Arbitration, Internet Commerce: Ninth Circuit Agrees Website Did Not Provide Sufficient Notice Of Agreement To Arbitrate

Clickwrap? Browserwrap? Scrollwrap? Sign-in Wrap?

        When does one's use of a website result in an agreement to arbitrate? Concurring with the majority, Judge M. Miller Baker candidly observes that this is an "evolving and fact-bound area." Here, Judge Paul J. Watford, writing for the majority, and Judge Baker, concurring, agreed that the facts didn't add up to a binding agreement to arbitrate. Berman et al v. Freedom Financial Network, LLC, et al, No. 20-16900 (9th Cir.  4/5/22) (Watford, Hurwitz; Baker, International Trade Judge). The notice "in fine print stating, 'I understand and agree to the Terms & Conditions which includes mandatory arbitration'" wasn't conspicuous. And one could browse through the website without having to click and clearly manifest that one had read and understood the arbitration agreement. 

        Judge Baker's concurring opinion provides an analysis of choice-of-law and concludes that California law applies. The majority did not spend time on a choice-of-law analysis, concluding instead that the parties agreed California or New York law applied, and that the result would be the same regardless of which state's law was chosen.

      The concurring opinion is also useful because it reviews the evolving typology of internet commerce agreements: clickwrap (presumptively enforceable); browser wrap (per se unenforceable); scrollwrap (presumptively enforceable) and sign-in wrap¹ (falling in a  gray area). Here, the agreement best fit into the "sign-in wrap" gray zone, requiring conspicuous textual notice that completing a transaction or registration signifies consent to the site’s terms and condition in order to be enforceable. And Baker agreed that the notice here was insufficient. 

        COMMENT: Two of the leading California cases on the typology of internet agreements, and formation, as applied to arbitration, are Sellers v. JustAnswer LLC (2021) and Long v. Provide Commerce, Inc. (2016). We previously posted about the Sellers case on 1/13/22, and posted about the Long case on 3/26/16.

^{1  "'Sign-in wrap' agreements are those in which a user signs up to use an internet product or service, and the sign-up screen states that acceptance of a separate agreement is required before the user can access the service. While a link to the separate agreement is provided, users are not required to indicate that they have read the agreement’s terms before signing up."}