How Fitbit heart-rate class action intends to bust arbitration agreement

January 6, 2016

(Reuters) – Class action lawyers didn’t need the New York Times’ epic series on mandatory arbitration to alert them to the impact of corporate contracts requiring consumers to waive their right to sue. Plaintiffs’ lawyers have been engaged for years in hand-to-hand battles over arbitration clauses, in a war to prove class action waivers are unconscionable. Unfortunately for them, the U.S. Supreme Court has rendered the campaign almost entirely unsuccessful, despite overwhelming statistical evidence that class actions deliver more cash to more consumers than individual arbitrations.

But the class action bar, bless its heart, keeps trying to devise new ways to undercut or evade arbitration provisions and class waivers. The latest try comes in a just-filed consumer fraud class action complaint in San Francisco federal court, alleging that Fitbit pulse-tracking fitness devices do not accurately track users’ heart rates, especially during high-intensity workouts. Plaintiffs’ lawyers from Lieff Cabraser Heimann & Bernstein and Robert Klonoff confront the fitness device company’s mandatory arbitration clause head on, claiming not only that the provision does not bind class members but that it is itself an illegal trade practice.

As the complaint explains, Fitbit devices work properly only when users register them at the company’s website. To register, users must agree to terms of service in which they submit to arbitration (unless they opt out) and waive the right to classwide dispute resolution. That’s pretty straightforward, as Fitbit’s lawyers at Morrison & Foerster wrote in a motion to compel arbitration in a separate class action alleging Fitbit devices inaccurately track users’ sleep patterns. (That motion has not yet been ruled on.)

The heart rate complaint asserts, however, that Fitbit purchasers who bought their devices from sellers other than Fitbit didn’t agree to the company’s terms of service before they plunked down their money. The named plaintiffs in the case bought Fitbits from REI, Target and a California store called Sports Chalet. None of them, according to the complaint, realized from Fitbit advertising or packaging that they would have to sign up at the Fitbit website – and submit to Fitbit’s terms of service – to use the devices.

‘There is no mention on the product packaging or anywhere else at the point of sale that the PurePulse Trackers will work as intended only after setting up an online account or, critically, that such an account will be governed by terms of service” barring class actions, the complaint said. “Fitbit’s attempt to bind customers who bought PurePulse Trackers through third party online and brick and mortar stores to an arbitration clause and class action ban postpurchase when they register the product-which is required to make the product function as intended-is unconscionable, invalid, and unenforceable. It is also an unfair and deceptive trade practice in its own right.”

Because this arbitration-evasion theory applies only to Fitbit consumers who bought their devices before assenting to the company’s terms of service, the class specifically excludes buyers who bought trackers directly from Fitbit, since those users would have assented to the class action waiver before their purchase.

Pretty intriguing, right?

Fitbit doesn’t think the theory will hold up. In a response to my email about whether the class waiver applies to users who bought their devices elsewhere, a Fitbit representative said, “All end users agree to the terms of service when they set up a Fitbit account regardless of where they purchased the device.” She also said Fitbit “stands behind our heart rate technology and strongly disagrees with the statements made in the complaint and plans to vigorously defend the lawsuit.”

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