JOHN C. COUGHENOUR, District Judge.
This matter comes before the Court on Defendant Amazon Services, LLC's (Amazon's) Motion to Compel Arbitration (Dkt. No. 24). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the Motion for the reasons explained herein.
This suit arises from the operation of Amazon's Prime service. From 2005 to February 2014, a period inclusive of the time period relevant to this suit, Amazon offered its Prime subscribers free two-day shipping, discounted one-day shipping, and weekend shipping on millions of eligible products, for a $79 annual fee. (Ressmeyer Decl., Dkt. No. 25 at 112 & Ex. A-B.) Prime eligible products are those that are sold by Amazon or that are sold by third-party merchants participating in the Fulfillment by Amazon (FBA) program. (Haberkorn Decl., Dkt. No. 26 at 113.) Customers signing up for Amazon Prime must accept Amazon's Prime Terms and Conditions (T & Cs), by clicking a button next to text that states "you acknowledge that you have read and agree to the Amazon Prime Terms and Conditions," the underlined portion of this sentence providing a hyperlink that directs customers to the T & Cs. (Motion to Compel Arbitration, Dkt. No. 24 at 2-3.) These T & Cs incorporate Amazon's Conditions of Use (COU). (Id.) Customers also accept the COU every time they make a purchase on Amazon.com; to make a purchase, customers must click a button next to text that says "by placing your order, you agree to Amazon.com's privacy notice and conditions of use," the underlined portions also bearing hyperlinks to the eponymous documents. (Id.)
Since August 19, 2011, Amazon's COU have included a binding arbitration agreement. (Id.)
Both Plaintiff Dr. A. Cemal Ekin and Interested Party Ms. Marcia Burke have been Amazon Prime members since 2006 and 2007, respectively. (Motion to Compel Arbitration, Dkt. No. 24 at 3-4.) Although the arbitration agreement was not part of the COU to which the parties agreed when they initially joined Amazon, Plaintiffs have actively renewed
Amazon's arbitration agreement provides that
(Id. at 5-6 (emphasis added).) In the arbitration agreement, Amazon agrees to pay all arbitrator fees and costs for claims under $10,000 and to unilaterally waive its claims for attorneys' fees. (Id.) Arbitrations are conducted by the American Arbitration Association, pursuant to its rules governing consumer-related disputes. (Id. at 6.) Customers may choose to arbitrate in their hometowns, another convenient location, or may also arbitrate by telephone or through written submissions. (Id.) The arbitration agreement also provides that any disputes are to be governed by the Federal Arbitration Act (FAA), associated federal law, and the laws of Amazon's principal place of business (Washington state). (Id.)
In February of 2014, Plaintiff filed a putative Rule 23(b)(3) class action suit, asserting claims for breach of contract and violations of Washington's Consumer Protection Act, stemming from what Dr. Ekin alleges was Amazon's practice of encouraging FBA-vendors to increase the base cost of their products to recapture the revenue lost from providing free shipping to Prime members. (First Amended Complaint, Dkt. No. 5 at ¶¶3.4; 6.1-6.3; 7.1-7.3.) The putative class consists of all those persons and entities who became Amazon Prime members between October 24, 2007 and February 22, 2011, the period before Amazon's arbitration agreement became part of its COU. (Id. at ¶5.1.) Again, both the putative class representative, Dr. Ekin, and interested party Ms. Burke renewed their Prime memberships several times and purchased hundreds of items after the end of this class period and even after the filing of the Complaint, each time agreeing to COU that, after August 2011, included the arbitration agreement.
Since the Supreme Court's seminal ruling in AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), federal courts are limited in their discretion to disregard a valid agreement to arbitrate. In Concepcion, the Court affirmed the binding and state law—preempting nature of the Federal Arbitration Act's Section 2, which provides that agreements to arbitrate are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.
Thus, this Court is firmly bound by the FAA in adjudicating this Motion. The FAA requires courts to compel arbitration if (1) a valid agreement to arbitrate exists, and (2) the dispute falls within the scope of that agreement. Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir.2000). If both of these two prongs are fulfilled, then the FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration." Id.; see also Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); Kilgore v. Keybank, N.A., 718 F.3d 1052, 1058 (9th Cir.2013).
Plaintiffs' main objection to the validity of the arbitration agreement
First, the cases cited by Plaintiffs do not actually support their assertion that Ninth Circuit precedent establishes that unilateral reservations of the right to change contract terms makes such contracts illusory, and thus per se invalid. Plaintiffs' argument on this issue largely rests on Pokorny v. Quixtar, Inc., 601 F.3d 987, 997-99 (9th Cir.2010) and Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1179 (9th Cir. 2003).
