Adobe back on the hook over subscription plan terms

A federal judge breathed new life into a class action against Adobe after it continued to fight the lawsuit over subscription plan terms in court instead of through arbitration.SAN JOSE, Calif. (CN) — A federal judge revived a putative class action Wednesday against Abode over the renewal terms of the software company’s subscription plans, vacating his previous ruling to toss the case.U.S. Magistrate Judge Nathanael Cousins said Adobe waived its right to compel arbitration after it continued to fight the action in court.“After reconsideration, the court finds that defendant waived its right to compel arbitration as a whole and the opt-out provision did not prevent procedural unconscionability,” he wrote in his 29-page ruling.Procedural unconscionability is a legal defense that allows a court to refuse to enforce a contract if a party lacked a fair choice during its formation.On March 31, Cousins granted Adobe’s motion to dismiss with leave to amend, saying the plaintiffs “did not sufficiently allege that they complied with the term of service’s prelitigation requirements.”In his order, Cousins ruled that Adobe “held the power and knowledge” to compel arbitration but instead asked the court to decide if the class had fulfilled its prelitigation requirements, an action usually done by an arbitrator, and in doing so acted inconsistently and gave up its right to enforce its arbitration provision.Cousins vacated the March 31 dismissal and allowed users’ claims for conversion, unjust enrichment and negligent misrepresentation to survive, but the class can’t seek injunctive relief or disgorgement.Abode provides tiered subscription plans that automatically renew at the end of a subscription period. Users select a plan and enroll for services. One plan option called “annual, billed monthly” is characterized as a one-year commitment but doesn’t include information about early termination fees or subscription terms.If a user cancels after 14 days, they are charged a lump sum of 50% of the remaining contract with service only until the end of the month of cancellation. Users are only aware of this clause, explains Cousins, if they click a link during final checkout.“This is the first and only instance where the early termination fee is explicitly linked to the total contract value. The process for cancellation is designed to be confusing and frustrating,” he wrote.Cousins said users incurred financial harm due to the confusion, and paid unauthorized charges, unintended subscriptions and early termination fees, without the ability to cancel subscriptions.Attorneys for the class and Adobe did not immediately respond to requests for comment.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads