1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 Travis Schlueter-Beckner, et al., Case No. 3:25-cv-01764 (CRB)

9 Plaintiffs,

ORDER GRANTING IN PART

10 v.

AND DENYING IN PART

DEFENDANT’S MOTION TO

11 SimpliSafe, Inc., et al., COMPEL ARBITRATION 12 Defendants.

13 This case involves false-advertising and unfair-business-practices claims against an 14 internet seller, SimpliSafe, Inc. The immediate question here is whether Defendant 15 SimpliSafe’s arbitration clauses in its Terms of Sale and Terms of Service are binding on 16 Plaintiffs such that the Court should stay this action and order arbitration. 17 For the following reasons, the Court GRANTS SimpliSafe’s motion with respect to 18 Plaintiff Schlueter-Beckner’s Automatic Renewal Law claim and DENIES its motion with 19 respect to his other claims and all of Plaintiff Babka’s claims. 20 I. BACKGROUND 21 A. The Underlying Dispute 22 SimpliSafe sells security hardware and related services. Plaintiffs Travis Schlueter- 23 Beckner and Zach Babka completed two separate transactions with SimpliSafe: they 24 (1) purchased security system hardware and (2) enrolled in a free trial of SimpliSafe’s 25 alarm monitoring service for that hardware. Plaintiffs primarily allege various false- 26 advertising claims relating to the hardware purchases under California law. Am. Compl. 27 (dkt. 19) ¶¶ 143–200. They also allege a violation of California’s Automatic Renewal Law 1 SimpliSafe asserts that each Plaintiff agreed to arbitrate this dispute on two separate 2 occasions—once at the time of sale and again when enrolling for the monitoring service. 3 SimpliSafe’s operative Terms of Sale and Terms of Service both contained binding 4 arbitration clauses. See Schlueter-Beckner Terms of Sale (dkt. 13-2, Ex. 3) at 22–24; 5 Schlueter-Beckner Terms of Service (dkt. 13-2, Ex. 4) ¶ 39; Babka Terms of Sale (dkt. 13- 6 2, Ex. 5) at 61–65; Babka Terms of Service (dkt. 13-2, Ex. 6) ¶ 39. SimpliSafe contends 7 Plaintiffs assented to both contracts at the time of sale and that they assented to the Terms 8 of Service again when enrolling for the alarm service. Mot. (dkt. 13-1) at 12–16. 9 Both the Terms of Sale and Terms of Service require arbitration before the 10 American Arbitration Association in accordance with its Consumer Arbitration Rules. 11 E.g., Schlueter-Beckner Terms of Sale at 22–24. Those rules stipulate that “the arbitrator 12 shall have the power to rule on their own jurisdiction, including any objections with 13 respect to the existence, scope, or validity of the arbitration agreement.” American 14 Arbitration Association, Consumer Arbitration Rules and Mediation Procedures r. 7(a) 15 (2025) (cleaned up). 16 B. The Hardware Sales 17 Both Plaintiffs separately purchased security system hardware online within the last 18 two years. Schlueter-Beckner Decl. (dkt. 20-2) ¶ 4; Babka Decl. (dkt. 20-3) ¶ 4. Plaintiffs 19 completed their transactions on SimpliSafe’s website. As pictured below, at the bottom of 20 the last webpage before Plaintiffs placed their orders there was a disclosure in small, gray 21 text with hyperlinks to SimpliSafe’s Terms of Sale, Terms of Service, and Privacy Policy. 22 Point of Sale Screenshot (dkt. 13-2, Ex. 2). After entering the relevant payment 23 information into that final webpage, Plaintiffs clicked a large, colored button with the 24 words “Place Order” to complete their purchases. Ciruolo Decl. (dkt. 13-2) ¶¶ 5, 7. 25 26 27 1 2 Pay with PayPal Total: $114.19 ® Credit card DE 3 Enter your credit card details By subenicing ones you saree ro

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18 C. The Alarm Monitoring Service 19 After completing their purchases, both Plaintiffs enrolled in a free trial of 20 || SimpliSafe’s optional alarm monitoring service. Schlueter-Beckner Decl. 4] 19-22; 21 || Babka Decl. § 17.! To do so, they each downloaded an app onto their phones and 22 || completed a form with their system information. Von Stein Decl. (dkt. 13-3) fj 2, 10. At 23 || one point, the form asked Plaintiffs to submit the phone numbers of primary and secondary 24 || contacts. Id. §] 4-6, 11-12. At the bottom of this page, immediately above the □□□□□□ 25 26 7 ' The parties disagree on exactly how Plaintiffs signed up for the monitoring service. SimpliSafe claims in its reply brief that Plaintiffs signed up “and paid for” the service 2g || when purchasing the hardware, but they do not provide any evidentiary support for that assertion. Reply (dkt. 25) at 5.

