Parents May Be Tied by Arbitration Term Agreed to by School

Wednesday, April 15, 2026

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Ninth Circuit:

Parents May Be Tied by Arbitration Term Agreed to by School

By Kimber Cooley, associate editor

The Ninth U.S. Circuit Court of Appeals has reversed an order denying a request to compel arbitration made by a Silicon Valley-based educational technology company accused in a putative class action filed by three mothers and their children of monetizing data collected from the minors, who utilized the organization’s online learning services as part of their public school curriculum, in violation of California and federal law.

Declaring that “the district court misallocated the burden of proof on mutual assent,” a panel opined, in Monday’s memorandum decision, that the plaintiffs must establish that they did not voluntarily accept the benefit of the use of the company’s services, within the meaning of a California law providing that such acceptance binds them to all known obligations, even if they were not parties to the transaction containing the arbitration agreement.

At issue is Civil Code §1589, which specifies:

“A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.”

The panel, consisting of Circuit Judges Ronald M. Gould, Jacqueline H. Nguyen, and Mark J. Bennett, agreed with the trial judge that the schools that selected the provider were not authorized to act as the parents’ agent as to the arbitration agreement but said that the jurist erred by requiring the company to show that the plaintiffs’ alleged continued use of the program, after being made aware of the terms containing the arbitration provision, was voluntary.

Remarking that “[n]o California court has addressed which party has the burden to prove voluntariness under Section 1589,” the panel said:

“[R]elevant cases suggest that the California Supreme Court would likely allocate to Plaintiffs the burden to prove that their acceptance of the benefit was not voluntary.”

Putative Class Action

The question arose after Gretchen Shanahan, Amy Warren, and Kimberly Whitman of Kansas filed the putative class action complaint on behalf of themselves and their minor children against education services provider IXL Learning Inc., which is headquartered in San Mateo and offers online learning tools, in May 2024.

They assert violations of the Federal Wiretap Act as well as California’s Invasion of Privacy Act and Comprehensive Computer Data Access and Fraud Act, among other state laws.

Alleging in the operative pleading that the public schools attended by their children have incorporated the defendant’s software into the curriculum and that the company “has built a multibillion-dollar empire by monetizing vast troves of personal information that it has taken from students and their parents without their knowledge or consent,” they said:

“IXL markets itself as an education technology company, but its core business is collecting…information…and exploiting that information for profit. IXL surveils its users by extracting information through an ever-growing suite of digital technology products….[and] provides that information to its customers, among which are schools and school districts, but also a host of private companies.”

Profiles on Children

Adding that “IXL and its customers convert that information into…detailed profiles on children,” they alleged:

“Simply put, school may not come with a clickwrap agreement. By sending their children to school as the law requires, parents do not surrender their authority to decide what personal information may be collected about their children and themselves and how that information may be used.”

IXL filed a motion to compel arbitration in July 2024, citing a provision in the terms of service requiring users to arbitrate “any claim, dispute, or controversy…arising out of or in connection with or relating to this [contract]” and arguing that the school districts’ agreement to the condition is binding on the parents of the system’s students.

In November 2024, District Court Judge Rita L. Lin of the Northern District of California denied the motion, rejecting the company’s assertion that the school districts act as agents of parents when contracting with educational vendors and saying:

“IXL also argues that Plaintiffs have ratified the arbitration agreements by being aware of IXL’s terms of use and allowing their children to continue to attend public schools where the use of IXL tools is allegedly a mandatory part of the curriculum. IXL, however, fails its burden to demonstrate that the continued use of those tools was voluntary….”

Presumptive Agency Relationship

IXL argued that the Children’s Online Privacy Protection Act (“COPPA”), codified at 15 U.S.C. §6502, creates a presumptive agency relationship between the schools and the parents, such that the schools could consent to arbitrate on the plaintiffs’ behalf. COPPA makes it unlawful for the operator of an “online service directed to children” to “collect personal information” in a manner that violates federal regulations.

One such regulation (referred to in the opinion as the “COPPA Rule”) defines “[o]btaining verifiable consent” as “making reasonable effort[s]” to ensure that parents are given notice of any data-mining operations that target their children.

IXL pointed to a statement by the Federal Trade Commission that accompanied the agency’s promulgation of the COPPA Rule, which says that “where an operator is authorized by a school to collect personal information from children,…the operator can presume that the school’s authorization is based on the school’s having obtained the parent’s consent.”

Saying that “[n]othing in the text of COPPA or of the [accompanying regulations] even suggests (much less establishes) that operators may treat schools as parents’ agents for the purpose of obtaining verifiable parental consent to arbitrate,” Gould, Nguyen, and Bennett remarked:

“[E]ven if the Statement did purport to establish an agency relationship between schools and parents, it would be an unreasonable interpretation not entitled to deference.”

Voluntary Acceptance

Turning to Lin’s finding that the defendant had not established voluntary acceptance of the benefits of the school’s transaction with the vendor, the jurists cited California jurisprudence providing that the burden is generally on the party opposing enforcement of an arbitration clause to show a lack of voluntariness and declared:

“[W]e…conclude, that under California law, Plaintiffs bear the burden to prove that their acceptance of the Terms was involuntary.”

Having established which party bears the burden of proof, they reasoned:

“At this stage, Plaintiffs have not carried that burden. The district court suggested that Plaintiffs’ ‘continued use of IXL’ may not have been voluntary because ‘[e]nrollment in public school is mandatory in Kansas,’ where they live, and found that ‘a parent’s decision to not pull their child out of public school or tell them to stop using a platform that is part of the curriculum does not constitute voluntary acceptance of the benefits’ of the alleged contract. We disagree.”

They continued:

“The law often compels parties to transact….That legal compulsion does not invalidate mutual assent to the transaction….Moreover, Kansas law does not require Plaintiffs to use IXL’s products; it requires only that Plaintiffs attend school….Because the district court misallocated the burden of proof on voluntariness, Plaintiffs did not produce evidence establishing that they could not avoid using IXL’s products while complying with the Kansas truancy laws.”

Noting that IXL’s assertion of continued use of the company’s services is based solely on a statement in the operative complaint that refers to the plaintiffs’ interactions with the technology platform in the present tense, the panel declared:

“We therefore REVERSE the district court’s holding that IXL bore the burden to prove voluntariness, and REMAND for the district court to consider whether each Plaintiff validly ratified the Terms. The district court shall permit reasonable discovery on…whether and when each Plaintiff became aware or ought reasonably to have become aware of the existence and content of the Terms…[,] whether each Plaintiff’s continued use amounted to a retroactive ratification of the arbitration clause as to prior use[,] and whether each Plaintiff’s continued use was voluntary.”

The case is Shanahan v. IXL Learning Inc., 24-6985.