Barbara Knapke v. Peopleconnect, Inc. ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BARBARA KNAPKE, No. 21-35690
Plaintiff-Appellee,
D.C. No.
v. 2:21-cv-00262-MJP
PEOPLECONNECT, INC.,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted May 18, 2022
Seattle, Washington
Filed June 29, 2022
Before: Kim McLane Wardlaw, Ronald M. Gould, and
Mark J. Bennett, Circuit Judges.
Opinion by Judge Bennett
2 KNAPKE V. PEOPLECONNECT
SUMMARY *
Choice of Law / Arbitration
The panel vacated the district court’s denial of a motion
to compel arbitration in an action involving a right of
publicity claim against PeopleConnect, LLC under Ohio
law.
Plaintiff Barbara Knapke claimed that PeopleConnect
used her name and likeness in its Classmates.com school
yearbook database without her consent. Knapke retained an
attorney, Christopher Reilly, who created a Classmates.com
account and searched for Knapke on the site. In creating the
account, Reilly agreed to the Terms of Service, which
contained an arbitration provision. Applying Ohio law, the
district court denied PeopleConnect’s motion to compel
arbitration, holding that there was no evidence that Knapke
gave her counsel authority to bind her to the Terms of
Service containing the arbitration provision.
The panel held that the district court erred in applying
Ohio law because Washington law governed the threshold
question of arbitrability. Here, because no conflict was
shown to exist between the law of Washington (the forum
state) and Ohio law, Washington law applied.
The panel held that on the record before the district court,
questions of fact precluded ruling on the motion to compel
arbitration. These questions of fact included: whether
Knapke and Reilly had an agency relationship when Reilly
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
KNAPKE V. PEOPLECONNECT 3
agreed to the Terms of Service; if they did have an agency
relationship, whether and how Knapke limited Reilly’s
authority as her agent; and whether Knapke ratified Reilly’s
agreement to arbitrate even if Reilly initially lacked
authority to bind her to the agreement. The panel rejected
Knapke’s contention that Fed. R. Civ. P. 11 obligations
affected Reilly’s use of the Classmates.com account. The
panel held further that PeopleConnect had a right to conduct
discovery on these and related arbitrability issues before the
district court decides the motion to compel arbitration. The
panel remanded for further proceedings.
COUNSEL
Ian Heath Gershengorn (argued) and Illyana A. Green,
Jenner & Block LLP, Washington, D.C.; Clifford W.
Berlow, Debbie L. Berman, and Wade A. Thomson, Jenner
& Block LLP, Chicago, Illinois; Brent Caslin, Jenner &
Block LLP, Los Angeles, California; for Defendant-
Appellant.
Roger Perlstadt (argued), Ryan D. Andrews, and Ben
Thomassen, Edelson PC, Chicago, Illinois; Philip L.
Fraietta, Bursor & Fisher P.A., New York, New York; for
Plaintiff-Appellee.
4 KNAPKE V. PEOPLECONNECT
OPINION
BENNETT, Circuit Judge:
Barbara Knapke claims that PeopleConnect, Inc. uses
her name and likeness in its Classmates.com school
yearbook database without her consent. Knapke, an Ohio
resident, wanted to pursue an individual and class action
right of publicity claim against PeopleConnect under Ohio
law. Knapke retained an attorney, Christopher Reilly, but
the record does not reflect when she retained him. Reilly
created a Classmates.com account and searched for Knapke
on the site. By creating the account, Reilly agreed to the
site’s Terms of Service, which contained an arbitration
provision. Knapke eventually filed suit in the U.S. District
Court for the Western District of Washington, represented
by Reilly and his law firm. PeopleConnect sought to compel
arbitration through a motion to dismiss 1 and alternatively
asked for the right to conduct arbitration-related discovery.
Applying Ohio law, the district court denied the motion,
holding that there was no evidence that Knapke gave her
counsel authority to bind her to the Terms of Service
containing the arbitration provision. The district court also
denied discovery.
