A former L.A. Fitness member who accused the gym of tricking him into buying an annual membership he didn’t want cannot be held to an arbitration agreement he wasn’t shown until after he electronically signed it, a federal district court held.

When Beau Briones walked into the L.A. Fitness in Long Beach, California, he just wanted to cancel his cancel his personal training membership. But Briones said a salesperson pressured him into agreeing to one more month and then had him put his John Hancock on an electronic signature device. Briones assumed, like most of us would, that he was signing for a month of personal training—even though no contract was displayed on the signature device nor was he given a paper copy to review before signing, he said.

So he was understandably surprised when L.A. Fitness started auto-debiting $110 per month from his bank account. After calling to complain, he checked his email and saw L.A. Fitness had sent a copy of a one-year personal training agreement bearing his electronic signature on the same day he’d signed the device. 

Would you feel like you’d agreed to a one-year contract under these circumstances? Neither did Briones. He ultimately sued L.A. Fitness in federal court on behalf of himself and others like him, alleging the gym’s practices violated seven state and federal laws. L.A. Fitness moved to compel arbitration, pointing to a clause buried in the personal training agreement it emailed Briones.

The Fiction of ‘Knowing’ Consent to Arbitration   

As we’ve detailed here on our blog, arbitration agreements are a powerful weapon companies wield against consumers and employees seeking justice through the court system. Whether you’re joining the gym, turning on cable TV service or starting a new job, chances are you’ll be faced with a take-it-or-leave-it arbitration agreement that says you give up your right to sue the company if it wrongs you.

Like any other contract, an arbitration clause isn’t valid and enforceable unless both sides knowingly consent to it. Since companies often bury fine-print arbitration clauses deep inside voluminous contracts, consumers often don’t even know they’ve agreed to arbitrate at all. Nonetheless, courts routinely enforce a arbitration clauses against consumers who knowingly consented to the underlying agreement containing the arbitration clause.

No Valid Agreement Formed

Still, a defendant seeking to compel arbitration has the burden of proving a valid arbitration agreement exists. Here, the U.S. District Court for the Central District of California held that L.A. Fitness couldn’t meet that burden. It found that Briones did not knowing agree to arbitration because he was neither informed about the arbitration provision nor shown the agreement when he gave his electronic signature.

L.A. Fitness could produce no evidence to prove the salesperson had reviewed the personal training agreement with Briones, show it to him on a screen, or give him a printed copy. Still, it argued that Briones “cannot honestly claim that he did not know” he agreed to arbitrate because it emailed him a copy of the agreement later that day. But the court found no legal authority to back up this argument—and in any event, “the email copies sent after each Agreement provide no indication that Plaintiff, at the time of signing, agreed to arbitrate.”

Moreover, L.A. Fitness argued that Briones should have known about the arbitration clause because, it claimed, there was a sticker on the electronic signature pad that said: “Review Agreement Before Signing; by Electronically Signing You Agree to All of its Terms. You are Entitled to a Copy. If You Do Not Receive One, Call 949-255-7200.” But Briones didn’t have a “direct and immediate opportunity to review the agreement terms” before he signed, nor did the sticker specifically identify any agreement, including the arbitration agreement. Thus, even if the sticker was present, it could not bind Briones “to unseen and unnoticed terms that were never identified with specificity or provided by the device at the time of signing.”   

Implications

“This decision is a victory for consumers,” said Eric Grover of Keller Grover LLP.  “Although nonbinding, this decision makes clear that companies shouldn’t expect to get away with denying consumers their day in court through sharp business practices.” 

The case is Beau Briones v. Fitness International, LLC et al, Case No. SACV 16-44-JLS (KESx) (C.D.Cal. August 5, 2016).