Plaintiff could not have agreed to arbitrate claims over website before the website was even created

Ticketmaster.com terms of use did not govern claims arising from related ticket exchange website

Plaintiff sued defendants Ticketmaster and Live Nation asserting violation of the Americans With Disabilities Act and a similar state law. He claimed that Ticketmaster’s NFL Ticket Exchange website did not provide information about wheelchair-accessible seating. Defendants filed a motion asking the court to compel the parties to arbitrate the case. The court denied the motion.

Neither party argued that the terms and conditions of the Ticket Exchange website governed the dispute between them. Defendants instead argued that the clickwrap agreement governing previous purchases defendant had made from ticketmaster.com for concerts applied to plaintiff’s use of the Ticket Exchange website.

This clickwrap agreement contained an arbitration provision that changed over time. Before November 2012, the provision contained broad language stating that the parties “agree[d] to arbitrate all disputes and claims between [them].” The language after November 2012 limited the arbitration provision to any “dispute or claim relating in any way to [plaintiff’s] use of the Site, or to products or services sold or distributed by … or through [defendants].” The definition of “Site” did not include the Ticket Exchange website.

The court rejected defendants’ arguments that the ticketmaster.com terms of service governed plaintiff’s use of the Ticket Exchange website.

The pre-November 2012 terms governed only “the use of ticketmaster.com and mobile versions thereof.” The court observed that at the time, the Ticket Exchange website did not yet exist, and that ticketmaster.com contained a “section” serving the same purpose as the now-existing Ticket Exchange website. Accordingly, the court held that plaintiff would not be deemed to have agreed to arbitrate claims relating to his use of a website before the website was even created.

As to the November 2012-onward terms, the court easily determined those did not apply, as they did, by their own terms, apply only to the Site (which did not include Ticket Exchange). And since Plaintiff had made no purchase on the Ticket Exchange website, the scope of the terms purporting to cover “products or services sold or distributed by … or through [defendants]” still failed to reach the Ticket Exchange website.

Long v. Live Nation Worldwide, 2017 WL 5194978 (W.D. Wash., November 9, 2017)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Live by the browsewrap, die by the browsewrap

Company could not argue it was not bound by competitor’s browsewrap agreement, because it used a browsewrap agreement for its own website.

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Oilpro filed a counterclaim for breach of contract against its competitor, DHI, arguing that DHI breached the agreement it had with Oilpro – such agreement being in a browsewrap agreement found on Oilpro’s website – to not scrape, crawl, or use other automated means to download data from Oilpro’s website. DHI moved to dismiss the breach of contract claim, arguing that Oilpro had insufficiently pled that DHI assented to the terms of the browsewrap agreement. The court denied the motion to dismiss.

In browsewrap cases, because there is no affirmative step to acknowledge assent to the agreement, the party claiming breach has to show that a valid contract exists by demonstrating that the breaching party had actual or constructive knowledge of the terms and conditions. Just having a link to the terms at the bottom of the page, or having them available for review (without having to affirmatively click on something) may not be enough (though there are exceptions to this).

Here, the court found that Oilpro was not relying only on the fact that the agreement was on the pages of the website and available. Instead, Oilpro pointed to DHI’s own web design practices to support its knowledge of the terms of the browsewrap agreement. In the court’s words:

Oilpro alleges constructive notice because DHI has a similar site with a similar browsewrap agreement. Thus, even if there are no allegations that DHI took affirmative action to acknowledge assent, the court finds that the allegations relating to DHI’s constructive knowledge provide more than that the agreement was available and raise the claim to plausible.

So the case stands for the proposition that a company that uses a browsewrap agreement on its own website is less likely to be able to argue it is unaware of other companies’ browsewrap agreements. Said another way, browsewrap-using companies may have a higher standard of diligence in their own online dealings.