The district court erred. First, Washington law, not Ohio
law, governs the threshold question of arbitrability. And
second, on the record before the district court, questions of
fact precluded ruling on the motion to compel arbitration.
These questions of fact include whether Knapke and Reilly
had an agency relationship when Reilly agreed to the Terms
of Service; if they did have an agency relationship, whether
1
We follow the parties’ lead in referring to the motion to dismiss as
a motion to compel arbitration.
KNAPKE V. PEOPLECONNECT 5
and how Knapke limited Reilly’s authority as her agent; and
whether Knapke ratified Reilly’s agreement to arbitrate even
if Reilly initially lacked authority to bind her to the
agreement. PeopleConnect has a right to conduct discovery
on these and related arbitrability issues before the district
court decides the motion to compel arbitration. We have
jurisdiction under 9 U.S.C. § 16(a)(1), and we vacate the
district court’s denial of the motion to compel arbitration and
remand for further proceedings.
I. BACKGROUND
PeopleConnect, Inc., a Delaware corporation with its
principal place of business in Seattle, Washington, owns and
operates Classmates.com, an online library of more than
450,000 yearbooks. Although any Classmates.com user
may access some of that library, a user must register for
either a free or paid account to access most of it. To register,
a user must agree, by clicking “Submit”, to hyperlinked
Terms of Service and a privacy policy. The Terms of
Service contain an arbitration provision. The arbitration
provision covers, with almost no exceptions, “any and all
disputes that have arisen or may arise” between the user and
an array of PeopleConnect entities. The Terms of Service
also allow a user to “opt-out and not be bound by [the]
arbitration provision by sending written notice of [the]
decision to opt-out” within thirty days.
Knapke lives in Sidney, Ohio. Her class action
complaint is based on Classmates.com’s use of her and other
Ohioans’ names and likenesses to advertise its products
without their consent in violation of Ohio’s right to publicity
statute. The complaint included screenshots from parts of
Classmates.com accessible only to a user who had first
agreed to the Terms of Service. Some screenshots show that
a user named “Christopher” was logged into a
6 KNAPKE V. PEOPLECONNECT
Classmates.com account when the screens captured in the
screenshots were displayed. And PeopleConnect confirmed
that Christopher Reilly, Knapke’s attorney, created a
Classmates.com account on January 7, 2021, and purchased
a three-month subscription on January 29, 2021. Reilly
could not have done either without first agreeing to the
Classmates.com Terms of Service.
PeopleConnect moved to compel arbitration, arguing
that the arbitration clause covered this dispute.
PeopleConnect argued that Knapke was bound by the
arbitration clause because her counsel, Reilly, had agreed to
the Terms of Service (which include the arbitration
provision) while acting as her agent. PeopleConnect’s
Associate Director of Compliance and Intellectual Property
declared that users must agree to the Terms of Service before
accessing the results of a Classmates.com search or
registering for either a free or paid account. PeopleConnect
also asserted that Reilly was Knapke’s attorney and agent,
but it did not offer evidence that Knapke had either retained
or otherwise given authority to Reilly when he agreed to the
Terms of Service. PeopleConnect stated, as well, that if the
district court denied its motion, it wished to engage in
limited discovery about Knapke’s “knowledge of and
acquiescence to counsel’s use of Classmates.com on her
behalf” and “the identity of the person who took the
screenshots that appear in the complaint.”
Knapke argued that she had no relationship with
PeopleConnect and that Reilly’s agreement to the
Classmates.com Terms of Service did not bind her. Knapke
maintained that she had never been a Classmates.com
customer, had never seen the arbitration agreement, and that
the “hidden” nature of the clause within the “several
thousand-word” Terms of Service accessible via hyperlink
KNAPKE V. PEOPLECONNECT 7
rendered the clause “irrelevant” regardless. Knapke also
argued that her counsel created the account to satisfy his
obligations under Federal Rule of Civil Procedure 11(b); in
her view, “the failure . . . to check if a plaintiff’s identity was
in fact publicized by the website would likely draw . . .
sanctions.” And Knapke claimed that PeopleConnect’s
attempt to bind her to the arbitration clause was
“extraordinary overreach” because it would allow websites
to force every plaintiff into arbitration. Knapke also argued
that her counsel could not have bound her to the Terms of
Service because the Terms forbid the creation of accounts on
behalf of another person and that estoppel does not compel
her, as a nonsignatory, to arbitrate her claims because she
did not knowingly accept any benefit from PeopleConnect.
