A few months ago, the Ninth Circuit found that the arbitration agreement in Barnes & Noble’s website was not enforceable. This week, the Ninth Circuit found that the arbitration agreement Sirius XM Radio relied upon was not enforceable because the user did not know he had any agreement with Sirius XM, let alone an arbitration agreement. Knutson v. Sirius XM Radio Inc., __ F.3d__, 2014 WL 5802284 (9th Cir. Nov. 10, 2014).

The plaintiff in this case purchased a Toyota truck. The truck came with a 90-day trial subscription to Sirius XM satellite radio. The plaintiff did not have to sign any documents to receive or activate the radio, it was activated just after his purchase. Over a month later, the plaintiff received a “Welcome Kit” in the mail from Sirius XM. The kit had a customer agreement with an arbitration provision. The plaintiff did not pay any attention to the Welcome Kit. The plaintiff also did not ask to end his trial subscription.

Five days after the trial subscription ended, the plaintiff brought a putative class action suit against Sirius XM. He alleged that Sirius XM made three unauthorized calls to him that violated the Telephone Consumer Protection Act. Sirius XM quickly moved to compel arbitration, pointing out that not only did the dispute belong in arbitration, but the plaintiff had waived his right to a class action in the arbitration provision. The district court granted the motion and the Ninth Circuit reversed.

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