Ring Wins Stay Pending Arbitration in Cyberattack Suit

On Tuesday, a motion to stay was granted to defendant Ring LLC in their case against a class of consumers who alleged that Ring’s security systems were designed without sufficient security protocols, leaving users open to cyberattack, identity theft, and physical harm.

The operative complaint also contended that “Ring actively shared users’ sensitive personal identifying information with third parties without first obtaining users’ authorization or consent,  which allowed third parties to track and surveil Plaintiffs.”

At issue is whether or not the members of the class, separated into purchasers and non-purchasers of Ring, should be consolidated into the same group given that every purchaser is the parent or caregiver of someone within the non-purchaser class. Previously, Judge Michael W. Fitzgerald held that the purchaser plaintiffs in possession of an online Ring account were on “inquiry notice” of Ring’s terms of service, and thereby bound by its arbitration clause. However the court declined to send their non-purchase plaintiffs’ claims to arbitration, reasoning that Ring failed to meet its burden of proving that the non-purchaser plaintiffs, non-signatories to the terms of use, agreed to arbitrate their claims.

The defendant appealed this decision and believes that the non-purchasers case depends fully on the purchaser class in arbitration so they submitted the motion to stay in order to ensure a fair legal outcome. They fear that “allowing these claims to proceed simultaneously in two fora could provide double recovery for the same alleged injury or a second bite at the apple if they were to lose in one forum.” In order to be granted a motion to stay the party must establish certain questions. (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding.

The defendant stated that district courts in the Ninth Circuit routinely exercise their discretion to stay proceedings pending appeal of an order denying arbitration.

In regards to legal questions, the defendants asserted that the members of a household that employed a Ring device “used” that device in the same way that they use other household products like an air conditioner or water heater irrespective of whether they personally purchased, installed, or controlled the product.  They claim that there is a serious legal question of  whether the Non-Purchaser Plaintiffs are “Authorized Users” under the plain language of the Terms and thus are bound by its arbitration provision. 

Lastly, they claimed that not allowing a stay would substantially injure them because they will “forever lose the advantages of arbitration” and instead expend substantial costs, time, and resources litigating the Non-Purchaser Plaintiffs’ claims. The only inconvenience suffered by the non-purchasers would be a delay of relief, which they say is not enough to outweigh their own risk. It is due to these factors that the court decided to grant the stay.

The plaintiff is represented by Robinosn Calcagnie as well as Ahdoot and Wolfson. The defendant is represented by Hueston Hennigan.