Skaggs v. X.ai, LLC, 2026 WL 2352969 (N.D. Cal. Aug. 13, 2026), is a privacy suit against X.ai in which the U.S. District Court for the Northern District of California held that the Grok terms of service were never formed as a contract, and on that basis denied X.ai's motion to transfer the case to the Northern District of Texas under the terms' forum-selection clause (Source: blog.ericgoldman.org).
Background
The plaintiff alleges that Grok "disclosed private and confidential information," after submitting queries to the chatbot that contained sensitive financial, health, and business information (Source: blog.ericgoldman.org). The filing date and case number are not stated in the available account, which reports the decision from the Westlaw opinion.
Procedural history: the formation ruling
X.ai moved to transfer the case to the Northern District of Texas under a forum-selection clause in its Grok terms of service. Whether the clause could apply turned on whether the terms had been formed at all. Applying the Ninth Circuit's Chabolla framework for sign-in-wrap agreements to both the sign-up screen and the chat screen, the court found the terms notice was not reasonably conspicuous and denied the transfer motion (Source: blog.ericgoldman.org).
On the sign-up screen, the court cited the notice's distance from the relevant action items, its placement outside the user's natural flow, and its font. Intervening text reading "Already have an account? Sign in" acted as a visual barrier before the terms notice, the terms language sat below the sign-up buttons, and the court declined to treat the light-gray hyperlink text on a black background as a contrasting color. The court found the chat screen weaker still for X.ai: the notice sat beyond the periphery of the query box where a user's attention is focused, with empty space directly beneath the box (Source: blog.ericgoldman.org).
Commentary
Eric Goldman, writing on the Technology & Marketing Law Blog, observed that the formation failures identified by the court could have been avoided through routine implementation choices of the kind long established in sign-in-wrap case law (Source: blog.ericgoldman.org).
Relationships
- litigates: xAI
- related: AI and Privacy, AI Liability