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); 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.
The second part of this article (published in the February issue of The Computer & Internet Lawyer) and this part survey 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. The summaries 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.
Take the case of Arnaud v. Doctor's Associates Inc., for example, where the Second Circuit held that Subway's electronic survey by which it presented its arbitration agreement to customers did not put a user on inquiry notice of arbitration because the webpage was cluttered and nothing about it suggested to a reasonable user that additional terms applied when they clicked a button stating "I'm in" on the Subway survey. Compare that agreement with the one at issue in Spacil v. Home Away, Inc., which required users to agree to HomeAway's terms and conditions multiple times throughout the checkout process and check a box confirming that "I have read and agree to comply with all rental policies and terms" before they could proceed further with the rental process.
The cases summarized herein also show that the language used by plaintiffs in their declarations opposing arbitration is critical. In Harbers v. Eddie Bauer, LLC, for example, the plaintiff insisted in her declaration that she never saw key language on Eddie Bauer's webpage before making her purchase, which the district court found inadequate to defeat a finding of mutual assent. Similarly, in Heller v. Rasier, LLC, one of the plaintiffs asserted by declaration that he had no recollection of entering into an arbitration agreement with Uber and that had he been made aware of the agreement and been given the right to opt out, he would have done so. But the court there, too, held that such statements could not create a genuine issue of disputed fact as to whether the plaintiff agreed to arbitrate disputes with Uber.
Arnaud v. Doctor's Assocs. Inc., 2019 WL 4279268 (E.D.N.Y. Sept. 10, 2019) (Garaufis, J.) (applying New York law because no conflict with Connecticut law), aff'd, 2020 WL 5523507 (2d Cir. Sept. 15, 2020) – Plaintiff brought a nationwide class action against Subway, claiming violation of the Telephone Consumer Protection Act after he allegedly received unsolicited commercial text messages from the company on his cell phone after he completed a survey online about a recent visit to a Subway restaurant in exchange for a free or discounted Subway item. Subway moved to compel arbitration pursuant to terms and conditions it maintained plaintiff agreed to when he completed the survey.
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Originally published by The Computer & Internet Lawyer
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