1 button (to move onto the next page of the form) was the following disclosure with a 2 hyperlinked contract in bold, blue text: 3 By submitting this number, you represent that you are author- ized to provide this number and agree to SimpliSafe Terms 4 and Consent to Communicate, for Notifications and Alerts. 5 Contact Information Screenshots (dkt. 13-3, Exs. 3–5, 10–11). Despite the name, the blue 6 hyperlink connected to SimpliSafe’s entire Terms of Service. Von Stein Decl. ¶ 11. Both 7 Plaintiffs completed the forms. See id. ¶¶ 4–6, 11–12. 8 Schlueter-Beckner—but not Babka—was presented with a final page at the end of 9 this series of forms in which he had to affirmatively acknowledge his acceptance of 10 SimpliSafe’s Terms of Service by typing his name. Id. ¶ 9. The text on that page read: 11 Please read SimpliSafe’s Terms of Service carefully and enter your name below if you accept. By accepting the terms of this 12 agreement, you specifically acknowledge and accept (i) the disclaimer / limitation of liability; (ii) the exclusion of warran- 13 ties; and (iii) the indemnity paragraphs of this agreement. 14 Terms of Service Assent Screenshot (dkt. 13-3, Ex. 8). Although the page did not 15 expressly mention an arbitration clause, the hyperlinked Terms of Service did include such 16 a clause. See Von Stein Decl. ¶ 9; Schlueter-Beckner Terms of Service ¶ 39. Schlueter- 17 Beckner would have had to have typed his name on this form to use his alarm monitoring 18 service, though he does not recall seeing the form or filling it out. Schlueter-Beckner Decl. 19 ¶¶ 26–27; Von Stein Decl. ¶ 9. 20 D. Procedural History 21 Plaintiffs sued SimpliSafe, asserting false-advertising and unfair-business-practices 22 claims. SimpliSafe contends that the arbitration clauses in its Terms of Sale and Terms of 23 Service are binding on Plaintiffs and move to stay the matter pending arbitration. 24 II. LEGAL STANDARD 25 The Federal Arbitration Act requires courts to stay any action that is governed by a 26 valid arbitration agreement. 9 U.S.C. § 3. In deciding whether an action is governed by 27 such an agreement, a court must decide two “gateway” issues: (1) whether the agreement 1 that agreement. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (citing 2 Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). As to the first question, 3 courts use “general state-law principles” of contract law to determine whether an 4 arbitration agreement between the parties exists. Johnson v. Walmart Inc., 57 F.4th 677, 5 681–82 (9th Cir. 2023) (citation omitted). Once a court finds an agreement between the 6 parties, it then decides whether the immediate dispute is arbitrable under that agreement, 7 unless the parties “clearly and unmistakably” delegated that threshold question of 8 arbitrability to the arbitrator. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 9 63, 69 (2019) (cleaned up). Under the FAA, courts must send all issues covered by the 10 agreement to arbitration. 11 III. DISCUSSION 12 There are three issues necessary to resolve here. First, the Court must determine 13 whether Schlueter-Becker or Babka formed a contract with SimpliSafe. The Court 14 concludes that Schlueter-Beckner assented to the Terms of Service, but that no other 15 contract is binding. Second, the Court considers whether the Terms of Service agreement 16 is unconscionable. Looking only at the arbitration agreement, the Court concludes it is 17 not. Third, the Court looks to whether Schlueter-Beckner’s claims are arbitrable under the 18 Terms of Service. The Court concludes that his Automatic Renewal Law claim is, but the 19 rest are not. Accordingly, the Court denies SimpliSafe’s motion except as to Schlueter- 20 Beckner’s ARL claim. 21 A. Contract Formation at the Point of Sale 22 Contracts formed online retain the same fundamental requirement of mutual assent 23 as their traditional counterparts under California law; a user must manifest acceptance of 24 contractual terms to be bound by them. Berman v. Freedom Fin. Network, LLC, 30 F.4th 25 849, 855–56 (9th Cir. 2022). SimpliSafe does not argue that Plaintiffs had actual notice of 26 the contracts’ terms, rather it states that assent can be inferred by the websites’ disclosure 27 of the contracts. Meaningful assent to an online contract can be inferred only if (1) the 1 consumer takes some action that “unambiguously manifests his or her assent to those 2 terms.” Id. at 856 (citations omitted). Because SimpliSafe’s disclosure at the point of sale 3 “explicitly advised” Plaintiffs that placing the order constituted assent, see id. at 857, the 4 key question is whether the disclosure itself was reasonably conspicuous. 