And Knapke maintained that her counsel did not discuss
creating a Classmates.com account with her—and that the
discussions they did have were privileged.
The district court denied PeopleConnect’s motion to
compel arbitration. 2 See Knapke v. PeopleConnect Inc.,
553 F. Supp. 3d 865 (W.D. Wash. 2021). The district court
applied Ohio law “because Knapke resides in Ohio and Ohio
law should apply to interpreting any attorney-client
relationship that she entered into from her domicile.” Id.
at 872. It rejected PeopleConnect’s argument that Reilly’s
agreement to the Terms of Service bound Knapke. Id.at 872–74. The district court also found there was “no
evidence that Knapke gave her counsel any authority to bind
2
PeopleConnect also argued that Knapke’s claim was: (i) barred by
Section 230, a provision of the Communications Decency Act;
(ii) preempted by Section 301 of the Copyright Act; (iii) insufficient to
state a claim under the Ohio right of publicity statute; (iv) barred by the
First Amendment; and (v) barred by the Dormant Commerce Clause.
The district court rejected each of these arguments, and these issues are
not before us on appeal.
8 KNAPKE V. PEOPLECONNECT
her to Classmates’ terms of service.” Id. at 873. It found no
evidence that Reilly acted at Knapke’s direction or that
Classmates.com understood counsel’s actions to have been
undertaken on Knapke’s behalf. Id. And it found both that
Knapke did not discuss creating a Classmates.com account
with Reilly and that the Terms of Service forbade the
creation of accounts on behalf of others. Id.The district court also found that Reilly created and used
the Classmates.com account to satisfy his Rule 11
obligations. Id. And the district court rejected
PeopleConnect’s request for discovery because, in its view,
Knapke had disclosed in her opposition both the extent of
her knowledge of and acquiescence to Reilly’s use of the
account and the identity of the person who took the
screenshots used in the complaint (Reilly). Id. at 874.
PeopleConnect timely appealed.
II. STANDARD OF REVIEW
We review an order denying a motion to compel
arbitration de novo, questions of arbitrability “with a healthy
regard for the federal policy favoring arbitration,” and any
underlying factual findings for clear error. O’Connor v.
Uber Techs., Inc., 904 F.3d 1087, 1093 (9th Cir. 2018)
(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24 (1983)).
III. DISCUSSION
The Federal Arbitration Act (“FAA”) “governs the
enforceability of arbitration agreements in contracts
involving interstate commerce.” Kramer v. Toyota Motor
Corp., 705 F.3d 1122, 1126 (9th Cir. 2013). Under the FAA,
private agreements to arbitrate are “valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
KNAPKE V. PEOPLECONNECT 9
equity for the revocation of any contract.” 9 U.S.C. § 2.
“The question whether the parties have submitted a
particular dispute to arbitration, i.e., the question of
arbitrability, is an issue for judicial determination unless the
parties clearly and unmistakably provide otherwise.”
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
(2002) (cleaned up). “Generally, a court must determine two
issues before deciding whether to compel arbitration:
(1) whether there is an agreement to arbitrate between the
parties; and (2) whether the agreement covers the dispute.”
Zoller v. GCA Advisors, LLC, 993 F.3d 1198, 1201 (9th Cir.
2021). Knapke does not dispute that the arbitration clause
covers her claim. The question is thus whether Knapke
agreed to arbitrate with PeopleConnect.
