Samuel Estreicher and Holly H. Weiss ()
In Meyer v. Kalanick,1 the U.S. Court of Appeals for the Second Circuit is set to decide whether a “sign-in wrap” agreement to arbitrate with a consumer is enforceable. “Clickwrap” agreements, which require consumers to click on an “I agree” box after being presented with the terms and conditions of using the service, have been enforced by the courts.2 In contrast, “browsewrap” agreements, which present the consumer with a hyperlink to click to access the terms and conditions on the service provider’s website, have encountered greater resistance.3 For example, in Specht v. Netscape Communication,4 the Second Circuit did not enforce a browsewrap agreement to arbitrate with a consumer, holding such agreements are enforceable only if there is: (1) “reasonably conspicuous notice of the existence of contract terms,” and (2) “unambiguous manifestation of assent to those terms.” A “sign-in wrap” agreement is one where the user is notified of the existence of the terms and conditions when signing in or logging on, but does not have to affirmatively agree to the terms and conditions.
The District Court’s Opinion
Arguments on Appeal
On appeal to the Second Circuit, Uber and Kalanick argued that the registration process provided conspicuous notice of the terms and conditions to which Meyer assented and that a reasonable consumer would understand that registering for a service entails agreeing to the terms and conditions. Uber and Kalanick urged that by taking the affirmative step of clicking “REGISTER,” the consumer assented to Uber’s terms and conditions, and there is no reason the enforceability of an offeror’s terms should depend on whether the offeree states (or clicks), ‘I agree.’”7 Uber and Kalanick distinguished Specht on the ground that the consumers in that case had no reason to suspect that there were any license terms because they were downloading free software, whereas a reasonable consumer would understand that entering their credit card information and clicking “REGISTER” would likely form a contract that would govern the transactions. Uber and Kalanick also argued that the district court unfairly and improperly discriminated against arbitration. In opposition, Meyer argued that the court should defer to the district court’s factual findings that the contractual language was not reasonably conspicuous and, as in Specht, did not provide a means for unambiguous assent. Meyer also noted that the Second Circuit has never upheld a “non-clickwrap” interface like Uber’s “User Agreement.”
Courts have rarely declined to compel arbitration based on the “liberal federal policy favoring arbitration” under the FAA, including in appropriate cases arbitration agreements with consumers.8 If the Second Circuit affirms the district court’s decision, it may signal a reversal of the trend of liberally favoring enforcement of agreements to arbitrate, or at the very least impose limits on the enforceability of electronic arbitration agreements with consumers.
1. No. 15 Civ. 9796 (S.D.N.Y. Jul. 29, 2016) (opinion and order denying motion to compel arbitration).
2. See, e.g., Cullinane v. Uber Technologies, 2016 WL 3751652, at *6 (D. Mass. July 11, 2016).
3. See, e.g., Schnabel v. Trilegiant, 697 F.3d 110, 129 n. 18 (2d Cir. 2012); see also Berkson v. Gogo, 97 F. Supp. 3d at 396 (E.D.N.Y. 2015) (“Following the ruling in Specht, courts generally have enforced browsewrap terms only against knowledgeable accessors, such as corporations, not against individuals.”).
4. 306 F.3d 17 (2d Cir. 2002) (electronic contract formation case).
5. No. 15 Civ. 9796 at *2 (S.D.N.Y. Jul. 29, 2016).
6. Id. at 28.
7. Register.com v. Verio, 356 F.3d 393, 403 (2d Cir. 2004).
8. AT&T Mobility v. Concepcion, 563 U.S. 333, 339 (2011).