It should be noted, however, that the conclusion in this case is likely to apply only in the B2B context, and will likely not affect the enforceability (or non-enforceability) of browsewrap agreements in consumer context. The court said “[t]his conclusion is confined, of course, to instances where both parties are sophisticated businesses that use browsewrap agreements on their websites.”

DHI Group, Inc. v. Kent et al., 2017 WL 4837730 (S.D. Texas, October 26, 2017).

Photo courtesy Flickr user Patrick Finnegan under this Creative Commons license.

Evan_BrownAbout the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Florida court rules that online seller’s terms and conditions were not enforceable

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Beware the browsewrap.

A Florida state appellate court recently held that an online seller’s terms and conditions, appearing in a “browsewrap” agreement linked-to from the bottom of its web pages, were not enforceable.

Plaintiff, an online purchaser of defendant’s dietary supplements, sued defendant seller over liver damage plaintiff allegedly sustained from the products. Defendant filed a motion with the trial court seeking to enforce an arbitration clause in its online terms and conditions. Plaintiff objected to that motion, arguing that he never agreed to the arbitration clause contained in the browsewrap agreement.

The lower court denied defendant’s motion to compel arbitration, finding that the terms of the browsewrap agreement were not incorporated into the sales agreement. Defendant sought review with the Florida appellate court. On appeal, the court affirmed the denial of the motion to compel.

This was a case of first impression in the Florida state courts.

The court observed that in other jurisdictions, browsewrap agreements have generally been enforced only when the hyperlink to the terms and conditions is conspicuous enough on the web page to place a user on inquiry notice of their terms. (Inquiry notice, simply stated, is, as its name suggests, notice sufficient to make the user aware enough of the terms that their natural inclination is to inquire further as to what the particular terms are.)

The court distinguished this case from the case of Hubbert v. Dell Corp., an Illinois case in which the court found a browse-wrap agreement to be enforceable.

Here, unlike in the Hubbert case, the defendant’s website allowed a purchaser to select a product and proceed to checkout without seeing the hyperlink to the terms and conditions. The website user could complete the purchase without scrolling to the bottom of the page where the link to the terms and conditions appeared.

In this situation the court found that the online seller’s website failed to advise the plaintiff that his purchase was subject to the terms and conditions of the sale, and did not put him on the required inquiry notice of the arbitration provision.

Vitacost.com, Inc. v. McCants, — So.3d — 2017 WL 608531 (Fla.Ct.App. Feb. 15, 2017)

Evan_BrownAbout the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

Court holds browsewrap agreement not enforceable

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Plaintiff filed a consumer fraud class action lawsuit against defendant, the operator of an ecommerce website. Defendant moved to have the case heard by arbitration, arguing that the arbitration provision in its website’s terms of use required the dispute to be arbitrated instead of heard in court. The terms of use were in the form of a “browsewrap” agreement — viewable by a hyperlink displayed at the bottom of each page of defendant’s website.

The court denied the motion, finding that the hyperlink to the terms of use (containing the arbitration provision) was too inconspicuous to put a reasonably prudent internet consumer on inquiry notice. Since the agreement was not enforceable, plaintiffs were not bound by the arbitration provision. Defendant sought review with the California Court of Appeal. On appeal, the court affirmed the lower court.

It observed that for a browsewrap agreement to be enforceable, a court must infer that the end user assented to its terms. This may be more difficult to show than in situations involving “clickwrap” agreements, which require the user to affirmatively do something, such as check a box, to indicate his or her assent to the terms of use.

In this case, the court held that although an especially observant internet consumer could spot the defendant’s terms of use hyperlinks on some checkout flow pages without scrolling, that quality alone was not all that was required to establish the existence of an enforceable browsewrap agreement. Rather, as the Second Circuit observed in Specht v. Netscape, 306 F.3d 17 (2d Cir.2002), “[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.”

Here, the defendant’s terms of use hyperlinks — their placement, color, size and other qualities relative to defendant’s website’s overall design — were simply too inconspicuous to meet that standard.