The FAA “supplies not simply a procedural framework
applicable in federal courts; it also calls for the application,
in state as well as federal courts, of federal substantive law
regarding arbitration.” Preston v. Ferrer, 552 U.S. 346, 349
(2008). “As federal substantive law, the FAA preempts
contrary state law.” Mortensen v. Bresnan Commc’ns, LLC,
722 F.3d 1151, 1158 (9th Cir. 2013). And under the FAA’s
procedural framework, “[i]f the making of the arbitration
agreement . . . be in issue, the court shall proceed summarily
to the trial thereof.” 9 U.S.C. § 4. “In applying this
language, district courts rely on the summary judgment
standard of Rule 56 of the Federal Rules of Civil Procedure.”
Hansen v. LMB Mortg. Servs., Inc., 1 F.4th 667, 670 (9th
Cir. 2021). As a result, “a court is not authorized to dispose
of a motion to compel arbitration until after [material]
factual disputes have been resolved.” Id. at 671.
At summary judgment, if a court “concludes that there
are genuine disputes of material fact as to whether the parties
formed an arbitration agreement, the court must proceed
10 KNAPKE V. PEOPLECONNECT
without delay to a trial on arbitrability and hold any motion
to compel arbitration in abeyance until the factual issues
have been resolved.” Id. at 672. “The district court may
decide the case in a bench trial if the party opposing
arbitration does not demand a jury trial. But if a jury trial is
demanded, ‘the court shall make an order referring the issue
or issues to a jury in the manner provided by the Federal
Rules of Civil Procedure, or may specially call a jury for that
purpose.’” Id. at 670 (quoting 9 U.S.C. § 4).
Because the FAA does not “alter background principles
of state contract law regarding the scope of agreements
(including the question of who is bound by them),” state law
governs this inquiry. Arthur Andersen LLP v. Carlisle,
556 U.S. 624, 630 (2009). Knapke’s status as a nonsignatory
to the arbitration agreement does not alter the applicability
of state law. See GE Energy Power Conversion France SAS,
Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637,
1643 (2020) (“Chapter 1 of the Federal Arbitration Act
(FAA) permits courts to apply state-law doctrines related to
the enforcement of arbitration agreements.”); see also
O’Hanlon v. Uber Techs., Inc., 990 F.3d 757, 766 (3d Cir.
2021) (“Those background principles include ‘doctrines
[like estoppel] that authorize the enforcement of a contract
[against] a nonsignatory.’” (alterations in original) (quoting
GE Energy, 140 S. Ct. at 1643)); 21 Richard A. Lord,
Williston on Contracts § 57:19 (4th ed. May 2022 Update)
(“Thus, a nonsignatory may acquire rights under or be bound
by an arbitration agreement if so dictated by the ordinary
principles of contract and agency.” (footnotes omitted)).
PeopleConnect, “as the party seeking to compel
arbitration, must prove the existence of a valid agreement by
a preponderance of the evidence.” Wilson v. Huuuge, Inc.,
944 F.3d 1212, 1219 (9th Cir. 2019). It has not proven the
KNAPKE V. PEOPLECONNECT 11
existence of such an arbitration agreement binding Knapke
at this initial stage.
A. Choice of Law
The district court erred in its choice-of-law analysis by
applying Ohio law, Knapke argued that Ohio law applied,
and PeopleConnect argued that Washington law applied, but
neither claimed that the choice of law would affect the
outcome. However, both parties now agree that Washington
law applies. District courts sitting in diversity apply the
choice-of-law rules of the forum state. See Lazar v.
Kroncke, 862 F.3d 1186, 1194 (9th Cir. 2017). And
Washington, the forum state, employs the “most significant
relationship test” to determine choice-of-law questions.
FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp.
Holdings, Inc., 331 P.3d 29, 36 (Wash. 2014) (citing
Restatement (Second) of Conflict of Laws §§ 145, 148
(1971)). But before courts apply that test, “[a]n actual
conflict between the law of Washington and the law of
another state must be shown to exist.” Burnside v. Simpson
Paper Co., 864 P.2d 937, 942 (Wash. 1994). “Absent such
a showing, the forum may apply its own law.” Id. Here,
because no conflict has been shown to exist between
Washington and Ohio law, Washington law applies.
