Amazon Appeals to Arbitration For List Price Class Action Dismissal

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Amazon.com Inc. says that plaintiffs agreed to an arbitration pact when they made their purchases on the website and that’s why the class action lawsuit over list price discrepancies should be dismissed.

Plaintiffs Andrea Fagerstrom and Allen Wisely claim in their Amazon class action lawsuit filed in December 2014 that they bought a blender and audio converter on Amazon.com, respectively, and that the company shows both the list price and the discounted price as well as what the savings are to the customer by the dollar amount as well as the percentage of their savings.

But they claim in their Amazon deceptive marketing class action lawsuit that the manufacturer’s suggested retail price (MSRP), or “list price,” that Amazon uses is the highest price that the product has ever been listed for, not the current price that the product is being sold for in local brick-and-mortar stores.

According to the deceptive marketing class action lawsuits, Amazon deceives its customers by “cherry picking” the highest price so it can show the deepest discounts by comparison.

This they say is a violation of California’s False Advertising Law, which says that the displayed list price must be based on what the prevailing market price has been over the past three months.  Another option is for the retailer to include the date associated with the list price it uses.

But Amazon says in its motion to dismiss the class action lawsuits that in the process of making their purchases they accepted Amazon’s Conditions of Use (COU).

“In making these purchases, plaintiffs expressly accepted Amazon’s COUs and the arbitration agreement within the COUs. The final “checkout” page in the ordering process on Amazon.com allows customers to review and confirm their orders by clicking a “Place your order” button,” the online retailer explains in its motion to dismiss the false advertising class action lawsuit. “Just above that button, the page states: ‘By placing your order, you agree to Amazon.com’s privacy notice and conditions of use.”

“Plaintiff had the opportunity to review the COUs and the arbitration agreement before completing his or her purchase, because” both the words “privacy notice” and “conditions” of use included a hyperlink that would have led them to both of these items, the company explains.

“If Plaintiffs did not want to accept the COUs or the arbitration agreement, they could have cancelled their purchases before accepting arbitration,” Amazon adds. “But both completed their purchases by clicking the ‘Place your order’ button. Indeed, neither could have done so without accepting the COUs and arbitration.”

And Amazon argues that both Fagerstrom and Wisely agreed to the arbitration agreement on other purchases they had made on the website as well.

The arbitration agreement states: “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 will be resolved by binding arbitration, rather than in court, except that you may assert claims in small claims court if your claims qualify.

Amazon has cited its arbitration agreements in other class action lawsuits and courts have upheld those agreements, such an Amazon Prime class action lawsuit alleging that it gets vendros to raise prices of Prime eligible items so that it can charge Prime members hidden fees when they have already paid an annual premium. Amazon cites such court decisions in its motion to dismiss the price list class action lawsuit.

“In determining whether parties agreed to arbitrate, “courts … apply ordinary state-law principles that govern the formation of contracts,” Amazon says.

“Under Washington law, which applies here, contracts formed in Internet transactions in which parties must click a button indicating they agree to the contract terms are enforceable like any other contract,” the online retailer adds.

“California courts are in accord.”

The price list class action lawsuits were filed in a California federal court, citing violations of California business law.

The plaintiffs are represented by Jeffrey R. Krinsk, Mark L. Knutson, William R. Restis and Tenton R. Kashima of Finkelstein & Krinsk LLP.

Amazon is represented by James D. Nguyen, James C. Grant and Rebecca Francis ofDavis Wright Tremaine LLP.

The False Advertising Amazon List Price Class Action Lawsuit is Andrea Fagerstrom et al v. Amazon.com Inc., Case No. 3:15-cv-00096, in the U.S. District Court for the Southern District of California.

UPDATE: The Amazon list price class action lawsuit was dismissed on Oct. 20, 2015 after a judge found that the plaintiffs were bound by Amazon’s arbitration agreement.

UPDATE 2: On Feb. 29, 2016, Allen Wiseley asked the 9th U.S. Circuit Court of Appeals to review a district court’s decision to enforce an arbitration agreement in this Amazon list price class action lawsuit.