5 Online sellers enjoy complete control over the appearance of their websites, so “the 6 onus must be on website owners to put users on notice of the terms to which they wish to 7 bind consumers.” Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1179 (9th Cir. 2014). 8 A seller must present the contractual terms to the consumer in a reasonably conspicuous 9 manner that “makes it apparent” that an action constitutes assent “to those very terms.” 10 Sellers v. JustAnswer LLC, 73 Cal. App. 5th 444, 461 (2021) (cleaned up). To be 11 reasonably conspicuous, the notice must be “displayed in a font size and format such that 12 the court can fairly assume that a reasonably prudent Internet user would have seen it.” 13 Berman, 30 F.4th at 856 (citations omitted). Courts look at two aspects, “considered 14 together,” to decide this question: the “visual design of the webpages” and “the context of 15 the transaction.” Godun v. JustAnswer LLC, 135 F.4th 699, 709 (9th Cir. 2025) (citations 16 omitted). This means a disclosure’s conspicuousness turns on its phrasing, actual size, and 17 placement, subject to the understanding that a reasonable Internet user is “more vigilant” in 18 looking for terms when the transaction’s context implies a contractual relationship and less 19 vigilant otherwise. Id.; Sellers, 73 Cal. App. 5th at 461. 20 The facts of similar cases illustrate these principles. In Berman, for example, the 21 court held that disclosures of terms in small, gray font that was less visually prominent 22 than other elements of a website did not amount to “reasonably conspicuous” notice. 30 23 F.4th at 858. Like in this case, the defendant only posted its disclosure on the final page of 24 its webform in small, gray text. Id. at 854. The disclosure contained hyperlinks to the 25 contracts, and those links were underlined but otherwise appeared in the same small, gray 26 font as the surrounding sentence. Id. The court called these disclosures the “antithesis of 27 conspicuous” because they were “considerably smaller” than the surrounding website 1 hyperlinks was not “readily apparent” because they were identical to their surrounding text 2 but for underlining. Id. at 857. 3 So too in Godun, where the court held that small, gray, underlined hyperlinks were 4 insufficient for “reasonably conspicuous” notice. 135 F.4th at 711–15. The court 5 characterized the notices in that case as “visually buried” by not being “directly above or 6 below the action button” and “displayed in relatively small text.” Godun, 135 F.4th at 7 711–12; see also Sellers, 73 Cal. App. 5th at 480–81 (reaching the same conclusion where 8 the notice was in “extremely small print” and placed beyond where “the consumer’s 9 attention would necessarily be focused”). In Berman, Godun, and Sellers, the courts all 10 found that the lack of reasonably conspicuous notice meant that no contract existed 11 between the parties. 12 Contrast these examples with instances of reasonably conspicuous notice. In 13 Keebaugh v. Warner Bros. Entertainment Inc., 100 F.4th 1005 (9th Cir. 2024), for 14 example, the court found that a sign-in screen where a notice of terms was printed in a 15 white font on a dark background and was the only text beneath the central “Play” button 16 was reasonably conspicuous. Id. at 1009–12. The “contrasting white font” and singular 17 placement of the notice, unlike the “clutter” in Berman, sufficiently set apart the notice 18 from surrounding elements. Id. at 1020–21. In addition, the context was not an “insular 19 and discrete one-time transaction,” but rather a video game that users would play on their 20 phones, and even make purchases in, over time. Id. at 1020; see also B.D. v. Blizzard Ent., 21 Inc., 76 Cal. App. 5th 931, 950–53 (2022) (noting the “continuing, forward-looking 22 relationship” inherent in signing up for a videogame). Thus, reasonably prudent Internet 23 users would have known that they were entering into a continuous relationship and 24 therefore would be more on notice for contractual terms. Keebaugh, 100 F.4th at 1020–21. 25 Here, no contract was formed with either Plaintiff at the time of sale for two 26 reasons. First, unlike the disclosure in Keebaugh, which was “directly beneath” the 27 “operative button” with design elements making the notice “legible on the dark 1 was located off to the side—not directly above or below the “Place Order” button—and 2 was “displayed in relatively small text,” see Point of Sale Screenshot; Godun, 135 F.4th at 3 712. That SimpliSafe’s gray hyperlinks are set off from their surrounding sentence only 4 by underscoring also misses the mark, since “simply underscoring words or phrases … will 5 often be insufficient to alert a reasonably prudent user that a clickable link exists.” See 6 Berman, 30 F.4th at 857. Second, this sale did not inherently contemplate an ongoing 7 relationship between Plaintiffs and SimpliSafe; the transaction was for a one-time sale of 8 hardware and neither Plaintiff intended to create a long-term relationship. Schlueter- 9 Beckner Decl. ¶¶ 17–18; Babka Decl. ¶¶ 15–16. 