23andMe Lawsuits Sent to Arbitration

US District Court Judge Lucy Koh has ruled that the combined cases against 23andMe for its illegal marketing of the “Personal Genome Service” should be sent to arbitration.

23andMe, like an increasing number of large corporations, wrote into its Terms of Service that all disputes with the company must be arbitrated in secret before private lawyers instead of heard in court before a judge and jury. Despite its horribly one-sided terms — the arbitration has to be in San Francisco no matter where the consumer lives, has to be conducted in English, the consumer must pay the initial filing fees of $975, and might be liable for paying all of 23andMe’s costs including attorneys’ fees if he or she loses — Judge Koh ruled that the clause was enforceable.

The Ankcorn Law Firm was selected after a hard-fought contest with several other firms across the country to be the lead attorneys for the plaintiffs and classes. We argued that the Terms of Service were totally unenforceable, both as a matter of substance and procedurally. The Terms were presented well after the consumers paid their money for the PGS and were hidden as part of a take-it-or-leave-it check box on a web page, tucked into a section called “Miscellaneous” at the end of a long list of other terms. Take a look for yourself and see what I mean. Not exactly obvious, is it?

Arbitration is fine when the parties have equal bargaining power or between sophisticated business entities. Patents, business leases, disputes between lawyers, all are areas where an arbitrator’s familiarity with a technical subject (or where the parties both have a lot to lose with the adverse publicity of an open court proceeding) make sense to be handled with the streamlined, fast, private method that arbitration can offer.

But when the disputes are between a consumer and a massive corporation, forced arbitration is nothing more than a “get out of jail free card” for the entity to write itself an exemption from state and federal consumer protection laws. It’s rarely, if ever, worth it to face off against a big corporation (think cable company or bank or phone company) for small but meaningful stakes all by yourself.

23andMe is a sad example. Who, to get a refund of a $99 product, would hire a lawyer, pay $975, fly to San Francisco, and bring a claim? When would that make sense? It only makes sense if you get together with all the other people who have been ripped off by the company and bring a demand all together. The attorneys’ fees and costs are shared by thousands or hundreds of thousands of people and the ability to get the company to actually pay attention and stop its illegal practices is vastly improved.

Our lawyers are evaluating our next steps, which include taking an appeal and possibly litigating in arbitration on a class-wide basis. 23andMe, unlike most other big companies, didn’t also include an express waiver of the right to participate in a class action, so a class arbitration might be the next best step. We’ll post more when we’re ready to take that next step for the our clients and rest assured, we haven’t stopped fighting for justice.