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23andMe Customers Lose Bid to Form Class Arbitration

Thursday, January, 29, 2015


Two customers of the DNA-testing company 23andMe have failed in their efforts to represent a class in an arbitration proceeding against the company over false advertising claims. A judge in California has upheld a prior arbitrator’s decision that their case does not qualify for class categorization.

 

The dispute stems from a 2013 decision made by the Food and Drug Administration finding that 23andMe’s claims of the accuracy and effectiveness of their DNA testing was “dangerously misleading.” Specifically, the company had claimed that its genome-testing services would assist people in planning for serious diseases they would develop later in life. The FDA found no evidence that 23andMe’s testing could actually predict such diseases.

 

The two customers subsequently filed a class arbitration complaint with the American Arbitration Association (AAA). However, the arbitrator decided that the arbitration clause they had signed with 23andMe did not allow for class arbitration. The two customers fought this decision, taking the arbitrator’s ruling to the courts, but were unsuccessful as once again well-crafted language in an arbitration clause, legally and properly entered into, has been proven to be a permanent state of the agreement between two parties. In short, increasingly the courts are intolerant of claims of not understanding the implications of arbitration clauses as they are not rare or unusual any longer.

 

The initial arbitration, however, can continue and the two customers can still pursue damages. Other customers who feel similarly harmed can also pursue their own arbitrations.