Long v. Provide Commerce, Inc., — Cal.Rptr.3d —, 2016 WL 1056555 (Cal Ct. App., March 17, 2016)

About the Author: Evan Brown is a Chicago attorney advising enterprises on important aspects of technology law, including software development, technology and content licensing, and general privacy issues.

Photo courtesy Flickr user Patrick Finnegan under this Creative Commons license.

Court provides guidance on how to effectively communicate online terms of service

Are online terms of service provided via hyperlink in an email binding on the recipient of that email? The Second Circuit recently addressed that question, and the decision gives guidance on best practices for online providers.

Plaintiff booked a trip to the Galapagos Islands using defendant’s website. When she purchased her ticket, she got a booking information email, a confirmation invoice and a service voucher. (It is not clear how plaintiff got the confirmation invoice and the service voucher – the court’s opinion says they were sent as emails, but the PACER record does not show them as emails. In any event, plaintiff did not dispute that she received all three documents, nor did she dispute all three documents contained a hyperlink to defendant’s “terms and conditions” which were available online.)

One evening during the trip, a tour guide allegedly assaulted plaintiff. She sued defendant for negligently hiring and training that tour guide. Defendant moved to dismiss, pointing to language in the online terms and conditions that called for disputes to be heard in Canadian court. The district court dismissed the action, and plaintiff sought review with the Second Circuit. On appeal, the court affirmed. It held that defendant had reasonably communicated the forum selection clause to plaintiff by using hyperlinks and the appropriate language in the terms and conditions.

Each of the documents contained an underlined hyperlink, and accompanying language advising plaintiff to click on the hyperlink. The booking information email contained a standalone provision with the heading “TERMS AND CONDITIONS”. This section stated that “[a]ll . . . passengers must read, understand and agree to the following terms and conditions.” The hyperlink immediately followed. Both the confirmation invoice and the voucher contained a link to the terms and conditions, preceded by “[c]onfirmation of your reservation means that you have already read, agreed to and understood the terms and conditions. . . .”

The actual structure and language of the terms and conditions also served to reasonably communicate the forum selection clause. The second paragraph stated that the terms and conditions “affect your rights and designate the governing law and forum for the resolution of any and all disputes.” Later in the terms and conditions, a standalone section titled “APPLICABLE LAW” provided that all matters arising from the agreement were subject to Ontario and Canadian law and the exclusive jurisdiction of the Ontario and Canadian courts.

The decision validates the notion that an e-commerce provider can rely on establishing valid and binding contracts with its customers without having to actually transmit a copy of the terms and conditions that would apply to the transaction. Though the facts of this case dealt with email, there is no substantive reason why the best practices revealed by the court’s decision would not apply to providers of mobile apps and other online platforms.

Starkey v. G Adventures, Inc., — F.3d —, 2015 WL 4664237 (2nd Cir. August 7, 2015)

Evan Brown is an attorney in Chicago helping clients manage issues involving technology and new media.

Forum selection clause in browsewrap agreement did not bind parties in bitcoin fraud case

We all know that clickwrap agreements are preferable to browsewrap agreements, assuming, of course, the objective is to establish binding contracts between participants in online transactions. Nonetheless, some online platforms still (try to) rely on browsewrap agreements to establish terms of service. That avoidance of best practices gives us situations like the recent case of Hussein v. Coinabul, LLC, in which a federal court in Illinois refused to enforce a forum selection clause in a “bitcoin to gold marketplace” browsewrap agreement.

Plaintiff alleged that he sent about $175,000 worth of bitcoins to defendants in June 2013, expecting to get gold in return. (Plaintiff alleges he transferred 1,644.54 BTC. The average exchange value in June 2013 was $107.82/BTC. You can get historical bitcoin price data here: http://www.coindesk.com/price) When the gold never arrived, plaintiff sued for fraud.