10 SimpliSafe contends that Plaintiffs “also added to their cart and paid for monthly 11 alarm system monitoring” at the time of purchase, thereby creating a forward-looking 12 relationship instead. Reply at 5. Yet SimpliSafe provides no clear factual support for this 13 assertion. The declaration to which it cites only indicates Plaintiffs “chose to enroll in 14 alarm service monitoring” without specifying when Plaintiffs enrolled or paid. Ciruolo 15 Decl. ¶ 2; see id. ¶ 7. And Plaintiffs’ declarations specifically rebut SimpliSafe’s 16 contention; they state that Plaintiffs each set up the service approximately two months after 17 purchasing the hardware and that neither even paid, only signing up for a free trial. 18 Schlueter-Beckner Decl. ¶¶ 19–20; see Babka Decl. ¶¶ 17, 21. Accordingly, the Court 19 cannot credit SimpliSafe’s unsubstantiated argument on this point. 20 Because the small, gray disclosure of contractual terms with nondistinct hyperlinks 21 is not reasonably conspicuous, considering the one-time nature of the transaction, the 22 Court concludes that neither Plaintiff assented to a contract at the time of sale. 23 B. Contract Formation at the Alarm Monitoring Service Enrollment 24 Schlueter-Beckner and Babka had slightly different experiences when signing up 25 for the monitoring service on SimpliSafe’s app. Their experiences were materially 26 identical until Schlueter-Beckner encountered a final webform that Babka did not see. See 27 Von Stein Decl. ¶¶ 9–15. Accordingly, the Court must separately consider the screens that 1 both Plaintiffs saw, which included a reference to SimpliSafe’s terms when Plaintiffs 2 entered contact information, and the screen that only Schlueter-Beckner saw. 3 1. Contact Information Screen (Both Plaintiffs) 4 During the app enrollment process, Plaintiffs submitted contact information into 5 appropriate webforms. Id. ¶¶ 4–6, 11–12. Above the “Next” button to move on was this 6 notice: 7 By submitting this number, you represent that you are author- ized to provide this number and agree to SimpliSafe Terms 8 and Consent to Communicate, for Notifications and Alerts. 9 Contact Information Screenshots. 10 First, SimpliSafe’s contact information screen disclosures likely present no issues of 11 inconspicuous placement. As opposed to the purchasing stage, the notice on the app was 12 clearly visible in conspicuous font. See id. But SimpliSafe’s phrasing (as opposed to just 13 the placement) of its notice of contractual terms failed to give reasonably conspicuous 14 notice of its arbitration agreement. See Berman, 30 F.4th at 856–57. So Plaintiffs were 15 not bound by SimpliSafe’s disclosures at this stage—and because Babka had no further 16 interaction related to SimpliSafe’s terms, he is not bound by contractual terms at all. 17 “Reasonably conspicuous” notice of contractual terms not only must be 18 conspicuously placed, but also conspicuously phrased to communicate the contractual 19 terms to which the seller seeks assent. Sellers, 73 Cal. App. 5th at 461. For example, in 20 Herzog v. Superior Court, 101 Cal. App. 5th 1280 (2024), review denied, No. S285619 21 (Cal. Aug. 28, 2024), a California court declined to hold that a disclosure of specific terms 22 (such as that the user’s personal information and sensitive health information would be 23 collected, used, and shared) gave reasonably conspicuous notice that a website user would 24 agree to the entire Terms of Use. Id. at 1297–304. The court reasoned that the preface 25 specifying certain terms “distracted” the consumer from the full agreement and made the 26 notice “at best only an uncertain reference” to the full terms of use. Id. at 1297, 1301 27 (citation omitted). And in Sgouros v. TransUnion Corp., 817 F.3d 1029 (7th Cir. 2016), 1 disclosure implied that checking a box on a webpage merely authorized “TransUnion to 2 obtain [the plaintiff’s] personal information,” rather than stating that it expressed assent to 3 the entire Service Agreement. Id. at 1035. As the court put it, “no reasonable person 4 would think that hidden” within that acknowledgment “was also the message that the same 5 click constituted acceptance of the Service Agreement” as a whole. Id. (cleaned up). 