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Product Liability & Toxics Law

Fitbit, Attorneys Sanctioned Over Arbitration Proceedings

July 25, 2018, 8:28 PM

Fitbit, Inc. and its counsel engaged in bad-faith conduct in arbitration proceedings over a woman’s claim that its heart-rate trackers didn’t work, a federal court said in a harshly worded opinion.

Kate McLellan is entitled to recover her attorneys’ fees associated with the matter as compensation, Judge James Donato of the U.S. District Court for the Northern District of California said.

Morrison & Foerster, which represented Fitbit, wouldn’t comment. An attorney for McLellan couldn’t immediately be reached.

McClellan started an arbitration proceeding to contest the validity of an arbitration clause in Fitbit’s terms of use, after the court agreed with Fitbit that the matter had to be arbitrated.

She rejected a settlement, saying she wanted the arbitrator to address her argument that the clause couldn’t be enforced because of fraud.

Fitbit, though, failed to timely pay its fees and told McLellan it had no intention of arbitrating her claims or the arbitrability issues, the court said.

“Fitbit reversed course, paid the fees, and got the arbitration back on track after McLellan raised the matter with the Court at a hearing on another issue in the case,” the court said.

Fitbit called this incident a misunderstanding, “but it is much more than that,” the court said.

Fitbit says, for example, that it held up arbitration to wait for “guidance” from the American Arbitration Association or the court, the opinion said. But the record lacks evidence that Fitbit ever asked AAA for instructions, and the company didn’t seek guidance from the court, the opinion said.

The company’s conduct “undermines the public’s confidence in getting a fair shake when arbitration is compelled,” the court said.

The court also ordered Fitbit, for a year, to file a copy of this decision in all cases where it seeks to compel arbitration under its Terms of Service with consumers.

But the court refused to relieve McLellan of her arbitration agreement, or to strike the clause for all Fitbit users.

Lieff, Cabraser, Heimann & Bernstein LLP and others represent the plaintiffs. Morrison & Foerster LLP represents Fitbit.

The case is McLellan v. Fitbit, Inc., 2018 BL 262840, N.D. Cal., 16-00036, 7/24/18.

To contact the reporter on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bloomberglaw.com

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