Caseflicks

California Court of Appeal • 2016

Long v. Provide Commerce, Inc.

245 Cal. App. 4th 855 | 200 Cal. Rptr. 3d 117 | 2016 Cal. App. LEXIS 199

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Takeaway

In short, a browsewrap arbitration clause is unenforceable when a website’s inconspicuous terms link and design do not reasonably notify consumers that completing a purchase binds them to contractual terms.

Background

Brett Long bought a Mother’s Day floral arrangement through ProFlowers.com, a website operated by Provide Commerce, Inc. He alleged that the product was advertised as a completed floral arrangement but arrived as a do-it-yourself kit requiring assembly. He sued under California’s Consumers Legal Remedies Act and unfair competition law on behalf of himself and a putative class of California purchasers.

Provide petitioned to compel arbitration under the site’s Terms of Use. The terms were accessible through a capitalized, underlined “TERMS OF USE” hyperlink at the bottom of ProFlowers webpages. During checkout, the link appeared below the central order-entry box, security notice, and a dark-green feedback bar, in light-green text against a lime-green background. A post-purchase confirmation email also included a small “Terms” link near its bottom. Long declared that he did not notice or read either reference before ordering.

The trial court denied arbitration, finding the hyperlinks too inconspicuous to give Long constructive notice of the Terms of Use. It also denied Provide’s request to transfer the case to San Diego under a forum-selection clause in those terms. Provide appealed.

Issues

Issue #1

Whether Long formed an enforceable browsewrap agreement, including the arbitration provision, by placing an order on ProFlowers.com.

Holding

No. The website and confirmation email did not give a reasonably prudent Internet user inquiry notice of the Terms of Use, so Long did not unambiguously assent to arbitration.

Reasoning

Arbitration rests on consent. Although federal and state law favor enforcing valid arbitration agreements, that policy does not eliminate the threshold requirement that the parties voluntarily agreed to arbitrate. Contract assent is assessed objectively from the parties’ outward words and conduct, viewed in context.

The ProFlowers Terms of Use were a browsewrap agreement: users were purportedly bound merely by using the site, rather than by clicking an “I agree” button. Because browsewrap does not require express assent, its enforceability depends on the user’s actual or constructive knowledge of the terms. Provide did not dispute that Long lacked actual knowledge, leaving only whether the site gave him inquiry notice.

The court reviewed the issue de novo because the material evidence consisted of undisputed screenshots. Drawing on Specht v. Netscape and Nguyen v. Barnes & Noble, the court explained that a visible terms hyperlink alone does not ordinarily establish constructive notice. Effective online contracting requires reasonably conspicuous notice of contractual terms and an unambiguous manifestation of assent to them.

The checkout design did not make the Terms of Use reasonably conspicuous. The order fields and buttons appeared in a prominent white box, while the terms link appeared far below that box, below a security message and logo and a separate feedback bar. It was grouped with a privacy-policy link and displayed in light-green text that blended into the lime-green background. A customer focused on placing an order would have little reason to search that area for binding legal terms.

The confirmation email did not cure the lack of notice. Its “Terms” link appeared only after the recipient scrolled past the order details, advertisements, account-management links, brand logos, and customer-service information. A small gray hyperlink near the bottom of a post-purchase email was not a conspicuous alert that disputes arising from the purchase would be subject to binding arbitration.

The court further agreed with Nguyen that website operators should provide conspicuous textual notice telling users that continued use or completion of a transaction constitutes agreement to the terms. A bare “Terms of Use” link may not convey to all reasonable consumers that it contains binding contractual provisions. Although the court did not need to make this point dispositive because the links here were inconspicuous, it advised online retailers to use clear notice tied to the user’s conduct.

Issue #2

Whether the forum-selection clause in the unassented-to Terms of Use required transfer of the action to San Diego.

Holding

No. Because Long never agreed to the Terms of Use, he was not bound by the forum-selection clause contained in them.

Reasoning

Provide argued that forum-selection clauses are presumptively valid and that Long therefore bore the burden of showing why the San Diego venue provision should not be enforced. The court rejected that argument because the presumption applies to a clause in an otherwise enforceable contract; it does not establish that a contract was formed in the first place.

Accepting Provide’s position would allow a party to prove a binding agreement simply by pointing to a presumptively valid forum-selection clause within the alleged contract. Since Provide failed to show Long assented to the Terms of Use, the trial court properly denied the request to transfer venue.