No Class Action of 23andMe Marketing Claims

     SAN FRANCISCO (CN) — The DNA-testing company 23andMe succeeded Tuesday in making customers arbitrate their claims over questionable marketing tactics.
     In its early days, 23andMe advertised that its product offered important health information.
     Consumers were just one cheek swab away, as the kit argued, from learning whether they were at risk of diabetes, heart disease, breast cancer or other serious ailments.
     The company stopped running such advertisements when the Food and Drug Administration cracked down in 2013, but a series of consumer class actions over the practice were soon consolidated in San Francisco.
     U.S. District Judge Lucy Koh sent the cases to arbitration, as called for in 23andMe’s terms of service, and the Ninth Circuit affirmed Tuesday.
     That arbitration clause forces the losing party to pay attorneys’ fees and costs, mandates that the proceedings be held in San Francisco, and excepts any intellectual-property claims from arbitration.
     The terms of service also come with a one-year statute of limitations and says 23andMe has the right to modify the agreement.
     Though 23andMe consumers do not have to read the terms of service to buy the product, such agreement is required to register an account on 23andMe and send their completed DNA kit off for analysis.
     “We hold that none of the challenged portions of the arbitration provision, alone or in concert, render the arbitration provision unconscionable under current California law,” U.S. Circuit Judge Sandra Ikuta said Tuesday, writing for a three-person panel.
     David Tompkins and the other consumer plaintiffs failed to sway the court that arbitration carries travel costs that discourage them from pursuing their case.
     “Although plaintiffs submitted two affidavits stating that the cost of traveling to San Francisco for arbitration would be burdensome and expensive, ‘[m]ere inconvenience or additional expense’ does not make the locale unreasonable,” Ikuta wrote.
     The consumers also made little headway at the provision that would have them pay attorneys’ fees for 23andMe’s “top-tier lawyers.”
     Ikuta said the class failed to identify any case “where a state appellate court held that a bilateral clause awarding attorneys’ fees and costs to the prevailing party was unconscionable, whether in an arbitration or nonarbitration context.”
     Robert Varian, an attorney for 23andMe with Orrick, Herrington & Sutcliffe, declined to comment on the ruling.
     Jeremy Robinson argued for the class meanwhile on behalf of Casey Gerry Schenk Francavilla Blatt & Penfield in San Diego.
     “Obviously, in general, we’re disappointed with the outcome,” Robinson said, adding that he felt the circuit took its interpretation too far. “Their interpretation of the attorney fee-shifting clause is a little troubling to me.”
     Given the financial clout a company has with such a provision, Robinson said he feels that customers will be afraid to seek arbitration.
     “I’m concerned about it from a consumer perspective.”

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