B. Arbitration Agreement
The record does not establish whether Reilly was
Knapke’s attorney when he agreed to the Classmates.com
Terms of Service. But even if the record showed that Reilly
agreed to the Terms of Service after Knapke retained him,
that would not be enough, on its own, to show that the
arbitration clause binds Knapke.
12 KNAPKE V. PEOPLECONNECT
1. Agency Relationship
It is unclear whether Reilly and Knapke had an attorney-
client relationship, and thus an agent-principal relationship,
when Reilly agreed to the Terms of Service. See West v.
Thurston County, 275 P.3d 1200, 1212 (Wash. Ct. App.
2012) (“We recognize that the attorney-client relationship is
generally a type of principal-agent relationship.”). 3 Under
Washington law, “[t]he burden of establishing an agency
relationship is on the party asserting it exists”—here,
PeopleConnect. Afoa v. Port of Seattle, 421 P.3d 903, 911
(Wash. 2018).
The record does not show when Knapke and Reilly
formed their agency relationship. Reilly did become
Knapke’s attorney at some point. But it is unclear if that
happened before Reilly initially registered for his
Classmates.com account, or if not, before he bought his
three-month subscription. The screenshots discussed above
are evidence of Reilly’s assent to the arbitration agreement.
See Tompkins v. 23andMe, Inc., No. 5:13-CV-05682-LHK,
2014 WL 2903752, at *7 (N.D. Cal. June 25, 2014) (access
to portions of website requiring assent to Terms of Service
is sufficient evidence of assent to arbitration clause
contained in it), aff’d, 840 F.3d 1016 (9th Cir. 2016). But
the record does not establish when Reilly became Knapke’s
agent, whether as her attorney or otherwise. As discussed
below, this issue might be material to determining whether
3
Knapke need not have formally retained Reilly’s law firm by that
time for an agency relationship to have formed. “Consent [to an agency
relationship] may be implied,” and there need only be “facts or
circumstances that establish that one person is acting at the instance of
and in some material degree under the direction and control of the other.”
Wash. Imaging Servs., LLC v. Wash. State Dep’t of Revenue, 252 P.3d
885, 892 (Wash. 2011) (internal quotation marks omitted).
KNAPKE V. PEOPLECONNECT 13
Knapke is bound by Reilly’s agreement to the Terms of
Service. We thus remand for discovery on this issue.
Knapke focuses on PeopleConnect’s decision not to take
discovery on this issue before moving to compel arbitration.
Instead, PeopleConnect noted in its motion that if the district
court did not grant its motion, it requested leave to engage in
limited discovery about the agency relationship. So,
according to Knapke, PeopleConnect “wanted it both
ways—if it won the motion to compel, great; if it didn’t win,
only then did it want discovery. Although [PeopleConnect]
had the burden to present evidence [of an agreement to
arbitrate], it rolled the dice and chose not to pursue
additional discovery at the outset.” Appellee’s Br. 16
(quoting Wilson, 944 F.3d at 1220). But the defendant in
Wilson “waived its discovery request as it was insufficiently
raised in a two-line footnote in a reply brief.” 944 F.3d
at 1220. Here, PeopleConnect conditionally, and
sufficiently, requested discovery in its motion to compel.
Nothing required PeopleConnect to seek discovery first, and
the district court never found (nor could it have) that
PeopleConnect waived taking discovery. And since Wilson,
we have confirmed that the FAA’s procedure mirrors the
three phases of federal civil lawsuits: a motion to compel
arbitration akin to a motion to dismiss; followed by optional
discovery before summary judgment, if the motion is denied;
followed by a mini-trial, if necessary. See Hansen, 1 F.4th
at 670.