Further, Washington and Ninth Circuit courts have a history of enforcing contracts containing change-in-terms provisions. See e.g., Alaska Airlines. Inc. v. Carey, 395 Fed.Appx. 476, 479 (9th Cir. 2010) (holding that "Alaska Airline's unilateral right to modify the terms of the Mileage Plan do[es] not make the plan an illusory contract"). In Washington, a contract is illusory only if it lacks all consideration and mutuality of obligation, e.g., the promisor has no obligations with regard to any parts of the contract. See e.g., Gress v. Conover Ins., Inc., 494 Fed.Appx. 772, 774 (9th Cir.2012) ("The fact that [defendant] retained the right to unilaterally modify the contract did not render the agreement illusory, because the performance obligations remained fixed."); Quadrant Corp. v. Am_ States Ins. Co., 154 Wn.2d 165, 184-85, 110 P.3d 733 (2005) (explaining that illusory contracts are those without any consideration). This is not the case here, where the contract between customers and Amazon created several performance obligations for Amazon, the alleged breach of which forms the basis of this suit. Thus, there is no binding legal authority compelling a finding that the reservation of the right to change the terms makes the COU/arbitration agreement unenforceable.
Second, in addition to the absence of any elements making the agreement per se unconscionable, the arbitration agreement's terms hardly strike this Court as unfair. For instance, the arbitration agreement obliges Amazon to pay all arbitrator fees and costs for claims under $10,000, to unilaterally waive its claims for attorneys' fees, to submit to arbitration in any location chosen by the consumer, and also allows consumers to arbitrate by telephone or written submission. (See Motion to Compel Arbitration, Dkt. No. 24 at 5-6.) Arbitration is conducted not according to
Third, this agreement misconstrues Defendant's demand for arbitration. Defendant is not arguing that the pre-August 2011 COU to which Plaintiffs agreed have been changed to include the arbitration agreement. Rather, Amazon argues that the post-August 2011 COU to which Plaintiffs agreed on numerous occasions, and which have featured arbitration agreements from their inception, bind Plaintiffs.
The fact that Amazon did not, in fact, use its allegedly-unfettered power to change the terms to "alter[] the dispute resolution process after a dispute, or potential dispute, has arisen," (Plaintiffs' Response, Dkt. No. 38 at 15), renders Plaintiffs' remaining validity arguments irrelevant. Plaintiffs' lack-of-savingsclause argument (id. at Section III(C)(3)) is moot. Further, as Amazon points out, such reservation of terms-changing rights is in fact "fettered" and restricted by the universal requirements of good faith and fair dealing. Plaintiff's failure to provide notice of a change of terms argument (id. at Section III(C)(4)) is likewise moot, at the point that Amazon is basing its Motion on the unchanged COU to which Dr. Ekin assented after August 2011. The failure of Plaintiffs' arguments along these lines is supported by this District's decision in L.A. Fitness International, LLC v. Harding, in which Judge Bryan rejected the similar claims of those plaintiffs and held that when a defendant seeks to enforce an arbitration agreement that has not been changed, a challenge on the basis of unconscionability due to change-in-terms provisions is irrelevant, because the never-invoked change-interms provision can be severed, allowing the rest of the contract and agreement to stand. 2009 WL 4545079 at *4 (W.D.Wash., Nov. 25, 2009). Finally, the fact that Amazon bases its Motion on the COU to which Dr. Ekin affirmatively assented discredits Plaintiffs' argument that Amazon did not secure meaningful consent. (See Plaintiffs' Response, Dkt. No 38 at 22.)
Plaintiffs' alternate argument against the validity of the arbitration agreement is that Amazon's failure to attach and specify the relevant arbitration rules makes the agreement unenforceable for ambiguity. (Plaintiffs' Response, Dkt. No. 38 at 18-20.) However, the Court fails to see how Amazon's reference to the AAA's rules is at all ambiguous. The arbitration agreement provides that "[t]he arbitration will be conducted by the American
Thus, Plaintiffs have presented this Court with no reasons for holding the arbitration agreement invalid.
Amazon's arbitration agreement encompasses "any dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com." (Ressmeyer Decl., Dkt. No. 25, Ex. E at 24.) Plaintiffs do not meaningfully contest that this phrasing encompasses disputes arising from both future and past transactions on Amazon.com. Nor could they, consistently, given the prevailing law. As Defendant points out, Chief Judge Pechman of the Western District of Washington held one year ago that a similarly worded arbitration provision of Amazon was "plainly not limited to prospective disputes." Peters, 2 F.Supp.3d at 1173. This District's ruling is amply supported by Ninth Circuit precedent
Thus, the instant Prime—FBA price dispute, even though stemming from transactions occurring prior to August 2011, is within the scope of the post-August 2011 arbitration agreement that this Court found valid in the preceding section, and to which Plaintiffs agreed. The arbitration agreement having fulfilled both prongs of the Chiron test, this Court must conclude that arbitration is mandated.
For the foregoing reasons, Defendant's Motion to Compel Arbitration (Dkt. No. 24) is GRANTED. The parties are directed to submit their claims to arbitration. In light of this Order, Amazon's Motions to Dismiss (Dkt. No. 23 & 27) are stricken as moot.