## Facts

- 23andMe sold a direct-to-consumer genetic testing “Personal Genome Service” kit through its website.
- Customers could purchase the kit online without being required to click or read the Terms of Service (TOS) link displayed on the purchase page.
- To register the kit and obtain results, customers had to create an online account and click a box indicating agreement to the TOS.
- The TOS included a binding arbitration provision requiring disputes to be resolved in arbitration rather than court.
- The TOS also included (1) a prevailing-party costs clause allocating arbitration costs to the losing party, (2) a forum-selection term governing where arbitration would occur, (3) an intellectual-property carve-out exempting certain IP disputes from arbitration, and (4) a unilateral-modification provision allowing 23andMe to modify the TOS.
- Plaintiffs brought consolidated putative class actions alleging that 23andMe’s marketing of the service as providing health-related information was misleading or unlawful.

## Issues

1. Whether the TOS arbitration provision was unenforceable under California law because it was procedurally and substantively unconscionable.
2. Whether the prevailing-party costs clause, forum-selection term, IP carve-out, and unilateral-modification provision—individually or cumulatively—rendered the arbitration provision unconscionable and revocable under FAA § 2.

## Decision

- The district court compelled arbitration and dismissed the claims without prejudice in favor of arbitration after finding plaintiffs assented to the TOS by checking the agreement box during account creation.
- The Ninth Circuit affirmed, holding the arbitration provision enforceable under the Federal Arbitration Act and not unconscionable under current California law.
- The court rejected challenges to the prevailing-party costs clause, forum-selection term, IP carve-out, and unilateral-modification provision, both separately and in combination.
- The court held plaintiffs failed to meet their burden to show the challenged terms were overly harsh, one-sided, or would effectively prevent vindication of statutory rights.

## Legal Principles

- Under FAA § 2, an arbitration agreement is enforceable except on generally applicable contract grounds such as unconscionability.
- California unconscionability requires both procedural and substantive unconscionability, applied on a sliding scale.
- A bilateral prevailing-party costs clause is not substantively unconscionable absent a showing that likely costs are so high as to deter or preclude pursuit of claims.
- A forum-selection component of an arbitration clause is not unconscionable without evidence that the forum imposes significant, deterrent burdens.
- An IP carve-out from arbitration is not per se unconscionable under California law; it must be shown to create an unduly one-sided scheme.
- A unilateral-modification provision does not invalidate an arbitration clause absent a showing it was applied in a manner that makes arbitration unfair or one-sided; challenges aimed at general contract provisions must be tied to their application to the agreement to arbitrate to be resolved by a court.

## Conclusion

The Ninth Circuit held that customers who registered their kits by clicking assent to the TOS were bound to arbitrate and that the challenged cost-allocation, forum, IP carve-out, and modification terms did not make the arbitration agreement unconscionable under California law, so the case was properly dismissed to proceed in arbitration.


Tompkins v. 23andMe, Inc., 840 F.3d 1016 (9th Cir. 2016)