6 Here, SimpliSafe’s reference to the “SimpliSafe Terms and Consent to 7 Communicate, for Notifications and Alerts” (which, incidentally, do not exist) misleads in 8 the same way. This disclosure appeared exclusively on forms asking for contact 9 information and would thus lead a reasonable consumer to believe he was consenting 10 specifically to terms related to communication, not the entire Terms of Service. Neither 11 Schlueter-Beckner nor Babka understood “Terms and Consent to Communicate, for 12 Notifications and Alerts” to include terms beyond “consent to receive communications, 13 notifications, and alerts from SimpliSafe,” see Schlueter-Becker Decl. ¶ 25, Babka Decl. 14 ¶ 20, and neither would a reasonably prudent Internet user. Just as in Sgouros, SimpliSafe 15 “undid whatever notice it might have been furnishing” within its hyperlink by phrasing the 16 purported consent the way it did. See 817 F.3d at 1036; accord Herzog, 101 Cal. App. 5th 17 at 1297–98. 18 The Court therefore concludes that neither Plaintiff assented to the Terms of Service 19 based on this notification. 20 2. The Final App Screen (Schlueter-Beckner Only) 21 Schlueter-Beckner was presented with an additional screen requesting his assent to 22 SimpliSafe’s Terms of Service, however. This final screen’s sole purpose was to notify 23 the user of the applicable Terms of Service. Its disclosure read: 24 Please read SimpliSafe’s Terms of Service carefully and enter your name below if you accept. By accepting the terms of this 25 agreement, you specifically acknowledge and accept (i) the dis- claimer / limitation of liability; (ii) the exclusion of warranties; 26 and (iii) the indemnity paragraphs of this agreement. 27 Terms of Service Assent Screenshot. This notice was reasonably conspicuous as it was the 1 webform by entering his name to “accept” the terms. See id. 2 Schlueter-Beckner argues, relying on Herzog, that because the webform highlighted 3 three terms in the notice, it was not reasonably conspicuous notice of the entire Terms of 4 Service. Opp’n (dkt. 20) at 10–11. But unlike in Herzog and similar cases, SimpliSafe’s 5 webform includes a clear statement and reference to the entire Terms of Service beyond 6 mentioning the specified terms. Those terms clarify, but do not purport to limit, the scope 7 of the terms that Schlueter-Beckner agreed to. These clarifications would therefore not 8 mislead a reasonably prudent user from understanding that they were agreeing to the entire 9 Terms of Service. 10 Accordingly, the Court rejects Schlueter-Beckner’s arguments and concludes that 11 SimpliSafe’s Terms of Service bind him. None of the app’s disclosures reference the 12 SimpliSafe’s Terms of Sale, though, so those still do not apply. 13 C. Unconscionability 14 Schlueter-Beckner then argues that the entire Terms of Service, including the 15 arbitration provision, is unconscionable and unenforceable. Under the FAA, courts need 16 only recognize the validity of the arbitration agreement to send the matter to arbitration. 17 Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010). Schlueter-Beckner’s claims of 18 unconscionability of the whole contract are thus properly resolved by the arbitrator as long 19 as the arbitration agreement is valid and encompasses the disputes. Id. 20 Under California law, an unconscionable agreement must be both procedurally and 21 substantively unconscionable. Armendariz v. Found. Health Psychcare Servs., Inc., 24 22 Cal. 4th 83, 114 (2000). But as a matter of law, a “meaningful opportunity to opt out” of 23 the arbitration provision negates procedural unconscionability. Cir. City Stores, Inc. v. 24 Ahmed, 283 F.3d 1198, 1199–200 (9th Cir. 2002). Schlueter-Beckner’s Terms of Service 25 contained an opt-out provision, allowing him to have opted out via email within sixty days 26 of executing the contract. Schlueter-Beckner Terms of Service ¶ 39(d). This provision 27 means Schlueter-Beckner fails to satisfy the procedural unconscionability requirement. 1 Schlueter-Beckner argues that he did not really have a meaningful opportunity to 2 opt out of arbitration—but not because he was procedurally unable to. Instead, he points 3 to the fact that the alternative to arbitration was a forum-selection clause and jury waiver. 