Web Retailer’s Browsewrap Agreement Found Insufficient to Compel Arbitration

Author: Robert Taitz

Long v. Provide Commerce, Inc.
2016 WL 1056555
March 17, 2016

In this case, Defendant Provide Commerce, Inc. (“Provide”) appealed from an order denying its petition to compel arbitration of certain consumer fraud claims brought by Plaintiff Brett Long on behalf of himself and a putative class of California consumers who purchased flower arrangements through Provide’s website, ProFlowers.com. Provide sought to compel arbitration based on a provision contained in the company’s “Terms of Use,” which were viewable via a hyperlink displayed at the bottom of each page on the ProFlowers.com website.

The Terms of Use on ProFlowers.com fall into a category of Internet contracts commonly referred to as “browsewrap” agreements. Unlike the other common form of Internet contract—known as “clickwrap” agreements—browsewrap agreements do not require users to affirmatively click a button to confirm their assent to the agreement’s terms; instead, a user’s assent is inferred from his or her use of the website. Because assent must be inferred, the determination of whether a binding browsewrap agreement has been formed depends on whether the user had actual or constructive knowledge of the website’s terms and conditions.

Plaintiff opposed the petition to compel arbitration on the ground he was never prompted to assent to the Terms of Use, nor did he actually read them, prior to placing his order on ProFlowers.com. The trial court concluded the Terms of Use hyperlinks were too inconspicuous to impose constructive knowledge on Plaintiff, and denied the petition.

On appeal, the court likewise found the hyperlinks and the overall design of the ProFlowers.com website would not have put a reasonably prudent Internet user on notice of Provide’s Terms of Use, and Plaintiff therefore did not unambiguously assent to the subject arbitration provision simply by placing an order on ProFlowers.com.

In reaching its decision, the Appellate Court noted “Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate . . . This threshold inquiry stems from the basic premise that arbitration is consensual in nature . . . The fundamental assumption of arbitration is that it may be invoked as an alternative to the settlement of disputes through the judicial process ‘solely by reason of an exercise of choice by [all] parties.'”

In applying these standards to internet purchases, the court stated “This requirement applies with equal force to arbitration provisions contained in contracts purportedly formed over the Internet. While Internet commerce has exposed courts to many new situations, it has not fundamentally changed the requirement that mutual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract.”

In discussing internet contracts, the court explained that “Contracts formed on the Internet come primarily in two flavors: ‘clickwrap’ (or ‘click-through’) agreements, in which website users are required to click on an ‘I agree’ box after being presented with a list of terms and conditions of use; and ‘browsewrap’ agreements, where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.” The parties in this case agreed the subject Terms of Use for the ProFlowers.com website fell into the browsewrap category.

In this regard, the court noted “Unlike a clickwrap agreement, a browsewrap agreement does not require the user to manifest assent to the terms and conditions expressly … [a] party instead gives his assent simply by using the website.” Indeed, “in a pure-form browsewrap agreement, ‘the website will contain a notice that—by merely using the services of, obtaining information from, or initiating applications within the website—the user is agreeing to and is bound by the site’s terms of service.'” Thus, “by visiting the website—something that the user has already done—the user agrees to the Terms of Use not listed on the site itself but available only by clicking a hyperlink.” “The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.” “Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of a website’s terms and conditions.” More to the point here, absent actual notice, “the validity of [a] browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract.”

Provide did not dispute Plaintiff’s testimony he had no actual knowledge of the Terms of Use when he placed his order on ProFlowers.com. Accordingly, the court had to decide whether the design of the ProFlowers.com website and/or the conspicuousness of the hyperlinks to the Terms of Use were sufficient to put a reasonably prudent Internet consumer on inquiry notice of the browsewrap agreement’s existence and contents.

The court noted no California Appellate Court had yet addressed what sort of website design elements would be necessary or sufficient to deem a browsewrap agreement valid in the absence of actual notice. In this regard, the court stated although “it may be that an especially observant Internet consumer could spot the Terms of Use hyperlinks on some checkout flow pages without scrolling, that quality alone cannot be all that is required to establish the existence of an enforceable browsewrap agreement. Rather, as the Specht court observed, “[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 Terms of Use hyperlinks—their placement, color, size and other qualities relative to the ProFlowers.com website’s overall design—are simply too inconspicuous to meet that standard. Indeed, the court’s review of the screenshots revealed how difficult it is to find the Terms of Use hyperlinks in the checkout flow even when one is looking for them. This of course is to say nothing of how observant an Internet consumer must be to discover the hyperlinks in the usual circumstance of using ProFlowers.com to purchase flowers, without any forewarning he/she should also be on the lookout for a reference to “Terms of Use” somewhere on the website’s various pages.

Finally, the court noted:

“While the lack of conspicuousness resolves the instant matter, we agree with the Nguyen court that, to establish the enforceability of a browsewrap agreement, a textual notice should be required to advise consumers that continued use of a website will constitute the consumer’s agreement to be bound by the website’s terms of use. In our view, the problem with merely displaying a hyperlink in a prominent or conspicuous place is that, without notifying consumers that the linked page contains binding contractual terms, the phrase ‘terms of use’ may have no meaning or a different meaning to a large segment of the Internet-using public. In other words, a conspicuous ‘terms of use’ hyperlink may not be enough to alert a reasonably prudent Internet consumer to click the hyperlink . . . Though we need not resolve the issue here given the inconspicuousness of the Terms of Use hyperlinks on the ProFlowers.com website, in our view the bright line rule established by Nguyen is necessary to ensure that Internet consumers are on inquiry notice of a browsewrap agreement’s terms, regardless of each consumer’s degree of technological savvy. Online retailers would be well-advised to include a conspicuous textual notice with their terms of use hyperlinks going forward.”

This opinion provides sound advice for on-line retailers and highlights the need for the conspicuous display of any contractual terms which the retailer wants to enforce on its customers. It is not sufficient to simply provide a hyperlink to the company’s Terms of Use.

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