Browse-wrap agreements for Web site terms of service might or might not be enforceable

Notice to the user is the key to enforceability

You’ve probably seen Web sites that refer to so-called “browse-wrap” agreements, with notices claiming that merely by using the Web site, you’re agreeing to the terms and conditions of the agreement.

The case law indicates that a party claiming enforceability of a browse-wrap agreement — which is typically the Web site host, seeking to enforce a clause requiring arbitration or mandating a particular state’s law or jurisdiction — must show that:

• the user was given sufficient notice that any continued use of the Web site, in and of itself, constituted assent to the browse-wrap agreement’s terms, and
• thereafter, the user indeed continued to use the site.

Selected case law: Browse-wrap agreements held enforceable

• Southwest Airlines Co. v. Boardfirst, L.L.C., No. 3: 06-CV-0891-B, slip op. at 7-12 (N.D. Tex. Sept. 12, 2007): The opinion contains a useful survey of case law and commentary about browse-wrap agreements. A federal district court in Dallas granted, in part, Southwest’s motion for partial summary judgment; it issued a permanent injunction against Boardfirst’s accessing the Southwest Airlines Web site to check in passengers for their flights in order to secure early-boarding-group status for them. The court held that Boardfirst was bound by the terms of the Southwest browse-wrap agreement, and that Boardfirst’s check-in activities violated those terms.

• Hubbert v. Dell Corp., 359 Ill. App.3d (Ill. Ct. App. 2005): On appeal, an Illinois state appellate court reversed the trial court’s refusal to compel arbitration. The appeals court took note of how prominently Dell had warned the user that Dell’s terms and conditions would apply:

… The blue hyperlink entitled “Terms and Conditions of Sale” appeared on numerous Web pages the plaintiffs completed in the ordering process[ … and] should be treated the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract. Although there is no conspicuousness requirement, the hyperlink’s contrasting blue type makes it conspicuous. Common sense dictates that because the plaintiffs were purchasing computers online, they were not novices when using computers. A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.

Additionally, on three of the defendant’s Web pages that the plaintiffs completed to make their purchases, the following statement appeared: “All sales are subject to Dell’s Term[s] and Conditions of Sale.” This statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and that it would be wise to find out what the terms and conditions were before making a purchase.

The statement that the sales were subject to the defendant’s “Terms and Conditions of Sale,” combined with making the “Terms and Conditions of Sale” accessible online by blue hyperlinks, was sufficient notice to the plaintiffs that purchasing the computers online would make the “Terms and Conditions of Sale” binding on them.

Because the “Terms and Conditions of Sale” were a part of the online contract and because the plaintiffs did not argue that their claims were not within the scope of the arbitration agreement, they were bound by the “Terms and Conditions of Sale,” including the arbitration clause.

[Emphasis and extra paragraphing added.]

• PDC Laboratories v. Hach Co., No. 09-1110, slip op. at 5-6 (C.D. Ill. Aug. 25, 2009): A federal district court held that defendant Hach Co.’s browse-wrap terms and conditions were sufficiently conspicious because they were hyperlinked three times. (The court denied Hach’s motion for summary judgment on other grounds.)

Other case law: Browse-wrap agreements held not enforceable

• In re Zappos.com Inc., Customer Data Security Breach Litigation, No. 3:12-cv-00325-RCJ-VPC MDL No. 2357, slip op. at 7-10 (D. Nev. Sept. 27, 2012) (denying defendant’s motion to compel arbitration), discussed by Professor Eric Goldman at his blog: The court held that “[w]ithout direct evidence that Plaintiffs click [sic] on the Terms of Use, we cannot conclude that Plaintiffs ever viewed, let alone manifested assent to, the Terms of Use.” Id., slip op. at 8.

• Hoffman v. Supplements Togo Mgmt., LLC, No. A-5022-09T3 (N.J. App. May 13, 2011), discussed by Venkat Balasubramani at Eric Goldman’s blog: A Web site’s terms of service included a forum-selection clause that required litigation to be in Nevada. After reviewing other courts’ holdings, a New Jersey appeals court held that the Web site did not provide its users with sufficient notice of the forum-selection clause:

Defendants provide nothing to contradict plaintiff’s contention that the forum selection clause would not be visible on an Erection MD purchaser’s computer screen unless he or she scrolled down to a submerged portion of the webpage where the disclaimer containing the clause appeared. Nor do defendants rebut plaintiff’s contention that if a purchaser selected one of their products (such as Erection MD) advertised on the site, by clicking that item and adding it to his or her electronic “shopping cart,” the webpage would skip ahead to new pages that do not contain the disclaimer.

In sum, the forum selection clause was unreasonably masked from the view of the prospective purchasers because of its circuitous mode of presentation. The relative size of the disclaimer’s type face is irrelevant, because the website was designed in a manner that makes it unlikely that consumers would ever see it at all on their computer screen. …

• Cvent, Inc. v. Eventbrite, Inc., 739 F. Supp. 2d 927 (E.D. Va. 2010) (granting defendant’s motion to dismiss breach-of-contract claim): The district court held that “plaintiff has not pled sufficient facts to plausibly establish that defendants Eventbrite and Foley were on actual or constructive notice of the terms and conditions posted on Cvent’s website.” Id. at 938.

• Hines v. Overstock.com, Inc., 668 F.Supp. 2d 362 (E.D.N.Y. 2009), aff’d, No. 09-4201-cv, (2d Cir. June 3, 2010): The court denied defendant Overstock’s motion to stay or dismiss pending arbitration, on grounds that defendant Overstock’s browse-wrap agreement did not give plaintiff Hines sufficient notice of an arbitration clause to bind her to it.

• Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002): In an opinion by now-Justice Sotomayor, the influential Second Circuit court of appeals affirmed denial of a motion to compel arbitration; the court agreed that:

“… a reasonably prudent Internet user in circumstances such as these would not have known or learned of the existence of the license terms before responding to defendants’ invitation to download the free software, … defendants therefore did not provide reasonable notice of the license terms.

In consequence, plaintiffs’ bare act of downloading the software did not unambiguously manifest assent to the arbitration provision contained in the license terms.

[Emphasis and extra paragraphing added]

The Specht court pointed out that:

The signal difference between downloading Communicator and downloading SmartDownload was that no clickwrap presentation accompanied the latter operation.

Instead, once plaintiffs Gibson, Gruber, Kelly, and Weindorf had clicked on the “Download” button located at or near the bottom of their screen, and the downloading of SmartDownload was complete, these plaintiffs encountered no further information about the plug-in program or the existence of license terms governing its use.

The sole reference to SmartDownload’s license terms on the “SmartDownload Communicator” webpage was located in text that would have become visible to plaintiffs only if they had scrolled down to the next screen.

[Emphasis and extra paragraphing added, footnote omitted.]