4 Opp’n at 13–14. Though his argument that he is between a rock (arbitration) and a hard 5 place (a different forum with no jury) has some intuitive appeal, Schlueter-Beckner cites 6 no cases where courts have evaluated the alternatives to arbitration and then concluded that 7 a party lacked a meaningful opportunity to opt out of arbitration. See id. Indeed, he 8 identifies no case where a court has even looked at the contractual alternatives to 9 arbitration at all. When considering whether a contract provides a meaningful opportunity 10 to opt out, courts typically look to whether the offeree was procedurally able to opt out. 11 See, e.g., Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1211 (9th Cir. 2016) (holding a 12 “meaningful opportunity” existed even when an Uber driver would have had to opt out in 13 person in San Francisco or by overnight delivery service, regardless of other terms); 14 Kilgore v. KeyBank, Nat’l Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013) (en banc) (finding a 15 sixty-day period to opt out of arbitration sufficient); cf. OTO, L.L.C. v. Kho, 8 Cal. 5th 16 111, 126–30 (2019) (finding no “meaningful choice” when the defendant was given only a 17 few minutes to sign complicated legal jargon written in extremely small, single-spaced 18 font). Accordingly, the Court cannot find that Schlueter-Beckner lacked a meaningful 19 opportunity to opt out of arbitration solely because the alternatives may have been onerous. 20 Schlueter-Beckner’s further arguments about the unconscionability of the forum 21 selection clause and jury waiver do not help him at this stage because the enforceability of 22 those clauses, as well as any other contract defenses pertaining to other provisions, are not 23 properly resolved at a motion to compel. See Rent-A-Ctr., 561 U.S. at 70. These 24 arguments must be resolved on the merits. On this basis, the Court does not reach the 25 substantive unconscionability question and concludes the arbitration clause is enforceable. 26 Because Schlueter-Beckner’s arbitration agreement is “valid, irrevocable, and 27 enforceable,” see 9 U.S.C. § 2, any claim it encompasses must be sent to the arbitrator. 1 D. Arbitrability 2 Once a court finds that an agreement to arbitrate is valid and enforceable, it 3 ordinarily then decides whether the particular dispute is governed by the agreement unless 4 the parties’ agreement delegates that threshold arbitrability question to the arbitrator by 5 “clear and unmistakable” evidence. Henry Schein, 586 U.S. at 69 (quoting First Options 6 of Chi. v. Kaplan, 514 U.S. 938, 944 (1995)). All submitted SimpliSafe agreements 7 incorporate by reference the AAA’s Consumer Arbitration Rules, which delegate the 8 arbitrability question to the arbitrator. The first question then is whether incorporation of 9 the AAA’s rule constitutes “clear and unmistakable” delegation between a sophisticated 10 and unsophisticated party. If it does not, then the Court must itself decide whether this 11 dispute is arbitrable under the Terms of Service. 12 1. Delegation of the Arbitrability Question 13 SimpliSafe points to Brennan to support its argument that incorporation of the AAA 14 Rules is “clear and unmistakable” delegation. Mot. at 16–17. The Ninth Circuit held in 15 Brennan that “incorporation of the AAA rules constitutes clear and unmistakable evidence 16 that contracting parties agreed to arbitrate arbitrability.” 796 F.3d at 1130. But it 17 expressly limited that holding as “between sophisticated parties,” leaving open the 18 question whether incorporation of the AAA rules is clear and unmistakable delegation to 19 an unsophisticated party. Id. at 1131; accord Patrick v. Running Warehouse, LLC, 93 20 F.4th 468, 481 (9th Cir. 2024) (recognizing the same question was still open in 2024). 21 There is currently a split within this district on that question. Compare, e.g., Cordas v. 22 Uber Techs., Inc., 228 F. Supp. 3d 985, 992 (N.D. Cal. 2017) (finding incorporation of 23 arbitration rules effective delegation regardless of the parties’ sophistication), Bazine v. 24 Kelly Servs. Glob., LLC, No. 5:22-cv-07170-BLF, 2023 WL 4138252, at *6 (N.D. Cal. 25 June 21, 2023) (same), and Singh v. Payward, Inc., No. 3:23-cv-01435-CRB, 2023 WL 26 5420943, at *8 (N.D. Cal. Aug. 22, 2023) (same), with Eiess v. USAA Fed. Sav. Bank, 27 404 F. Supp. 3d 1240, 1253 (N.D. Cal. 2019) (holding incorporation of arbitration rules 1 Agency, LLC, 675 F. Supp. 3d 1027, 1039–40 (N.D. Cal. 2023) (same), and Magill v. 2 Wells Fargo Bank, N.A., No. 4:21-cv-01877-YGR, 2021 WL 6199649, at *5 (N.D. Cal. 3 June 25, 2021) (same). 