Defendants moved to dismiss, citing a forum selection clause contained in a browsewrap agreement found on its website. That purported agreement required all disputes to be heard in the state courts of Wyoming, and for Wyoming law to apply. The court denied the motion to dismiss, finding that the browsewrap agreement afforded plaintiff neither actual nor constructive knowledge of its terms and conditions.

The court observed that the hyperlink that directed users to defendants’ Terms of Service was listed among ten other hyperlinks at the bottom of each page. (See this Wayback Machine capture of the website from June 2013).

As for lack of actual knowledge, the court credited plaintiff’s allegations that he did not review or even know of defendants’ Terms of Service when he entered the bitcoin transaction. And there was no evidence to the contrary in the record.

And as for lack of constructive knowledge, the court found that the hyperlink, “buried at the bottom of the webpage – [was] without some additional act of notification, insufficient for the purpose of providing reasonable notice.”

Hussein v. Coinabul, LLC, No. 14-5735, 2014 WL 7261240 (N.D. Ill. December 19, 2014)

Court enforces online terms and conditions incorporated by reference in invoices

Clickwrap and browsewrap agreements are not the only enforceable online contracts.

Fadal Machining Centers, LLC v. Compumachine, Inc., 2011 WL 6254979 (9th Cir. December 15, 2011)

Plaintiff manufacturer sued one of its distributors over unpaid invoices. Defendant moved to dismiss, citing to an arbitration provision in the terms and conditions on plaintiff’s website. The district court dismissed the complaint and plaintiff sought review with the Ninth Circuit. On appeal, the court affirmed.

It held that the district court did not err in concluding an arbitration agreement existed between the parties. Though the language of the hard copy distribution agreement did not address arbitration, it provided that plaintiff could unilaterally establish terms of sale from time to time. Each invoice referred to plaintiff’s website’s terms and conditions. The court found that these referred-to terms and conditions “clearly and unmistakably delegated the question of arbitrability to an arbitrator.”

The decision supports the notion that contracting parties (particularly merchants selling goods) may rely on provisions not spelled out in any documents exchanged between them, but appearing online and incorporated by reference. In other words, certain online contracts other than clickwrap and browsewrap agreements may be enforceable.

Browsewrap website terms and conditions enforceable

Major v. McAllister, — S.W.3d —, 2009 WL 4959941 (Mo. App. December 23, 2009)

The Missouri Court of Appeals has issued an opinion that reflects a realistic grasp of how people use the web, and also serves as a definitive nod to self-responsibility. The court refused to accept a website end user’s argument that she should not be bound by the website terms and conditions that were presented to her in the familiar “browsewrap” format.

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Ms. Major used a website called ServiceMagic to find some contractors to remodel her home in Springfield, Missouri. Each page she saw during the process had a link to the website terms and conditions. At the point where she submitted her contact information to facilitate the signup process, she was presented with a link to the website’s terms and conditions. We’ve all seen this countless times — the link read, “By submitting you agree to the Terms of Use.”

Major admitted she never clicked on the link and therefore never read the terms and conditions. But had she clicked through she would have read a forum selection clause providing that all suits against ServiceMagic would have to be brought in Denver, Colorado.

When Major sued ServiceMagic in Missouri state court, ServiceMagic moved to dismiss, citing the forum selection clause. The trial court granted the motion and Major sought review. On appeal, the court affirmed the dismissal.

Major relied heavily on Specht v. Netscape, 306 F.3d 17 (2d Cir. 2002). The court in Specht held that end users of Netscape’s website who downloaded a certain application were not bound by the terms and conditions accompanying that download because the terms were not visible on the screen without scrolling down to see them.

But in this case the court found the terms and conditions (including the forum selection clause) to be enforceable. In contrast to Specht, the ServiceMagic site did give immediately visible notice of the existence of the terms of the agreement. Even though one would have to click through to read the terms, the presence of the link was sufficient to place the website user on reasonable notice of the terms, and subsequent use by the end user manifested assent to those terms.

Click image courtesy Flickr user smemon87 under this Creative Commons license.