Class Action and Product Insights for Your Business
April 05, 2016 - Class Action

California Court of Appeal Weighs in on Enforceable “Browsewrap” Arbitration Agreements in ProFlowers Case

The California Court of Appeal (2d App. Dist., Div. 3) recently joined the ever-evolving body of case law addressing the enforceability of so-called “browsewrap” arbitration agreements.  In Long v. Provide Commerce, Inc., — Cal.Rptr.3d —-, No. B257910, 2016 WL 1056555 (Ct. App. Mar. 17, 2016), the court affirmed a superior court’s decision denying Provide’s petition to compel arbitration with one of its online customers based on a provision contained in the “Terms of Use” on Provide’s website,

The Short on LongA “browsewrap” agreement is an Internet-based agreement between a website owner and a website visitor that does not require the visitor to affirmatively express his or her assent to its terms.  Rather, the visitor is deemed to have accepted the agreement through his or her viewing or use of the website.  Like many “browsewrap” agreement cases, Long concerns a single threshold question:  was there an agreement to arbitrate?  Stated differently, did the consumer consent to the Terms of Use?

Because “browsewrap” agreements, by definition, do not require any affirmative action by the consumer to indicate his or her assent, the court examined whether Long had constructive knowledge of the Terms of Use (Provide did not dispute Long’s testimony that he had no actual knowledge of the Terms).  According to the court, Long would be deemed to have constructive knowledge if “the design of the 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.”  Long, 2016 WL 1056555, at *4.

Long’s Analysis.  After noting that no California appellate court had yet weighed in on what “website design elements” were “necessary or sufficient,” id., the Court of Appeal looked to two federal court opinions for guidance:  Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002), and Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014).  Focusing on hyperlinks presented to the consumer during the checkout process and in the order confirmation email sent after the purchase, the court concluded that their placement, size, font color, and other qualities relative to the rest of the site/email were too inconspicuous to place a reasonably prudent Internet consumer on notice.

Long’s Suggestions.  Although the lack of conspicuousness ended the inquiry, the court went on in dicta to provide additional suggestions for creating enforceable browsewrap agreements.  In the court’s view, the phrase “Terms of Use,” without more, “may have no meaning or a different meaning to a large segment of the Internet-using public.”  Long, 2016 WL 1056555, at *7.  Thus, the court noted that online retailers would be “well-advised” to pair hyperlinks with a “conspicuous textual notice” informing the consumer that the “linked page contains binding contractual terms.”  Id.

Although the court’s comments are expressly advisory, they do signal what factors at least one Court of Appeal might consider in future cases and, importantly, confirm that the court does not view browsewrap agreements as per se unenforceable.