Duane Morris Class Action Review - 2023 - Report - Page 76
inconspicuous; and the screen to which users were directed showed that they signed up
for a $5 trial, not a $46 subscription. Further, the textual notice failed to comply with
automatic renewal law guidelines, which state that a notice must be “in larger type than
the surrounding text, or in contrasting type, font, or color to the surrounding text of the
same size, or set off from the surrounding text of the same size by symbols or other
marks, in a manner that clearly calls attention to the language.” Id. at 556. The court of
appeal thus held that “enforcing a mandatory arbitration provision that includes a class
action waiver based on these textual notices — which are less conspicuous than the
statutory notice requirements governing [p]laintiffs’ underlying claims — would permit
[defendant] to end-run around legislation designed to protect consumers in these
specific transactions.” Id. at 557.
Costa, et al. v. Road Runner Sports, Inc., 84 Cal. App. 5th 224 (Cal. App. 4th Dist.
2002), is another published decision of the California court of appeal that involved a
putative class action brought under California’s automatic renewal law. The plaintiff
signed up for a paid loyalty program when he purchased shoes, and claimed he was not
told it was an automatic renewal subscription. Three years after he signed up for the
loyalty program, the defendant sent the plaintiff a mailer, which referenced terms and
conditions of the loyalty program and which, in small text, directed that such terms and
conditions were available at a referenced page on the company’s website. The
referenced webpage indicated in small print at the bottom that “[u]se of the membership
constitutes acceptance of the full terms of conditions of membership. Please review
here.” Id. at 231. The word “here” was a hyperlink that took a user to another webpage
containing six pages of terms and conditions. Id. On the final page, in small font the
same size as the font elsewhere in the document, but in bold, was a section entitled
“Binding Arbitration.” Id. In its motion to compel arbitration, the defendant pointed to the
mailer, and also argued that the plaintiff had agreed to the arbitration clause because
his counsel became aware of it in litigation and yet plaintiff had not cancelled his
membership. Id. at 232. The trial court denied the motion and the California court of
appeal affirmed. The court of appeal rejected the argument that the plaintiff had notice
of arbitration by virtue of the mailer. Id. at 236. As to the defendant’s argument that the
plaintiff should be bound given his failure to cancel his membership, the court of appeal
noted that the terms and conditions did not state that such inaction constituted
acceptance. Id. Rather, the terms and conditions provided that purchasing a
membership and using a membership, and the plaintiff had done neither prior to the
addition of the arbitration clause. Id. Further, by virtue of participating in the lawsuit, the
plaintiff had made clear he no longer wanted to participate in membership or be
charged. Id. at 236-237.
The Ninth Circuit’s decision in Knapke, et al. v. PeopleConnect, Inc., 38 F.4th 824 (9th
Cir. 2022), is interesting insofar as it was the plaintiff’s attorney who assented to a
website’s Terms of Use, including an arbitration agreement. The issue in the case was
whether the plaintiff had agreed to arbitration through her counsel. Although the district
court denied the defendant’s motion to compel arbitration, the Ninth Circuit reversed
and remanded with instructions to permit discovery on this issue. The plaintiff alleged
that Classmates.com used her name and likeness without her consent and filed a
putative class action alleging privacy rights violations. The plaintiff’s attorney created a
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Duane Morris Class Action Review – 2023
