (N.D. Cal.
`Mar. 18, 2016) (Judge Charles R. Breyer); Pelayo v. Platinum Limousine Services, Inc., No.
`15-00023, 2015 WL 9581801, at *1 (D. Haw. Dec. 30, 2015) (Judge Derrick K. Watson).
`Those decisions do not speak to our case, which involves two consumers — a music teacher and
`an architect — who have not been shown to have any business or legal acumen. (It is Spotify’s
`burden to establish that the delegation clause is enforceable.)
`In the absence of binding authority and with the benefit of a consistent trend of
`persuasive authority, this order finds that the parties, which included two ordinary consumers
`who could not be expected to appreciate the significance of incorporation of the AAA rules, did
`not clearly and unmistakably intend to delegate the issue of arbitration to an arbitrator.
`ARBITRATION CLAUSE.
`2.
`Spotify contends that even if the delegation clause is unenforceable, Ingalls and Hong
`must nevertheless arbitrate their claims. Plaintiffs do not dispute that they clicked “Accept”
`when presented with Spotify’s updated Terms and Conditions agreement. Nor do they dispute
`that their claims fall within the scope of the arbitration provision in Spotify’s Terms and
`conditions. Instead, plaintiffs contend that the arbitration clause is unenforceable.
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`Under the FAA, an arbitration clause in an agreement is presumptively valid “unless it
`may be said with positive assurance that the arbitration clause is not susceptible of an
`interpretation that covers the asserted dispute.” AT&T v. CWA, 475 U.S. at 650. Plaintiffs
`contend the presumption in favor of arbitrability should not apply here, citing Goldman Sachs &
`Co. v. City of Reno, 747 F.3d 733 (9th Cir. 2014). There, a city contracted with an underwriter
`for the issuance of securities. The city’s financing collapsed, and it initiated arbitration
`proceedings before the Financial Industry Regulatory Authority to resolve claims against the
`underwriter. The underwriter contended that the city had disclaimed any right to arbitrate under
`FINRA by agreeing to a forum-selection provision in its agreement with the underwriter.
`The underwriter contended that pursuant to its membership in FINRA it was obligated to
`arbitrate at any customer’s request, provided the parties did not contract around that obligation.
`The underwriter, however, further contended the forum-selection clauses had contracted around
`any obligation to arbitrate pursuant to FINRA’s default rules. Our court of appeals held that
`because the underwriter disputed the existence of the obligation to arbitrate, no presumption in
`favor of arbitrability applied. Thus, state-law principles of contract interpretation applied, and
`the question turned to whether the written agreement was clear and unambiguous on its face.
`Id. at 743. That is not our case.
`Our plaintiffs do not dispute that they accepted Spotify’s Terms and Conditions or that
`the Terms and Conditions included an arbitration clause that, if enforceable, applies to the
`instant claims. Instead, they argue that the arbitration clause within that agreement is not
`enforceable. Under the FAA, that clause may only be set aside based upon “generally
`applicable contract defenses, such as fraud, duress, or unconscionability.” AT&T Mobility LLC
`v. Concepcion, 563 U.S. 333, 339 (2011). Thus, the enforceability of the arbitration clause rests
`on the defenses available under California contract law. Ibid.
`Here, the only contract defense that plaintiffs raise is unconscionability. Under
`California law, an arbitration clause must be both procedurally and substantively
`unconscionable in order to be found invalid. Agreements are evaluated on a sliding scale,
`which disregards the need to show procedural unconscionability in proportion to the harshness
`of the substantive terms. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.
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`4th 83, 114 (2000). “In other words, the more substantively oppressive the contract term, the
`less evidence of procedural unconscionability is required to come to the conclusion that the
`term is unenforceable, and vice versa.” Ibid.
`A.
`Procedural Unconscionability.
`Procedural unconscionability refers to oppression or unfair surprise. Armendariz, 24
`Cal. 4th at 114. Oppression is shown by “an inequality of bargaining power that results in no
`real negotiation and an absence of meaningful choice.” Flores v. Transamerica HomeFirst,
`Inc., 93 Cal. App. 4th 846, 853 (2001). Unfair surprise relates to “the extent to which the
`supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by
`the party seeking to enforce the disputed terms.” Armendariz, 24 Cal. 4th at 114.
`Here, plaintiffs contend that Spotify’s Terms and Conditions were offered subject to a
`high degree of procedural unconscionability.
`Plaintiffs first argue that the Terms and Conditions were presented in an oppressive
`manner because they were offered on a take-it-or-leave-it basis. But the mere fact that a
`contract is one of adhesion establishes only a low degree of procedural unconscionability. Peng
`v. First Republic Bank, 219 Cal. App. 4th 1462, 1470 (2013). Our plaintiffs could have ceased
`using Spotify’s service and they could have sought a pro-rated refund for any fees paid for the
`monthly subscription.
