(CN) - A Terms of Service agreement that 23andMe supplies to users of its do-it-yourself DNA kit is problematic but still compels arbitration of all class claims, a federal judge found.
Consumer-protection lawsuits against Mountain View, Calif.-based 23andMe Inc. have been flooding
the courts over the past year, and U.S. District Judge Lucy Koh is presiding over the consolidated litigation in San Jose, Calif.
There are also at least three pending arbitrations involving class claims about the DNA saliva test Personal Genome Service (PGS), which 23andMe sells for $99 a pop, Koh noted.
Earlier this year, 23andMe filed an omnibus motion to compel arbitration of all claims. It noted that users who want to see their test results must create an online profile and agree to a Terms of Service that says "any disputes shall be resolved by final and binding arbitration."
Though the plaintiffs highlighted that they gave no such consent when purchasing their tests, Koh dismissed all claims without prejudice last week and compelled arbitration.
She did so despite finding that "23andMe's practice of obscuring terms of service until after purchase - and for a potentially indefinite time - is unfair, and that a better practice would be to show or require acknowledgement of such terms at the point of sale."
The TOS includes language stating that disputes would fall under the "rules and auspices of the American Arbitration Association (AAA)," but Koh noted that the AAA is normally used during cases involving two corporate entities - not consumers.
"The problem is further compounded by the fact that the TOS purport to bind users who are never asked to view the TOS and click 'I ACCEPT,'" the 31-page ruling states. "For example, as noted above, the TOS purport also to bind users who merely visit 23andMe's website even if the user lacks an account."
Koh also agreed with the plaintiffs that the arbitration clause in the TOS was unconscionable "because it is buried at the end of the TOS" and because they never received a copy of the agreement.
"Customers who purchase the DNA kits have only a 60-minute window to cancel their orders and receive a full refund," the ruling states. "By the time those customers create accounts and register their DNA kits - when 23andMe first requires them to acknowledge the arbitration provision - they have already paid 23andMe, and the cancellation period may have long expired."
Despite these findings, Koh said that the arbitration provision is enforceable because it was not substantively unconscionable.
"It is not enough that the terms are slightly one-sided or confer more benefits on a particular party; a substantively unconscionable term must be so unreasonable and one-sided as to 'shock the conscience,'" Koh wrote.
Holding arbitration in San Francisco near company headquarters also would not deprive the consumers of their "day in court," the ruling states.