California Court of Appeal Affirms the Right of California Consumers to Have Their Day In Court Against Road Runner

On September 28, 2022, a California appeals court dealt a significant blow to Road Runner’s latest effort to avoid defending against a class action lawsuit challenging Road Runner’s auto-renewal practices relating to its “VIP” loyalty program. The court of appeal affirmed denial of a motion to compel the case to arbitration. Road Runner must now face the class action claims in superior court.

The lawsuit alleges that Road Runner’s loyalty program violates California’s Automatic Renewal Law, Consumers Legal Remedies Act, and Unfair Competition Law by: (1) failing to disclose clearly and conspicuously the terms of its automatic renewal loyalty program before enrolling customers; (2) failing to first obtain customer affirmative consent before automatically charging renewal fees; and (3) failing to cancel memberships upon request.

Road Runner first failed to persuade the trial court to dismiss the case. Next, Road Runner settled with the named plaintiff in an effort to have the case go away. This tactic backfired when another class member stepped forward to continue the class action. Nearly a year after the lawsuit was filed, Road Runner moved to compel arbitration, hoping again to avoid the class claims and to get the case out of superior court. This move also failed. Road Runner argued the plaintiff had “imputed knowledge” of an arbitration provision buried in its loyalty program’s terms and conditions through his attorneys, and the plaintiff “implicitly consented” to the arbitration provision by not cancelling his membership using Road Runner’s preferred cancellation method. The superior court denied Road Runner’s motion.

The three-judge appellate panel agreed, emphatically rejecting Road Runner’s arguments and affirming the trial court’s ruling.

The case will soon be back before the trial court and the litigation will resume on a classwide basis.  Johnson Fistel, LLP and Blood Hurst & O’Reardon, LLP represent the plaintiff in the class action entitled Costa v. Road Runner, et al., San Diego Superior Court Case No. 37-2020-00017100.


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