As businesses continue to face unprecedented challenges navigating the global pandemic and depressed consumer spending and demand, companies are looking for cost-saving measures across the board to stay afloat and to maintain corporate profits. Many businesses have shifted to adding arbitration agreements with binding class action waivers to the sale of goods and use of services to consumers to flatten company annual litigation defense spending. These agreements require consumers to bring any claim arising out of their purchase or use of a product or service in arbitration rather than in court, and prevent consumers from bringing such claims as part of a class or consolidated action.
The first part of this article, published in the January issue of The Computer & Internet Lawyer, discussed why an arbitration clause can be a powerful tool in a company's litigation defense arsenal; the enforceability of arbitration agreements under the Federal Arbitration Act; the two most common types of web-based contracts (a "clickwrap" or "clickthrough" agreement and a "browsewrap" agreement); and best practices for drafting those web-based contracts; and elements that attorneys defending a company's arbitration agreement in court should incorporate into any motion to compel arbitration.
Subsequent parts of this article published in The Computer & Internet Lawyer surveyed recent decisions (in chronological order based on date of publication) over the past year or so across all jurisdictions involving the enforceability of consumer electronic acceptance of arbitration agreements. This final part concludes the survey.
The summaries below are focused principally on the question of contract formation, that is, whether the consumer had notice of the arbitration agreement and manifested their agreement to it, and the arguments plaintiffs have invoked in an effort to evade a finding of mutual assent to arbitrate any disputes. The summaries include imagery of the corporate website and app presentations of the arbitration agreements at issue in each case, and explain how those agreements fared when tested in court.
For instance, Rakofsky v. Airbnb, Inc. is illustrative of "a classic example" of modified clickwrap acceptance by which a user is presented with hyperlinked terms and conditions immediately below a button that the user is warned, when clicked on, will result in their agreement to Airbnb's terms of service. There, the fact that the user was not required to view Airbnb's terms of service, the court held, did not affect the inquiry notice analysis.
By contrast, Snow v. Eventbrite, Inc., for example, is demonstrative of two common pitfalls committed in an effort to bind a user to a company's arbitration agreement.
First, the district court in Snow found the declaration submitted by Eventbrite to authenticate the company's arbitration agreement in support of the company's motion to compel arbitration wanting because the declaration submitted "exemplary" "versions" of the sign-in wrap agreement that would have been presented to each plaintiff, but did not indicate (i) when those versions were in effect, and thus whether those versions could have been the agreements actually presented to the plaintiffs, and (ii) whether there were other variations of the agreement used by the company not depicted in the company's motion papers with which the plaintiffs might have been confronted. And while the company submitted a supplemental declaration asserting that the text of each interface was identical, the district court faulted Eventbrite's declaration because it did not indicate whether "the overall design" also remained unchanged.
was lacking where the company's disclaimer that warned the user that clicking a large "Continue" button would result in acceptance of Eventbrite's terms of service was inconspicuous – in dark gray font against a black background and therefore could be "easily missed because of the lack of contrast between it and the background."
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