On the other side, as an app or website owner, you specifically select contract provisions to protect your business and, in some cases, limit your liability. Because of this, it is in your best interests to have a valid and enforceable agreement between you and your customers. There are a number of factors that a court will consider, but, here, we are primarily focusing on the sign-up process. Did you provide the notice of the terms of any agreement you may want to enforce in the future? The answer to this may hinge on the design and content of your app or website. This has been a critical issue in cases brought against the owners of several popular apps and websites including Uber, Facebook, and DoorDash.
A PHILADELPHIA COURT DASHES UBER’S ATTEMPT TO ENFORCE AN ARBITRATION AGREEMENT
In Kemenosh v. Uber Technologies, Inc., the plaintiff sued Uber after she was injured in an accident involving a vehicle summoned through Uber’s app. Uber claimed that the plaintiff was foreclosed from filing a complaint because she was bound by an arbitration agreement that she purportedly consented to in 2013 when registering to use the popular ride-sharing app.
Uber claimed that, at the end of the registration process, the plaintiff would have arrived at a screen that reads:
Not surprisingly, Uber’s terms of service contained a provision stating that “you and Company are each waiving the right to a trial by jury or to participate as a plaintiff or class User in any purported class action or representative proceeding.” In November 2016, Uber sent an email to the plaintiff advising her that it revised its arbitration agreement and that its updated terms of service could be accessed “here,” with here displayed in bright green hyperlinked text. The plaintiff claimed that she never received nor read the 2016 email or the updated terms of service.
After deciding that Pennsylvania — not California — law applied, the court noted that an offer to enter into a contract “must be intentional and sufficiently definite in terms, and no offer will be found to exist where its essential terms are unclear.” While Uber claimed that the plaintiff agreed to arbitrate, the court found that the 2013 registration process screens failed to properly communicate an offer.
certifying that they read the terms of service, or somehow conveyed that the user should read them — none of which Uber did.
The court also determined that Uber failed to show that the plaintiff had agreed to its arbitration agreement through the 2016 email, but for a different reason. Uber submitted business records purportedly demonstrating that Uber sent the email and plaintiff, in turn, received it. The plaintiff provided an affidavit disputing this. Since the parties relied on written statements and did not present any live witnesses, the court concluded that Uber failed to satisfy its burden that the plaintiff received the email. In other words, the court did not reach the question of whether Uber’s email was sufficient to establish that the parties entered into a valid agreement to arbitrate. Indeed, the email stated that Uber “revised [its] arbitration agreement which explains how legal disputes are handled[.]” There is a strong possibility that, based on the court’s opinion, that this would have been sufficient, i.e., conveying an offer to arbitrate.
Cases against Facebook and Doordash and the Second Circuit’s view of Uber’s registration process may shed some light on how this issue may fair in other courts. . . .
THE SECOND CIRCUIT PREVIOUSLY FOUND THAT UBER’S “SIGN-IN-WRAP” PROVIDED REASONABLY CONSPICUOUS NOTICE OF ITS TERMS OF SERVICE
More than one year before Kemenosh was decided, the Second Circuit had arrived at a different conclusion concerning a plaintiff’s assent to arbitrate its claims against Uber based on a similar — if not identical — registration process. In Meyer v. Uber Technologies, Inc., the Second Circuit observed that the terms of service notice appeared below the “Register” button on the payment screen, a layout commonly referred to as “sign-in-wrap.” Meyer claimed that he did not (or was not able to) see the hyperlink to the terms of service, and thus the arbitration provision it contained, when he clicked register on the app.
The Second Circuit noted that “[c]ourts around the country have recognized that [an] electronic ‘click’ can suffice to signify the acceptance of a contract” as long as the layout and language of the website or app gives the user “reasonable notice” that this click will establishes assent. In Uber’s case here, the Second Circuit concluded that Uber provided reasonably conspicuous notice of its terms of service based on a number of factors, among them:
- an “uncluttered” payment screen;
- the hyperlinked text is located directly below the registration button;
- the entire screen is visible at once;
- the underlined, dark-printed hyperlink, although in small font, contrasted sharply with its white background; and
- the terms of service are presented simultaneously to enrollment.
After disposing of Meyer’s challenges to the app’s layout, the Second Circuit also rejected his claim that a hyperlink on its own is insufficient to find reasonable notice, likening a click to hyperlinked text to the “twenty-first century equivalent of turning over the cruise ticket.” In other words, the language Uber used was a prompt to read the agreements and “signaling that their acceptance of the benefit of registration would be subject to contractual terms.” Finally, the Second Circuit stated that just because the register button had the dual functions of creating an account and consenting to the terms of service did not create ambiguity in Meyer’s assent.
Meyer’s holding was recently validated by a federal court in California. In Peter v. DoorDash, Inc., the Northern District of California relied on Meyer to conclude that similarly situated sign-in-wrap bound plaintiffs to an arbitration provision in DoorDash’s hyperlinked terms of service. In doing so the court observed that “[t]he screens are similarly uncluttered and wholly visible, and the notice text appears even closer to the sign-up button on DoorDash’s page than on Uber’s.”
In In re Facebook Biometric Information Privacy Litigation, three plaintiffs alleged that the social media website’s “Tag Suggestions” program, which scanned and stored faces in uploaded photographs so that it or you could “tag” those users in subsequently uploaded photos, violated the Illinois Biometric Information Privacy Act, 740 Ill. Comp. Stat. 14/1 et seq. Facebook moved to dismiss the complaint, claiming that users AGREED that the law of California — not Illinois — governed the dispute. The plaintiffs’ reply? Not so fast, Facebook! We never agreed to your User Agreement.
Let’s take a look at how the three plaintiffs signed up for Facebook:
- Box was separate from the “sign up” button to complete registration
- Two different sign-up screens were randomly presented to new users
- Both screens required user to click a box next to similar language as the first plaintiff
- Box was separate from the “sign up” button to complete registration
The difference between the first two plaintiffs and the third does not seem like much, but the Court found a meaningful distinction. In all three circumstances, the court found that the sign-up process fell towards “browsewrap,” but that those encountered by the first two plaintiffs had more legally favorable clickwrap features. Huh?
In a clickwrap agreement, the user is presented with a list of terms and conditions of use before being asked to agree to them. Courts typically find these types of agreements valid and enforceable because, as noted in Berkson v. Gogo LLC, “by requiring a physical manifestation of assent, a user is said to be put on inquiry notice of the terms assented to.” (Berkson also recognized two additional types of internet-based agreements — scrollwrap and sign-in-wrap).
In contrast, for a browsewrap agreement, a website’s or app’s terms and conditions of use are generally posted in a hyperlink at the bottom of the screen.
While quickly glancing at a website or app when signing up, the differences between clickwrap and browsewrap may not be meaningful to you at that moment, courts have found that their differences affect whether you are bound by the agreements each are linked to — whether you read them or not.
The Court in the Facebook case provided a helpful graphic to differentiate the unique features of clickwrap and browsewrap, which I recreated and slightly modified below:
Although there is no brightline rule on which procedure is valid and enforceable, the Ninth Circuit “has recognized that the closer digital agreements are to the clickwrap end of the spectrum, the more often they have been upheld as valid and enforceable.”
Written by Daniel J. Mirarchi, who is Of Counsel to Rogers Counsel and handles a variety of commercial litigation matters for the firm. Over the last 15 years, he has represented businesses, individuals, and public pension funds in securities, data breach, fraud, employment, breach of contract, and theft of trade secret matters.
Learn about the author, attorney Daniel Mirarchi, of-counsel at Rogers Counsel.