`Plaintiffs also contend that Spotify failed to provide our plaintiffs with the text of the
`AAA procedures that would apply in any arbitration to our plaintiffs because they used the
`wrong title for those rules. But the failure to provide the AAA procedures also establishes only
`minimal procedural unconscionability. Id. at 1472. True, Spotify did not merely fail to provide
`the procedures but used a title for an older, abrogated version of the AAA procedures.
`Although the Consumer Arbitration Rules do differ from the cited Supplementary Procedures
`for Consumer Related Disputes of the American Arbitration Association, our plaintiffs do not
`contend that any material difference was unfairly concealed. Indeed, plaintiffs do not contend
`that any provisions of either version of the AAA procedures were unfair, so any surprise due to
`Spotify’s error did not hide any substantively unconscionable provisions.
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`While these circumstances presented some degree of procedural unfairness, they fell far
`short of the “high degree of procedural unconscionability” suggested by our plaintiffs.
`Nevertheless, this order turns to plaintiffs’ substantive unconscionability arguments, which this
`order finds strong enough to render the arbitration agreement unenforceable in light of the
`degree of procedural unfairness already shown.
`B.
`Substantive Unconscionability.
`Substantive unconscionability concerns how one-sided a bargain is. Armendariz, 24
`Cal. 4th at 114. An arbitration clause that lacks mutuality without a reasonable justification is
`sufficient to find unconscionability. Id. at 117–18. Under California law, the presence of
`multiple unconscionable provisions in an arbitration clause, even if all are severable,
`“indicate[s] a systematic effort to impose arbitration” on the consumers, “not simply as an
`alternative to litigation, but as an inferior forum” that works to the advantage of the party
`pressing arbitration. See Armendariz, 24 Cal. 4th at 124–25. Saving an arbitration clause by
`severing each individual problematic provision would allow a company to draft a one-sided
`agreement and then whittle down to the least-offensive agreement when faced with litigation,
`rather than drafting fair agreements in the first instance. Thus, a court may refuse to enforce an
`arbitration agreement that is “so permeated with unconscionable clauses that we cannot remove
`the unconscionable taint from the agreement.” Ferguson v. Countrywide Credit Industries, Inc.,
`298 F.3d 778, 788 (9th Cir. 2002).
`Three features of the arbitration agreement at issue here give rise to substantive
`unconscionability: (1) Spotify retained the right to unilaterally change the terms of the
`arbitration agreement, (2) any arbitration was required to proceed confidentially, and (3) a one-
`year limitations period applied to all claims brought in arbitration. Each is addressed in turn,
`though it is the pervasiveness of unconscionability, not any one source of it, that is fatal to
`Spotify’s motion.4
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`4 The applicable AAA Rules provided that after a consumer paid a filing fee of $200, the arbitrator’s
`compensation would be paid by the business (Spotify) and could not be reallocated except as required by law or
`if the claim was filed for purposes of harassment or if it was patently frivolous.
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`Unilateral Modification.
`(1)
`Plaintiffs contend that the arbitration provision was substantively unconscionable
`because it contemplated that Spotify could make changes to the arbitration provision, which
`would take effect unless the user timely rejected the amendment (which resulted in termination
`of that user’s service. Plaintiffs cite Ingle v. Cir. City Stores, Inc., 328 F.3d 1165, 1179 (9th
`Cir. 2003), for the proposition that such unilateral authority are substantively unconscionable.
`In Tompkins v. 23andMe, Inc., No. 14-16405, __ F.3d __, 2016 WL 4437615 (9th Cir.
`Aug. 23, 2016), our court of appeals considered an arbitration agreement that included a
`unilateral modification provision and held that “the implied covenant of good faith and fair
`dealing prevents a party from exercising its rights under a unilateral modification clause in a
`way that would make it unconscionable.” Id. at *12. Nevertheless, Tompkins acknowledged
`that Ingle held that a “unilateral modification provision itself may be unconscionable.” Ibid.
`Tompkins then distinguished Ingle, holding that a unilateral modification provision set forth
`separate from the arbitration provision could not invalidate the arbitration agreement or the
`contract as a whole, because the parties are free to argue that the unilateral modification clause
`is unenforceable in arbitration.
`Here, Section 2 of the Terms and Conditions reserved to Spotify the right to unilaterally
`change the agreement as a whole. Spotify offered an online contact form through which users
`could reject unilateral amendments (and terminate their service), but Paragraph 24.3.6 of the
`Terms and Conditions established a more burdensome procedure for rejecting modifications to
`the arbitration provision (involving written notice sent by mail), indicating Spotify’s intent to
`specially protect its right to unilaterally modify the arbitration provision. This distinction
`brings our case closer to Ingle than to Tompkins.
