Duane Morris Class Action Review - 2023 - Report - Page 75
In Berman, et al. v. Freedom Financial Network, LLC, 30 F.4th 849 (9th Cir. 2022), the
Ninth Circuit addressed the circumstances under which website use can bind a
consumer to a set of hyperlinked terms and conditions, including mandatory arbitration,
that the consumer never saw or read. The plaintiffs filed a putative class action under
the Telephone Consumer Protection Act, alleging they received unwanted calls and
texts as part of a telemarketing campaign. Id. at 854. The defendant moved to compel
arbitration, citing plaintiffs’ use of websites that indicated in tiny gray text next to a
comparatively large “Continue” button, “I understand and agree to the Terms &
Conditions which includes mandatory arbitration.” Id. A hyperlink to the Terms &
Conditions was provided but was also in gray and not the standard blue. Id. The district
court concluded there was no assent to arbitration, and the Ninth Circuit affirmed. It
found that the websites did not provide reasonably conspicuous notice of the terms and
conditions because the font size used was “barely legible to the naked eye” and far
smaller than its surrounding text and website elements, which directed user attention
elsewhere. Id. at 856-57. As the Ninth Circuit explained, the “onus must be on the
website owners to put users on notice of the terms to which they wish to bind
consumers.” Id. at 857. Further, “a website designer must do more than simply
underscore the hyperlinked text in order to ensure that it is sufficiently ‘set apart’ from
the surrounding text.” Id. Customary features of a conspicuous hyperlink would include
the use of blue contrasting font color and use of capital letters. Id. Additionally, it was
not clear that by clicking “Continue” that the plaintiffs were assenting to be bound by the
terms and conditions. Rather, the user must be “explicitly advised” that the clock of a
button will constitute assent. Id. “[C]lose proximity of the hyperlink to relevant buttons
that the user must click on - without more - is insufficient to give rise to constructive
notice.” Id. at 858.
Similarly, the California court of appeal affirmed the denial of a petition to compel
arbitration in Sellers, et al. v. JustAnswer LLC, 73 Cal. App. 5th 444 (Cal. App. 2d DIst.
2022), a putative class action alleging violations of California’s automatic renewal law.
In support of its motion to compel arbitration, the defendant argued that, when plaintiffs
entered their payment information on its website and clicked a button that read “start my
trial,” they agreed to the terms of service. In small font below the “start my trial” button, a
notice read: “By clicking ‘[s]tart my trial’ you indicate that you agree to the terms of
service and are 13+ years old.” Id. at 450. The 26-page-long terms of service were
hyperlinked in this notice. The trial court denied the motion to compel arbitration, finding
the terms of service notice too small and “inconspicuous” to be binding. Considering an
issue of first impression under California law, the court of appeal considered whether
and under what circumstance a “sign-in wrap” agreement is valid and enforceable. The
court of appeal defined a “sign-in wrap” agreement as one 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.” Id. at 454. The court of appeal noted
that, while “sign-in wrap” agreements could be sufficient to put a consumer on inquiry
notice of the linked terms, the issue must be determined on a case-by-case basis, as
the context of the transaction is relevant. Here, the court of appeal found that
defendant’s showing failed because the textual notice itself was small and
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Duane Morris Class Action Review – 2023