4 The Court holds that this context—veiled incorporation of arbitration rules within 5 an already veiled lengthy Terms of Service agreement—does not meet the required clear 6 and unmistakable evidentiary standard as to unsophisticated parties. The “clear and 7 unmistakable” requirement “pertains to the parties’ manifestation of intent”—whether the 8 parties’ actions clearly imply a desire to delegate the arbitrability question. Rent-A-Ctr., 9 561 U.S. at 69 n.1. Where the parties “are not likely to have thought that they had agreed” 10 to delegate the question, the court must “avoid[] the risk of forcing parties to arbitrate a 11 matter that they may well not have agreed to arbitrate” by deciding the question on its 12 own. Howsam, 537 U.S. at 83–84. Because this standard relates to the parties’ actual 13 manifestation of intent, recognizing the delegation would require the Court to declare a 14 finding that Schlueter-Beckner unmistakably intended to delegate the “rather arcane” 15 arbitrability question, see First Options, 514 U.S. at 945, simply by clicking a button. 16 Such an inference defies common experience. 17 To illustrate this point, this inference would assume that Schlueter-Beckner, after 18 having navigated through eight webforms to get a one-month free trial, clicked on the 19 Terms of Service, viewed the lengthy agreement (which spans twenty single-spaced pages 20 when printed out) on his phone, noticed the incorporation of the AAA rules, located and 21 pulled up those rules (which span thirty-seven single-spaced pages), and found the 22 delegation rule therein. Such a scenario is unreasonable for the average consumer with no 23 legal experience. Of course, not reading the terms of a contract is no defense to its 24 enforceability generally, but courts impose a “heightened standard” with respect to this 25 issue. See Rent-A-Ctr., 561 U.S. at 69 n.1. Incorporating dozens of pages of AAA Rules 26 within dozens of pages of SimpliSafe Terms of Service is “tantamount to inserting 27 boilerplate inside of boilerplate,” and to call this “clear and unmistakable” evidence of 1 far.’ ” Allstate Ins. Co. v. Toll Bros., Inc., 171 F. Supp. 3d 417, 429 (E.D. Pa. 2016) 2 (quoting Campbell Soup Co. v. Wentz, 172 F.2d 80, 83 (3d Cir. 1948)).2 3 Because this delegation question requires a heightened showing under the Supreme 4 Court’s interpretation of the FAA, mere incorporation of the AAA Rules in dense Terms 5 of Service cannot suffice for an unsophisticated party like Schlueter-Beckner. 6 2. Arbitrability of the Dispute 7 The parties did not clearly and unmistakably delegate the arbitrability question, so 8 the Court must decide that on its own. Plaintiffs primarily allege that SimpliSafe engaged 9 in false advertising at the time of sale, invoking a California statute relating to misleading 10 discount-related advertisements for the sale of SimpliSafe’s goods. Compl. ¶¶ 143–200. 11 Plaintiffs also allege violation of California’s Automatic Renewal Law. Id. ¶¶ 128–34. 12 SimpliSafe’s Terms of Service require arbitration for “any dispute or disagreement 13 between the parties arising from or relating to this Agreement or the breach hereof,” 14 explicitly including without limitation “auto renewal disputes, billing, or service disputes.” 15 Schlueter-Beckner Terms of Service ¶ 39 (cleaned up). Schlueter-Beckner’s ARL claim is 16 clearly arbitrable under this language. 17 Schlueter-Beckner’s remaining claims do not fall under the Terms of Service, 18 however. The claims pertain to improper advertisement for the hardware sale, regardless 19

20 2 District courts that have come out the other way have done so largely to avoid the “impractical line-drawing” necessary to discern sufficient sophistication. See, e.g., Singh, 21 2023 WL 5420943, at *8. It is not clear, however, that this approach adequately applies the Supreme Court’s “heightened standard.” See First Options, 514 U.S. at 945 (citation 22 omitted). Contracts involving unsophisticated parties are the paradigmatic example of the Court’s concern of how delegation of certain questions to an arbitrator could dramatically 23 increase arbitrators’ power. If anyone is going to be “too often force[d] … to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide,” it is 24 an unsophisticated party. See id.; see also Beco v. Fast Auto Loans, Inc., 86 Cal. App. 5th 292, 302–06 (2022) (reaching the same conclusion based on California state court 25 precedent interpreting First Options). Plus, courts are adequately equipped to evaluate parties’ sophistication, as they do so in many other areas of contract law. See, e.g., Cont’l 26 Airlines, Inc. v. Goodyear Tire & Rubber Co., 819 F.2d 1519, 1527 (9th Cir. 1987) (citation omitted) (unconscionability); Foster v. Chesapeake Ins. Co., 933 F.2d 1207, 1219 27 (3d Cir. 1991) (citation omitted) (fraud and undue influence); RIV VIL, Inc. v. Tucker, 1 of whether Schlueter-Beckner enrolled in the monitoring service. The arbitration 2 agreement regarding SimpliSafe’s monitoring service does not encompass the false- 3 advertising dispute regarding the separate, and earlier in time, sale of its products. 