2. Binding Effect
Because of a factual dispute about the scope of Reilly’s
authority, the record does not allow a determination of
whether Knapke is bound to the arbitration through Reilly’s
assent. Under Washington law, “[a]rbitration agreements
may encompass nonsignatories under contract and agency
14 KNAPKE V. PEOPLECONNECT
principles.” Romney v. Franciscan Med. Grp., 349 P.3d 32,
42 (Wash. Ct. App. 2015). Washington also recognizes
various theories under which a nonsignatory may be bound
by a contract, including agency. Satomi Owners Ass’n v.
Satomi, LLC, 225 P.3d 213, 230 n.22 (Wash. 2009). “An
agency relationship may exist, either expressly or by
implication, when one party acts at the instance of and, in
some material degree, under the direction and control of
another.” Hewson Constr., Inc. v. Reintree Corp., 685 P.2d
1062, 1064 (Wash. 1984). And an agent may bind a
principal through either actual authority (express or implied)
or apparent authority. King v. Riveland, 886 P.2d 160, 165
(Wash. 1994).
A principal may also be bound by contracts her agent
makes without authority if the principal later ratifies the
agent’s agreement. Bill McCurley Chevrolet, Inc. v. Rutz,
808 P.2d 1167, 1170 (Wash. Ct. App. 1991). “A principal
ratifies an agent’s agreement if the principal (1) receives,
accepts, and retains benefits from the contract; (2) remains
silent or fails to repudiate the contract; or (3) otherwise
exhibits conduct demonstrating adoption and recognition of
the contract.” Hoglund v. Meeks, 170 P.3d 37, 46 n.7 (Wash.
Ct. App. 2007).
Under both implied actual authority and ratification, it is
unclear if Reilly’s agreement to the arbitration provision
binds Knapke, even if Reilly were Knapke’s attorney when
he agreed. Knapke’s status as an undisclosed principal when
Reilly was her agent does not alter the application of
Washington agency law here. Nor does Reilly’s obligation
under Federal Rule of Civil Procedure 11 to adequately
investigate Knapke’s claim.
KNAPKE V. PEOPLECONNECT 15
a. Implied Actual Authority
The parties dispute whether Reilly had implied actual
authority to agree to the Classmates.com Terms of Service
on Knapke’s behalf. Under Washington law, “[i]mplied
authority is actual authority, circumstantially proved, which
the principal is deemed to have actually intended the agent
to possess.” King, 886 P.2d at 165. And “actual authority
to perform certain services on a principal’s behalf results in
implied authority to perform the usual and necessary acts
associated with the authorized services.” Hoglund, 170 P.3d
at 44. Such usual and necessary acts can include agreeing to
contracts. See, e.g., Chi. Title Ins. Co. v. Wash. State Off. of
Ins. Comm’r, 309 P.3d 372, 382 (Wash. 2013). Attorneys
licensed in Washington also possess the same implied
authority to act on behalf of their clients. See Wash. R. of
Prof’l Conduct 1.2(a) (“A lawyer may take such action on
behalf of the client as is impliedly authorized to carry out the
representation.”).
At some point, Knapke retained Reilly and his law firm
to file suit against PeopleConnect based on
Classmates.com’s alleged unauthorized use of her image.
But the scope of both their agreement and Reilly’s
corresponding authority are unclear on this record. Knapke
now argues that she retained Reilly’s law firm not “to enter
into the PeopleConnect Terms of Service,” but only “to
investigate and file a lawsuit.” Appellee’s Br. 21. But
Knapke filed no declaration, and Reilly’s declaration does
not discuss this issue. Discovery could reveal, among other
things, both the contours of Knapke’s agreement with
Reilly’s law firm and the limits, if any, on Reilly’s authority
to act on Knapke’s behalf.
