Adobe juggles potential class actions in California over its terms of use

SAN JOSE, Calif. (CN) — A federal judge questioned Thursday whether a leading software company adequately informed its customers about an opt-out for annual subscription services, saying he couldn’t dismiss the case on perceived technicalities.

U.S. District Judge P. Casey Pitts considered Adobe attorney Douglas Winthrop’s arguments during a motion to dismiss hearing about how the plaintiff did not provide enough specifics about the initial problem and what steps were taken by the plaintiff to address it with Adobe before moving the issue into litigation.

“Before you file a notice, you have to contact customer service,” Winthrop said.

Adobe’s terms of service agreement are generally agreed to when a customer signs up for its design and photo editing services. Customers need to opt out of automatically renewed subscription services that the plaintiff argues are updated frequently and need to be consistently monitored, with the signee having to continually click the opt-out option.

Winthrop said litigating the case was a waste of judicial resources because on Tuesday, another judge in the same district dismissed a putative class action against Adobe with similar issues.

On March 31, U.S. Magistrate Judge Nathanael Cousins granted Adobe’s motion to dismiss with leave to amend in Marquez et al v. Adobe Inc., saying the plaintiffs “did not sufficiently allege that they complied with the term of service’s pre-litigation requirements.”

Because of Cousins’ ruling, Adobe requested a stay for the putative class action under Pitts, Foret v. Adobe Inc., until the Marquez case is completely resolved.

Pitts, a Joe Biden appointee, wasn’t convinced that two cases in the same court with the same defendant but different plaintiffs precluded a stay for the case that was filed second.

“I don’t see a reason to stay,” said Pitts. “The plaintiff is not splitting his claims, we don’t have a certified class, and I am unaware of a basis in law for doing that.”

Pitts pressed Winthrop about why Adobe decided against arbitration when a customer filed a complaint about its representation of the company’s terms of use, when arbitration was the path given to customers to resolve complaints based on its own terms of service. Winthrop implied that all the claims brought to Adobe about its subscription service were small, and to arbitrate all of them would be expensive. After declining arbitration, Adobe blamed the plaintiff for not filing in small claims court.

Plaintiff attorney Andrew Wolinsky said his client felt misled by Adobe’s terms of use and, under the California Consumers Legal Remedies Act, had a right to seek relief. He said he disagreed with the Marquez decision because Adobe’s terms of use are procedurally unconscionable.

Wolinsky also argued that the plaintiff didn’t file in small claims court because he was not obligated to, and to do so would disallow the plaintiff to appeal a decision or allow for a class action.

The two Northern District of California cases are an echo of a March $150 million settlement by Adobe with the Department of Justice over violations of the Restore Online Shoppers’ Confidence Act. The ruling concluded Adobe hid termination fees and intentionally made it difficult to cancel subscriptions. The case was initially filed in June 2024.

Pitts did not indicate when he would rule on Adobe’s motion to dismiss.