`(2)
`Confidentiality.
`Paragraph 24.3.5 of the Terms and Conditions included a confidentiality clause
`prohibiting both sides from making “any public pronouncement or public comment or
`originat[ing] any publicity concerning the arbitration.” Our court of appeals has recognized that
`even facially-neutral confidentiality provisions can favor a company over an individual, because
`the various attorneys representing individual plaintiffs cannot learn from the full body of
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`arbitration, while the limited set of attorneys representing the company can. Ting v. AT&T, 319
`F.3d 1126, 1151–52 (9th Cir. 2003). Spotify argues that our court of appeals has cautioned
`against invalidating arbitration clauses based on confidentiality provisions because “plaintiffs
`are free to argue during arbitration that the confidentiality clause is not enforceable.” Kilgore v.
`KeyBank, Nat. Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013). Spotify further argues that Ting did
`not invalidate an arbitration clause based on the confidentiality agreement, but rather
`invalidated a provision detailing the legal remedies available to the plaintiffs. True, but Spotify
`ignores the fact that the issue in Ting simply did not concern a motion to compel arbitration.
`Our court of appeals found that the agreement that was at issue in Ting was “so permeated with
`unconscionability and illegality” due to its confidentiality, fee-splitting, and class-action-waiver
`provisions that the agreement could not be saved or reformed. Ting, 319 F.3d at 1149 n.13.
`Spotify’s attempt to distinguish Ting fails.
`(3)
`One-Year Limitations Period.
`Plaintiffs argue that the arbitration provision is substantively unconscionable because it
`applies a one-year limitations period for claims asserted in arbitration (but not for claims
`brought in court. Our court of appeals and the California Court of Appeal have both recognized
`that arbitration provisions that reduce the limitations period for a consumer’s assertion of a
`statutory right are unconscionable when the reduction applies only to claims in arbitration. See
`Martinez v. Master Protec. Corp., 118 Cal. App. 4th 107, 117–18 (2012); Graham Oil Co. v.
`ARCO Products Co., 43 F.3d 1244, 1248 (9th Cir. 1994), as amended (Mar. 13, 1995).
`Spotify notes that in Tompkins, our court of appeals held that a reduction of a limitations
`period that applies to all disputes (not just those asserted in arbitration) does not render an
`arbitration provision unconscionable. Tompkins, 2016 WL 4437615, at *12. Like our case,
`Tompkins involved claims under the California Unfair Competition Law, which includes a four-
`year statute of limitations (the longest limitations period applicable in either case) and reduced
`the limitations period to one year. Cal Bus. & Prof. Code § 17208. In Tompkins, however, the
`limitations period reduction applied to all claims regardless of the venue and thus did not affect
`the enforceability of the arbitration clause in particular. Not so here. Because the reduced
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`Case 3:16-cv-03533-WHA Document 39 Filed 11/14/16 Page 12 of 12
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`limitations period here is part and parcel of the arbitration provision in Spotify’s Terms and
`Conditions, Tompkins is inapposite.
`* * *
`Spotify cites Bleak v. Spotify USA Inc., Case No. 13-5653 (N.D. Cal. Apr. 25, 2014)
`(Dkt. No. 37), in which a judge compelled arbitration of similar claims against Spotify pursuant
`to an earlier version of the Terms and Conditions. The plaintiffs therein raised many of the
`same substantive unconscionability issues that are the subject of the instant motion, but the
`written decision comprised only a single sentence adopting the reasons stated on the record at
`oral argument. Moreover, a review of the transcript reveals that the specific unconscionability
`issues were never discussed, beyond the bare conclusion that the agreement was mutual because
`it applied to claims relating to payment both by consumers and by Spotify (Dkt. No 40 at 5–6).
`Nevertheless, because this order cannot discern or engage with the reasoning in Bleak, it finds
`the holding in that decision unpersuasive.
`Although, as stated, many of the substantively unconscionable provisions that form part
`of the arbitration provision could be severed, unconscionability so permeates the arbitration
`clause that it cannot be cured by severance.
`CONCLUSION
`For the reasons stated above, Spotify’s motion to compel arbitration is DENIED. A case
`management order will follow.
`This order notes that the Terms and Conditions agreement at issue herein also included a
`class-action waiver separate from the arbitration agreement, which this order does not address.
` See Am. Exp. Co. v. Italian Colors Rest., 570 U.S. __, 133 S. Ct. 2304, 2310 (2013)
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`IT IS SO ORDERED.
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`Dated: November 14, 2016.
`
`
`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
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