Knapke’s memorandum in opposition to the motion to
compel stated that counsel had no discussion with Knapke
16 KNAPKE V. PEOPLECONNECT
about creating an account on Classmates.com. But this
statement is unsupported by any declaration. Knapke’s
memorandum also states that counsel’s discussions with
Knapke are protected by privilege and that counsel’s
representations regarding things they did not discuss do not
operate as a waiver of the privilege on any subject. The
district court rejected PeopleConnect’s request for
“discovery to learn about Knapke’s knowledge and
acquiescence to counsel’s use of the account” because
“[t]hat information ha[d] already been provided in the
Opposition, rendering the requested discovery a nullity.”
Knapke, 553 F. Supp. 3d at 874. But that information, if it
was provided, was not provided in a declaration.
PeopleConnect is entitled to discovery in these areas and
need not accept at face value the statements Knapke’s
counsel made in a memorandum of law.
On remand, the district court should determine the
contours of the attorney-client privilege and any potential
waiver of that privilege. The district court should also
determine the consequences, if any, of Knapke
simultaneously denying an agency relationship regarding the
arbitration agreement and asserting a privilege for
communications that would bear directly on that issue. See
5A Karl B. Tegland, Wash. Prac., Evidence Law and
Practice § 501.26 (6th ed. Aug. 2021 Update) (“A party
waives the privilege by placing confidential
communications at issue, i.e., by raising an issue as to
whether confidential communications did or did not occur.
Waivers have occasionally been found when the intent of a
contract or other document was placed in issue.” (footnote
omitted)); 1 Paul R. Rice et al., Attorney-Client Privilege:
State Law Wash. § 9:30 (July 2020 Update) (“Consistent
with federal law, Washington courts will not allow the
attorney-client privilege to be used as both a sword and a
KNAPKE V. PEOPLECONNECT 17
shield” and “will not permit selective disclosure of parts of
privileged communications that are favorable to the client’s
position and then raise the privilege to prevent disclosure of
the remaining portions that give context and meaning to
what the client has disclosed.”).
b. Ratification
On this record, it is also unclear if Knapke is bound
because she ratified Reilly’s agreement to the Terms of
Service, even if she would not otherwise be bound. In its
motion to compel arbitration, PeopleConnect noted in
conditionally requesting discovery that it would ask about
Knapke’s “knowledge of and acquiescence to [Reilly’s] use
of Classmates.com on her behalf.” Acquiescence is one
method of ratification. Barnes v. Treece, 549 P.2d 1152,
1157 (Wash. Ct. App. 1976). “Under agency law,
ratification is the affirmance by a person of a prior act which
did not bind him but which was done or professedly done on
his account, whereby the act, as to some or all persons, is
given effect as if originally authorized by him.” Riss v.
Angel, 934 P.2d 669, 683 (Wash. 1997) (cleaned up).
Principals can ratify an agent’s agreement in three ways:
(1) by receiving, accepting, and retaining benefits from the
contract; (2) by remaining silent, acquiescing, or failing to
repudiate the contract; or (3) by otherwise exhibiting
conduct demonstrating adoption and recognition of the
contract. Hoglund, 170 P.3d at 46 n.7; Barnes, 549 P.2d at
1157. Ratification by silence or acquiescence requires
knowledge and either “acceptance of the benefits from the
contract or prejudicial reliance by the other party.”
Lockwood v. Wolf Corp., 629 F.2d 603, 609 (9th Cir. 1980)
(citing Barnes, 549 P.2d at 1157).
The record does not establish whether Knapke knew that
Reilly had agreed to the Terms of Service on her behalf.
18 KNAPKE V. PEOPLECONNECT
There is no evidence that Knapke knew, when she filed her
complaint, that Reilly had even agreed to the Terms of
Service. And were that still the state of the record following
discovery, it would follow that there could be no evidence
that Knapke knew that Reilly had agreed to the Terms of
Service on her behalf. But the ratification inquiry looks not
only to the principal’s knowledge, but also to the principal’s
later actions.
