Ninth Circuit Won’t Revive Amazon Pricing Class Action

PASADENA, Calif. (CN) — The Ninth Circuit on Tuesday rejected a Californian’s bid to revive a class action challenging Amazon’s policy of compelling arbitration, citing a provision in the online retailer’s conditions of use.

Allen Wiseley claimed that that California consumer laws rather than Washington’s should apply, but the Ninth Circuit affirmed a ruling for Amazon in its unpublished opinion Tuesday.

U.S. District Judge Cynthia Bashant had granted Amazon’s motion to compel arbitration of Wiseley’s challenge to Amazon’s conditions of use, which rely upon Washington state law.

Wiseley asked the Ninth Circuit to vacate Bashant’s order.

The Ninth Circuit refused, in a 6-page memorandum. It agreed that Washington law is controlling and rejected the argument that the arbitration clause in the conditions of use was “unconscionable.”

“Wiseley fails to explain how California’s consumer protection statutes are more protective than Washington’s consumer protection statutes; rather, Washington’s and California’s consumer protection laws and protections against unconscionable contracts appear to be substantially similar,” the court wrote.

The three-judge panel found the conditions of use, which appear as hyperlinks at Amazon’s checkout and registration pages, create a valid contract between the retailer and its customers.

“Wiseley conceded before the district court that there was sufficient notice to create a valid contract, and neither California nor Washington allows a party to escape contract obligations if it had actual or constructive notice,” the ruling states.

The court found Wisely other claims of unconscionability of contract without merit.

In his original 2015 complaint in San Diego, Wiseley accused Amazon of cherry-picking the highest marketplace price to create a false impression of consumer savings, in violation of California’s false advertising laws. He said Amazon’s discounted prices are no different from those offered by its competitors, including traditional brick and mortar stores.

Consumer groups have made similar claims about a controversial practice familiar to shoppers. Amazon displays a crossed-out list price in black type which is supposed to represent the going market rate. Amazon’s price for the product is marked in red, and it displays a putative savings in dollars and percentage.

Amazon has faced significant legal blowback over this. A study of its website by the group Consumer Watchdog concluded that a quarter of Amazon stock included crossed-out prices and that 40 percent of those were higher than the prices typically offered by its competitors.

“Overall, Consumer Watchdog’s findings suggest that Amazon continues to flout Federal Trade Commission regulations on deceptive pricing, as well as laws in many states where it does business,”  Consumer Watchdog reported in August.

After Amazon announced its purchase of Whole Foods for $14 billion this year, Consumer Watchdog called on 11 state attorneys general to take action to stop the pricing practice.

Amazon says on its website that it regularly compares its own prices against those of its competitors.

“Manufacturers, vendors and sellers provide list prices, but our customers care about how the price they are paying compares to other retailers,” the company said in a March statement. “We validate list prices against actual prices recently found across Amazon and other retailers, and we eliminate list price when we believe it isn’t relevant to our customers.”

Ninth Circuit Judges William Fletcher and Sandra Ikuta and U.S. District Senior Judge Sarah Barker, sitting by designation from the Southern District of Indiana, heard arguments in August.

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