Three mothers and their minor children sued IXL Learning, an educational technology company, alleging the company collected and monetized their children's data without consent. IXL moved to compel arbitration based on an arbitration clause in its Terms of Service. While IXL had shared these Terms with the school districts, there was no evidence the parents had seen or expressly consented to them. The district court denied the motion, finding that IXL failed to prove the parents had agreed to arbitrate. IXL appealed, arguing that the schools acted as agents for the parents and that the parents had ratified the terms by continuing to use the software.
The Ninth Circuit applied the Federal Arbitration Act, noting that the party seeking arbitration bears the burden of proving an agreement exists by a preponderance of the evidence. The court first addressed IXL's argument that school districts were agents of the parents. Under California law, a defendant cannot prove agency by relying solely on the agent's own representations. The court found that the Terms stated schools had authority to consent to data collection, but this did not extend to binding parents to arbitration. The court also rejected the argument that the Children's Online Privacy Protection Act (COPPA) created a presumptive agency relationship. The court noted that the FTC's guidance allows operators to presume schools have obtained parental consent for data collection, but does not establish that schools are legal agents for all purposes, including arbitration. The court then reversed the district court's allocation of the burden of proof regarding mutual assent. The district court had required IXL to prove that the parents' continued use of the software was voluntary. The Ninth Circuit held that under California law, the burden is on the parents to prove their acceptance was involuntary. The court explained that legal compulsion to attend school does not invalidate mutual assent to a contract, and Kansas law does not mandate the use of IXL products specifically. Therefore, the district court erred in placing the burden on IXL.
The case is remanded to the district court for a trial on arbitrability. The district court must now determine whether each parent validly ratified the Terms of Service, including the arbitration clause, by continuing to use IXL's services after learning of them. The court will permit discovery on when parents became aware of the Terms, whether the version they saw contained an arbitration clause, and whether their continued use was voluntary. This shifts the litigation focus from a summary judgment denial to a factual inquiry into the parents' knowledge and actions.
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