The lack of an affirmative action by the consumer to accept the browsewrap agreement’s Terms of Service “TOS”) doomed the PDAA therein.
Whether a predispute arbitration agreement (“PDAA”) in Terms of Service (“TOS”) in an online “browsewrap” agreement is enforceable under the Federal Arbitration Act depends largely on whether the TOS containing the PDAA were clearly noted on the Webpage such that the consumer had clear notice that they were bound to arbitrate. The holding in Berman v. Freedom Financial Network, LLC, No 20-16900 (9th Cir. Apr. 5, 2022), is a primer on how not to provide clear notice.
District Court’s Guidance on How Not to Have an Enforceable Browsewrap PDAA
We will let the Court’s words in the case below, Berman v. Freedom Financial Network, LLC, 400 F.Supp.3d 964 (2019), and our coverage in SAA 2020-34 (Sep. 9), speak for themselves:
The Ninth Circuit is on Board
A unanimous Ninth Circuit affirms the District Court: [from the official summary]
“The panel held that unless the web operator can show that a consumer has actual knowledge of an arbitration agreement, an enforceable contract will be found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. The panel concluded that defendants’ webpages did not provide reasonably conspicuous notice because of the small font size and format and because the fact that a hyperlink was present was not readily apparent. The panel further concluded that by clicking on a large green ‘continue’ button, plaintiffs did not unambiguously manifest their assent to be bound by the terms and conditions.”
This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.