PeopleConnect argues that Knapke learned of Reilly’s
agreement at the latest when PeopleConnect argued in its
motion to compel arbitration that Reilly agreed to the Terms
of Service. And as PeopleConnect notes, in her opposition,
Knapke did not renounce Reilly’s agreement and employed
materials that Reilly had obtained for her benefit through his
agreeing to the Terms of Service. “Ratification can be
inferred from the principal’s silence if the circumstances are
such that, according to the ordinary experience and habits of
men, one would naturally be expected to speak if he did not
consent.” Smith v. Hansen, Hansen & Johnson, Inc.,
818 P.2d 1127, 1135 (Wash. Ct. App. 1991) (cleaned up).
But the record does not establish the facts necessary to
decide this issue, including what Knapke knew and when she
knew it. Knapke’s supposed silence even after
PeopleConnect moved to compel arbitration does not
necessitate a finding of ratification on the current record.
Thus, PeopleConnect is also entitled to discovery on
ratification.
c. Undisclosed Principal Status
Knapke’s status as a possible undisclosed principal does
not alone determine whether she is bound by Reilly’s
agreement. Under Washington law, “where an agent on
behalf of his principal enters into a simple contract as though
made for himself, and the existence of the principal is not
KNAPKE V. PEOPLECONNECT 19
disclosed, the contract inures to the benefit of the principal
who may appear and hold the other party to the contract
made by the agent.” Dana v. Boren, 135 P.3d 963, 965
(Wash. Ct. App. 2006) (quoting Columbia Sec. Co. v. Aetna
Accident & Liab. Co., 183 P. 137, 141 (Wash. 1919)). If the
principal “appear[s] and claim[s] the benefit of the contract,”
then the contract “becomes [her] own to the same extent as
if [her] name had originally appeared as a contracting party.”
Id. (quoting Columbia, 183 P. at 141).
Knapke argues that Reilly did not intend to agree to the
Terms of Service on her behalf, and so as an undisclosed
principal, she is not bound. But “[a]n undisclosed principal
only becomes a party to a contract when an agent acts on the
principal’s behalf in making the contract. Thus, an
undisclosed principal does not become a party to a contract
when the agent does not intend to act for the principal.”
Restatement (Third) of Agency § 6.03 cmt. c (2006). Cf.
Kim v. Moffett, 234 P.3d 279, 284 n.10 & 287 (Wash. Ct.
App. 2010) (citing § 6.03 cmts. d & e when assessing
Washington law). The question is thus whether Reilly acted
on Knapke’s behalf in agreeing to the Classmates.com
Terms of Service, not, as Knapke argues, whether Reilly
intended to bind her. Further factual development is
necessary to answer this question.
d. Federal Rule of Civil Procedure 11
Federal Rule of Civil Procedure 11 requires attorneys to
make a reasonable prefiling inquiry into the facts and law
supporting intended claims. See Fed. R. Civ. P. 11(b).
Knapke argues that “one, if not the primary, use of the
Classmates.com account by Mr. Reilly was to satisfy his
obligations under Civil Rule 11.” First, nothing in Reilly’s
declaration supports that proposition or even discusses
Rule 11. And second, while Reilly’s motivations could
20 KNAPKE V. PEOPLECONNECT
perhaps inform whether he agreed to the Terms of Service
on Knapke’s behalf, that issue, while relevant, is not
necessarily determinative. Moreover, Reilly’s obligation
under Rule 11 to adequately investigate Knapke’s claim does
not alter the application of Washington agency law.
Rule 11 cannot explain Reilly’s choice not to opt out of
arbitration, either. Under the Terms of Service, users may
opt out of arbitration through written notice within thirty
days of first using Classmates.com. Reilly could have
satisfied his Rule 11 obligation by creating his
Classmates.com account and then opting out of arbitration to
retain the right to judicial recourse. He simply did not do so.
IV. CONCLUSION
VACATED and REMANDED on an open record. 4
The parties shall bear their own costs.
4
The parties make various waiver claims. For example,
PeopleConnect claims that Knapke waived any argument about the
timing of the formation of her agency relationship with Reilly. And
Knapke claims that PeopleConnect waived its ratification argument. On
remand, the district court should consider all relevant arguments,
irrespective of any initial waiver.