Amazon successfully moved a putative class action challenging its pricing practices to arbitration after the U.S. Court of Appeals, Ninth Circuit held that the retailer’s agreement was not unconscionable.

Allen Wisely sued Amazon, alleging the company ran afoul of California’s False Advertising Law by using the highest marketplace price for comparison in order to deceive consumers into believing they were getting a deal. In reality, they were paying the same price offered by competitors, the suit claimed.

Pursuant to the website’s terms and conditions of use, Amazon moved to compel arbitration. A district court judge granted the motion, and the Ninth Circuit affirmed in a memorandum opinion.

Wisely conceded that Amazon’s conditions of use created a valid contract. Although he argued that California law should apply, the panel found the contract established that Washington law applied.

Under Washington law, a contract of adhesion alone is insufficient to support a finding of procedural unconscionability, the Ninth Circuit said, and no other indicia of procedural unconscionability were present.

The plaintiff “fails to explain how California’s consumer protection statutes are more protective than Washington’s consumer protection statutes; rather, Washington’s and California’s consumer protection laws and protections against unconscionable contracts appear to be substantially similar,” the court said, adding that “any distinction does not bear on this case, as we would reach the same result under California law.”

The notices on Amazon’s checkout and account registration pages providing hyperlinks to the conditions of use “were in sufficient proximity to give [the plaintiff] a ‘reasonable opportunity to understand’ that he would be bound by additional terms,” the panel wrote, and the arbitration clause itself was presented in the same size font as the rest of the conditions of use, with key terms bolded.

Nor did the incorporation by reference of the American Arbitration Association’s rules create procedural unconscionability, as the site provided a phone number to resolve any uncertainty.

Turning to substantive unconscionability, the panel found no merit to any of Wisely’s three arguments. A unilateral modification clause was limited by the implied covenant of good faith and fair dealing, while the exemption for intellectual property claims for injunctive relief did not make the provision overly harsh or one-sided.

Finally, the attorneys’ fees provision mirrors Washington’s statutory right to attorneys’ fees for frivolous claims, the court said, and to the extent it is unilateral, state law automatically converts it to a bilateral provision that would afford Wisely the same right. The plaintiff also failed to demonstrate that the overall arbitration fee scheme would be unaffordable or would have a substantial deterrent effect in his case.

The panel affirmed the order to compel arbitration.

To read the memorandum in Wisely v., Inc., click here.

Why it matters: The unpublished decision is a victory for Amazon and other companies seeking to rely on arbitration clauses in consumer contracts.