Business Law Articles
Website Terms and Conditions (TOCs) have come under scrutiny due to their location on a website. For example, in Nghiem v Dick’s Sporting Goods, Inc., No. 16-00097 (C.D. Cal. July 5, 2016), the Central District of California held “browse wrap” TOCs to be unenforceable because the hyperlink to the TOCs was “sandwiched” between two links near the bottom of the third column of links in a website footer.
This case is part of an emerging trend of judicial scrutiny over browse wrap agreements, where a website’s terms and conditions are posted on the website via a hyperlink at the bottom of the screen and users are presumed to manifest assent to the terms by use of the website, as opposed to a “click through” agreement, where users are expressly presented with and required to assent to the terms (by “clicking” a box). There are also other flavors of website agreements called “scroll wrap” or “sign-in-wrap” agreements.
Many courts have refused to enforce browse wrap agreements because of a lack of user notice and assent. In Nghiem, the plaintiff brought claims under the Telephone Consumer Protection Act (TCPA) seeking statutory damages and an order certifying a class action. The defendant Dick’s Sporting Goods (DSG) moved to compel arbitration based upon the DSG’s website TOCs. The Court denied DSG’s motion, ruling that the plaintiff had no knowledge of the website TOCs and was not bound by the arbitration clause contained in the browse wrap agreement.
The Nghiem Court noted that browse wrap agreements are enforced with “reluctance,” and only when a consumer has “actual or constructive knowledge of a website’s terms and conditions.” The Court noted that DSG’s terms appeared at the bottom in the website footer of the home page (and on the page about its mobile alerts), and within a grouping of 27 other hyperlinks arranged in four columns that covered a variety of diverse topics (e.g., careers, gift cards, find a store, etc.), and noted that the hyperlink to the terms was “sandwiched between ‘Only at DICK’s’ and ‘California Disclosures,’ near the bottom of the third column of links.” The Court ruled that the placement was not conspicuous enough alone to put consumers on inquiry notice of the terms.
Key Takeaway. Companies should examine their electronic contracting practices to ensure that consumers are offered notice sufficient to understand that use of a website will constitute agreement to the TOCs. Ultimately, in designing a website, we recognize that retailers must balance design and usability with the protections that come with enforceable TOCs, but the smallest of details matter. As an example of how details matter, for example, on July 29, 2016, the Southern District of NY Court, in Meyer v. Kalanick, et al., No. 15-9796 (S.D.N.Y. July 29, 2016), refused to enforce mandatory arbitration and jury waiver provisions included in a “sign-in-wrap” agreement against a putative class of Uber consumers. Interestingly, two weeks prior to the Meyer decision, a U.S. District Judge in Massachusetts did enforce an arbitration clause in Uber’s online customer agreement and dismissed a putative class action against Uber. The Massachusetts court ruled that the plaintiffs, which had signed up for Uber’s services using a slightly different version of Uber’s mobile app than in Meyer, did receive reasonable notice of Uber’s terms of service agreement and, by signing up for Uber’s services, assented to those terms.
Please contact Khizar A. Sheikh, Esq. (email@example.com or 973-243-7980) for more information.