In a putative class action concerning Experian’s marketing of its “Experian Credit Score” service, the Ninth Circuit recently affirmed a lower court order granting Experian’s motion to compel arbitration based on an arbitration clause in its terms and conditions. That arbitration clause also included a class action waiver, thus effectively barring plaintiff from bringing her claims on a class-wide basis. Stover v. Experian Holdings., No. 19-55204 (9th Cir. Oct. 21, 2020).

In June 2014, plaintiff Rachel Stover purchased the “Experian Credit Score” service, which provides subscribers with periodic credit scores. In doing so, she agreed to Experian’s terms and conditions, including an arbitration clause stating that all claims arising out of the transaction were subject to arbitration “to the fullest extent permitted by law,” and that plaintiff was waiving her right to participate in a class action. Plaintiff cancelled her subscription the next month. In 2018, she sued Experian, alleging it fraudulently marketed its credit score as information that lenders review when determining creditworthiness when, supposedly, the score was based on a formula few, if any, lenders used. On this basis, she alleged Experian had violated the Fair Credit Reporting Act (FCRA), as well as California and Florida unfair competition laws.

The district court granted Experian’s motion to compel arbitration. On appeal, plaintiff argued, among other things, that the 2014 arbitration clause was unenforceable under California law, which prohibits contract terms purporting to waive a person’s right to seek public injunctive relief in court. In rejecting this argument, the Ninth Circuit considered whether the terms were unenforceable because they either (a) prohibit judicial resolution of all claims for public injunctive relief, or (b) would close the courthouse doors to Stover’s specific claim for injunctive relief. First, the court noted the arbitration agreement did not on its face prohibit a plaintiff from seeking public injunctive relief in court, and therefore was not facially unenforceable. Second, the court found the arbitration clause did not have the effect of barring Stover from seeking public injunctive relief, because her complaint failed to allege Article III standing to seek an injunction against future allegedly deceptive advertising. Specifically, the complaint failed to allege that Stover would like to or intended to purchase the product again in future, and thus that she suffered a threat of future harm absent injunctive relief. While Stover’s appellate reply brief raised, for the first time, a request to amend her complaint to add allegations regarding her Article III standing, the Ninth Circuit concluded it would not be appropriate to grant this request, since Stover did not request leave to amend in the district court. The Ninth Circuit also expressed skepticism as to whether, in any event, Stover could amend the complaint to allege the necessary facts.

Since the Supreme Court’s decision in AT&T Mobility v. Concepcion, class action waivers in consumer arbitration agreements have been a powerful tool to protect companies from potentially costly class action litigation. This case serves as a reminder of the importance of these clauses in barring class claims related to allegedly deceptive advertising.


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