A federal appeals court ruled Tuesday that genetic testing company 23andMe can't be sued over allegations that it misled customers about its test kit because the claims belong in arbitration.
A unanimous panel at the 9th U.S. Circuit Court of Appeals in San Francisco affirmed a lower court's decision the class-action claims belonged in arbitration thanks to 23andMe's terms of service agreement. The plaintiffs sued back in 2013 alleging the Silicon Valley startup lied about its DNA test kit's health benefits, breached its warranty and used unfair business practices.
Until 2013, 23andMe claimed its saliva-based DNA testing kits could help customers prevent or mitigate diseases including diabetes, heart disease and breast cancer. But in November 2013, the Food and Drug Administration told the company to stop making such claims without agency approval. The Mountain View, Calif.-based company stopped selling the tests in December 2013 pending regulatory review before starting up again in October 2015.
In order to use the tests, customers had to agree to 23andMe's terms of service, which included an arbitration provision. Although the customers claimed various portions of the arbitration terms were unconscionable, the 9th Circuit rejected their arguments and deemed the agreement valid and enforceable.
23andMe offers 35 direct-to-consumer genetic tests that can tell users if they carry genetic mutations for diseases, including cystic fibrosis. It's a far cry from the more than 250 risk reports the company originally offered to customers.
