Unreported / Non-Citable
Background
Four plaintiffs, proceeding under pseudonyms, sued Walgreen Co. in the Northern District of California in April 2026 on behalf of a putative nationwide class. They allege that tracking technologies on Walgreen's website sent their personally identifiable health information to third parties, and they assert federal wiretapping, California statutory, and California and Illinois common law claims. Those allegations are unadjudicated; the order decides only whether the claims go to arbitration. Walgreen moved to compel arbitration and stay the action under terms of use that required arbitration and, it argued, delegated arbitrability to the arbitrator.
R.S. (2018) and N.G. (2021) created Walgreens.com accounts on a page with a checkbox beside the hyperlinked text "I read and agree to the Walgreens Terms of Use," which had to be checked to proceed. No 2018 screenshot was filed, but a Walgreen declarant described that page as substantially similar. R.L. and I.P. scheduled vaccine appointments starting in September 2024 on a page where the checkbox sat beside a long text-message consent paragraph whose last sentence also referenced the Terms of Use; users could click Next without checking it. The terms incorporated AAA rules (2018, 2021) or NAM rules (2024) and allowed a 30-day mail opt-out. All four plaintiffs submitted declarations saying they lacked legal training and did not understand that arbitral rules delegated arbitrability.
The Court’s Holding
Under the Ninth Circuit's sign-in wrap test applied through California law, the court asked whether the site gave reasonably conspicuous notice and whether the user unambiguously manifested assent. For R.S. and N.G. it found both. A permanent account implies an ongoing relationship with terms, the checkbox sat just above the continue button with set-off hyperlinked text, and the box had to be checked. Because the text tied the box only to agreeing to the Terms of Use, assent was unambiguous, so arbitration agreements were formed even if they never read the terms.
For R.L. and I.P., the court found no formation and denied the motion. A vaccine appointment is a one-off transaction, the Terms of Use reference was buried at the end of what looked like routine text-message consent, and the box offered no way to consent to texts alone. The final sentence also did not say which action signaled agreement. Plaintiffs' subjective understanding mattered only as evidence of what a reasonable observer would think.
The court held the delegation provision ineffective. Whether incorporating arbitral rules clearly delegates arbitrability to ordinary consumers is open in the Ninth Circuit, and given the declarations and the nondescript, buried incorporation language, the court found no clear and unmistakable delegation and decided enforceability itself. It found no procedural unconscionability in the 2018 and 2021 terms: plaintiffs did not show a lack of alternatives, were not required to open accounts, and a flawed opt-out did not itself establish unconscionability, so substantive unconscionability was not reached. It declined to stay R.L. and I.P.'s claims or the putative class claims, finding indefinite delay harmful, no hardship shown, and no simplification since arbitration binds only individuals. R.S. and N.G.'s claims must at least be stayed, and they must tell the court within 30 days whether to proceed by stay, severance, or another route.
Key Takeaways
- Small differences in a sign-up screen, such as a mandatory checkbox with clear, dedicated terms language versus an optional one, can decide whether an arbitration agreement was formed.
- Transaction context matters: opening an account suggests an ongoing relationship, while a one-off appointment makes users less likely to expect extensive terms.
- Incorporating arbitral rules did not clearly delegate arbitrability to consumers who submitted declarations of unsophistication, though this issue remains open in the Ninth Circuit.
- A court may decline to stay non-arbitrable and class claims when arbitration binds only individual plaintiffs and a stay would cause indefinite delay.
Why It Matters
This is a district court order, not a final judgment, and it does not resolve the merits of the privacy claims. It shows how Ninth Circuit sign-in wrap analysis can split a single putative class into arbitrating and non-arbitrating plaintiffs. Companies with changing interfaces face plaintiff-by-plaintiff formation questions, and the ruling on delegation and the stay leaves the putative class claims of R.L. and I.P. proceeding in court while R.S. and N.G.'s procedural path remains to be set.