Last week, a California federal court granted Google’s motion to compel arbitration of claims asserted by customers who alleged that their Fitbit watches burned their skin. The opinion in Houtchens v. Google found that the company’s “clickwrap” agreement put the plaintiffs on “reasonably conspicuous notice” of the company’s terms of service when they created online accounts to purchase the watches. A clickwrap agreement is one in which an internet user accepts a website’s terms of use by checking an “I agree” box or clicking an “I accept” button after being presented with contract terms and conditions via hyperlink or a scroll box.
Applying the standards for electronic contracting articulated by the Ninth Circuit in Berman v. Freedom Financial Network, LLC, the court concluded that the plaintiffs entered into an enforceable agreement because the hyperlink to the terms of service was presented in blue text in a sentence that otherwise used gray text, it was next to the box that the user was required to select to accept the terms, and the screen on which it appeared was uncluttered. On facts such as these, it emphasized, courts “have routinely found that such a presentation supplies reasonably conspicuous notice of hyperlinked terms.”
The court rejected the plaintiffs’ argument that a binding contract was not formed because they did not recall reading or agreeing to the terms of service when they created their Fitbit accounts, finding that “Plaintiffs’ bare assertion that they do not recall this process does not overcome Google’s evidence.” The court also rejected the plaintiffs’ assertion that the arbitration provision was procedurally unconscionable because it was contained in a contract of adhesion. The arbitration provision contained a right to opt out and “‘an arbitration agreement is not adhesive if there is an opportunity to opt out of it.’”
In contrast to clickwrap agreements, “browsewrap” agreements are those in which the user is informed that use of site constitutes acceptance of contract terms and conditions are presented by hyperlink somewhere on the screen. Depending on the facts, an arbitration provision in a browsewrap agreement can also be enforced, although additional hurdles may be presented because the user’s assent to contract terms is typically less explicit than is the case with clickwrap agreements.
We routinely monitor and write about significant developments in electronic contracting, particularly as they affect the enforcement of arbitration provisions. For additional information, please listen to our recent podcast episode, “Electronic Contracting: The New Restatement of Consumer Contracts and Other Emerging Regulatory and Litigation Issues, with Special Guest Florencia Marotta-Wurgler, Professor, New York University Law School, and Restatement Co-Reporter,” which is available here.
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