A class action lawsuit filed against cannabis tech platform Eaze – a major player in the California marijuana delivery world – was dismissed by a federal judge, who ordered the plaintiff to enter into arbitration with the company.
U.S. District Court Judge James Donato dismissed the lawsuit brought by former Eaze customer Farrah Williams, after ruling that she had entered into a legally binding contract with the company that requires her to go through arbitration.
Williams filed suit against Eaze in May 2018, alleging the company had violated the federal Telephone Consumer Protection Act by sending her unsolicited text messages advertising cannabis sales.
According to court records, Eaze is also on the brink of finalizing a settlement agreement with another plaintiff, Kristine Lloyd, who filed suit with similar TCPA complaints to Williams’, in August 2018.
Eaze published the following press release
SAN FRANCISCO–(BUSINESS WIRE)–Eaze Technologies, Inc. today announced that it obtained a complete dismissal of Williams v. Eaze, Inc., a putative nationwide class action lawsuit brought under the Telephone Consumer Protection Act (“TCPA”), by successfully enforcing the arbitration agreement in its Terms of Service.
“The court correctly found that cannabis companies are not barred from forming and enforcing basic contracts, and that Eaze’s business is legal under California state law”
In her lawsuit, Plaintiff Farrah Williams, attempted to circumvent the arbitration agreement in Eaze’s Terms of Service by arguing that cannabis contracts cannot be “formed” because cannabis is illegal under federal law. The court rejected this claim, thus preserving the ability of cannabis businesses, operating where cannabis is legal under state law, to enter into and enforce basic contracts with customers, individuals, and other businesses.
“This ruling is enormously important for the entire industry, as contracts across California and nationally could have been invalidated had the court found for the Plaintiff,” said Andrea Lobato, Chief Risk Officer at Eaze. “We are pleased to have successfully defended the basic right of legal cannabis companies to enter into contracts.”
After substantial briefing and argument led by Boies Schiller Flexner partners, Albert Giang and Michael Roth, the district court concluded that a proper contract had been formed, delegated other disputes to the arbitrator, and dismissed Plaintiff’s nationwide class action. Specifically, while noting that the case raises interesting issues about “ganjapreneurship,” the Court concluded that Eaze’s business “is legal under California state law” and arbitration was required under the Federal Arbitration Act (“FAA”).
“The court correctly found that cannabis companies are not barred from forming and enforcing basic contracts, and that Eaze’s business is legal under California state law,” said Giang. This ruling sets an important precedent for California’s legal cannabis market, and more broadly for the legal cannabis industry in America.
Eaze, a cannabis marketplace, connects adult consumers with licensed dispensaries and products. We are on a mission to enhance safe access to legal cannabis, educate people about cannabis as a tool for wellness, and drive smart cannabis policies. Learn more at www.eaze.com.