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Clickwrap Agreement: Consent or Not Consent, That Is A Question

When plaintiff Rojas tried to register and access job postings on defendant GoSmith’s website, he was able to see, adjacent to a check box near the bottom of the webpage, and underneath a “SIGN UP” or “See Job Matches” button, the following arbitration clause:

“At the sole option of Smith, any claim, dispute or controversy arising out of, relating to or concerning in any way the Agreement or use of the Website shall be resolved by binding arbitration administered by the American Arbitration Association (“AAA”) under its commercial arbitration rules. The decisions of the arbitrators shall be binding an conclusive upon all parties involved, and judgment upon any arbitration award may be entered by any court having competent jurisdiction… .

Smith may elect, in its sole discretion, not to use arbitration for any Individual Claim that you properly file and purse in court.”

Rojas clicked the button and proceed to see job matches.

Now in this action, Rojas sued GoSmith for violations of TCPA, alleging that GoSmith sent him at least 73 text messages without his prior consent. GoSmith moved to compel arbitration based on the above arbitration clause that it believes binding as a result of Rojas’ click on that “See Job Matches” button. Rojas counters that the agreement is invalid because there was no acceptance, no consideration, and even if there were acceptance and consideration, the agreement should be unenforceable due to unconsionability. See Rojas v. GoSmith, Inc., No. 2:17-CV-281-JVB-JEM, 2020 U.S. Dist. LEXIS 28922 (N.D. Ind. Feb. 20, 2020).

The court opines on all three points. First, acceptance. The court acknowledges that there is nothing automatically offensive for being a clickwrap agreement, “as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement.” Rojas, No. 2:17-CV-281-JVB-JEM, 2020 U.S. Dist. LEXIS 28922 at *7 (citation omitted). However, the court finds, with this specific clickwrap agreement, the problem is that, setting aside the fact that the check box adjacent to the arbitration clause was pre-checked already, there was no language like “ I Accept” or “Accept” that could put Rojas on reasonable notice that his click on that “See Job Matches” button would also mean that he assented to the arbitration agreement.

The court finds that “[n]o evidence shows any indication that Plaintiff was advised to read the entirety of the webpage or that he needed to opt out of the agreement.” The court thus finds that Rojas’ actions – clicking the “See Job Matches” button – could hardly indicate anything further, rather than what the plain language says on its face, i.e., see job matches. 

The court does find that there was adequate consideration for the agreement, that is, Rojas’ ability to use the exclusive portions of GoSmith’s website for its professional services.

As to the issue of consiconability, the Indiana law applies similar standards to those of many other states: an unconscionable contract “must be such as no sensible man not under delusion, duress or in distress would make, and such as no honest and fair man would accept.” Rojassupra, at *11. Now let’s re-visit some part of the language in the arbitration clause here, for example, “[a]t the sole discretion of Smith” and “Smith may elect, in its sole discretion.” One would argue that this must be unconscionable, right? Because it provides Smith with absolute unilateral ability to decide whether to arbitrate or not without any objective standards, and no sensible man should accept this.

The court says, not so much, “[c]ontract provisions … do not need to impose identical duties on all parties.” Thus, Rojas’ argument on the substantive unconsionability based on the unequal duties does not stand. (I cannot say I am completely convinced by the court’s explanation here, but understand that this is an arbitration contract, and we all know how much the courts favor them.) The court also finds no procedural unconsionability here based on its determination that clickwrap agreements are generally allowed under Indiana law.

Finally, something actually about the TCPA claims, the court needs to decide whether, as GoSmith argues, the alleged TCPA violations arise out of or relate to the underlying agreement. The text of the agreement says that “Smith will inform Service Provides with profiles that match the services requested by Consumer.” Thus, any texts that were sent before Rojas had an account and requested service with GoSmith do not arise out of or relate to the agreement. With respect to the text messages that were sent after Rojas created an account, Rojas argues that they are not within the scope of the arbitration agreement because GoSmith were advertising and marketing its products, which was not part of the services requested pursuant to the agreement. However, the contents of the alleged text messages are not before the court, and thus, the court finds insufficient facts to determine this issue.

Based on the foregoing, the court denies the motion to compel arbitration, and orders the parties to propose a limited discovery plan and will allow a renewed motion following the completion of the limited discovery.

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 55

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About this Author

Shiqi (Sara) Borjigin Litigation Attorney Squire Patton Boggs Los Angeles, CA
Associate

Sara Borjigin is a Litigation associate in the Los Angeles office, focusing on business and commercial disputes and matters involving the Telephone Consumer Protection Act (TCPA).

Prior to joining our team, Sara handled various disputes involving business and employment law, professional liability, securities and insurance coverage.

During law school, Sara was a judicial extern for the Honorable Richard L. Fruin in the Superior Court of California in the County of Los Angeles. She also studied abroad in Beijing, China, at Peking University Law School.

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