Ninth Circuit Enforces Online Arbitration Clause That Tested “Outer Limits” of Reasonable Conspicuousness in Consumer Contract
Yesterday, the Ninth Circuit upheld the district court's grant of a motion to compel individual arbitration in a case that "tests the outer limits of what constitutes a 'reasonably conspicuous' provision" in an online contract. The decision in Holl v. United Parcel Service, Inc. contrasts with prior Ninth Circuit rulings, arguably involving less extreme facts, which denied motions to enforce online arbitration clauses. Holl, however, was decided on a petition for mandamus, a remedy that requires the petitioner to establish clearly and indisputably that "extraordinary circumstances" exist to overturn the district court's decision. Holl could not immediately appeal the district court's arbitration order because Section 16 of the Federal Arbitration Act (FAA) permits interlocutory appeals "as of right" only from the denial, not the grant, of a motion to compel arbitration.
The class action complaint in Holl alleged that UPS systematically overcharged its retail customers. UPS moved to compel individual arbitration of Holl's claims pursuant to an arbitration clause in its My Choice Program that allows customers to track and manage deliveries. The Ninth Circuit summarized the online path that users would need to take to get to the arbitration clause while enrolling in the My Choice Program:
As the district court recognized, locating the arbitration clause at issue here requires several steps and a fair amount of web-browsing intuition. The user must access the UPS My Choice Service Terms via the enrollment page's hyperlink, potentially after following the first hyperlink to the 96-page Technology Agreement. The user must then read the UPS My Choice Service Terms and understand that they incorporate the UPS Tariff/Terms and Conditions of Service. Because the My Choice Service Terms do not include hyperlinks to the incorporated documents, the user must visit the full ups.com website, intuitively find the Service Terms and Conditions link at the bottom of the webpage, select it, and locate yet another link to the UPS Tariff/Terms and Conditions of Service. Then, the user must read the UPS Tariff/Terms and Conditions of Service to find the arbitration clause.