4 SimpliSafe correctly points out that the FAA represents a “liberal federal policy 5 favoring arbitration.” Mot. at 11 (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 6 333, 339 (2011)). But “while ambiguities in the language of the agreement should be 7 resolved in favor of arbitration,” courts must not “reach a result inconsistent with the plain 8 text of the contract[] simply because the policy favoring arbitration is implicated.” EEOC 9 v. Waffle House, Inc., 534 U.S. 279, 294 (2002) (cleaned up). Arbitration agreements 10 must be “on an equal footing with other contracts” and receive the same judicial scrutiny. 11 Concepcion, 563 U.S. at 339 (citation omitted). Accordingly, normal state-law principles 12 of contract interpretation govern the arbitration clause. First Options, 514 U.S. at 944 13 (citations omitted). 14 Though the Terms of Service employ “broad and far reaching” language, see 15 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1131 (9th Cir. 2000), disputes 16 “arising from or relating to” the Terms still have an outer bound. See AGCO Corp. v. 17 Anglin, 216 F.3d 589, 593 (7th Cir. 2000) (holding that even broadly phrased arbitration 18 agreements “must not be so broadly construed as to encompass claims that were not 19 intended to be arbitrated under the original contract”). Schlueter-Beckner’s non-ARL 20 claims pertain only to the advertisement and sale of SimpliSafe’s hardware; they have 21 nothing to do with the ancillary alarm monitoring service and its corresponding Terms. 22 Courts considering similar facts have reached the same conclusion. For example, in 23 Close v. Penney OpCo LLC, No. 3:24-cv-05756-DGE, 2025 WL 1721002 (W.D. Wash. 24 June 20, 2025), appeal docketed, No. 25-4181 (9th Cir. July 7, 2025), a plaintiff alleged a 25 similar false advertising scheme against JCPenney for deceptive pricing. Id. at *1. 26 JCPenney moved for arbitration because the plaintiff was a rewards member and assented 27 to an arbitration agreement as a part of that membership. Id. The agreement’s language, 1 rewards membership. Id. at *3 (cleaned up). Because deceptive-pricing and false- 2 advertising allegations had nothing to do with the plaintiff’s reward membership, the court 3 held that this language would not cover the plaintiff’s claims. Id. at *4. As another court 4 explained, “with respect to the alleged wrong, it [was] simply fortuitous that the parties 5 happened to have a contractual relationship.” Cavlovic v. J.C. Penney Corp., 884 F.3d 6 1051, 1060 (10th Cir. 2018) (citation omitted) (holding that JCPenney’s rewards program 7 arbitration agreement did not encompass a purchase-related dispute). 8 The same result follows here. The Terms of Sale do not apply, and the Court 9 concludes that Schlueter-Beckner’s claims (except for the Automatic Renewal Law claim) 10 are not arbitrable. 11 3. Stay of Arbitrable and Nonarbitrable Claims 12 Part of this litigation is arbitrable and part is not. The FAA requires the Court to 13 stay litigation as to the arbitrable claim. See Smith v. Spizzirri, 601 U.S. 472, 475–76 14 (2024). But “where some, but not all, claims are subject to arbitration, it is within a district 15 court’s discretion whether to stay or proceed with the litigation on the non-arbitrable 16 claims.” Ireland-Gordy v. Tile, Inc., 760 F. Supp. 3d 946, 964 (N.D. Cal. 2024) (cleaned 17 up), appeal docketed, No. 25-403 (9th Cir. Jan. 21, 2025). A district court’s discretion 18 should be informed by “economy and efficiency, the similarity of the issues of law and fact 19 to those that will be considered during arbitration, and the potential for inconsistent 20 findings absent a stay.” Wolf v. Langemeier, No. 2:09-cv-03086-GEB-EFB, 2010 WL 21 3341823, at *8 (E.D. Cal. 2010) (citation omitted). These factors usually point to a stay 22 when “the arbitrable claims predominate, or where the outcome of the nonarbitrable claims 23 will depend upon the arbitrator’s decision.” Cal. Crane Sch., Inc. v. Google LLC, 621 F. 24 Supp. 3d 1024, 1033 (N.D. Cal. 2022) (citation omitted). 25 Here, the arbitrable ARL claim is ancillary both in substance and importance to the 26 overall complaint. All of Babka’s claims and all but one of Schlueter-Beckner’s claims are 27 nonarbitrable, and none of them depends on the outcome of the ARL claim. The Court 1 Renewal Law claim. 2 IV. CONCLUSION 3 For the foregoing reasons, the Court GRANTS SimpliSafe’s motion with respect to 4 Schlueter-Beckner’s ARL claim and DENIES the motion with respect to Babka and 5 Schlueter-Beckner’s other claims. The Court will proceed on all counts except for 6 Schlueter-Beckner’s ARL claim. 7 IT IS SO ORDERED. 8 Dated: July 30, 2025

CHARLES R. BREYER

9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27