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Ninth Circuit Judge Blasts ‘Wrong’ Doctrine in Internet Cases
Ryan D. Nelson Pens Concurrence, to Majority Opinion He Authored, Criticizing Precedent Requiring Websites Using So-Called Sign-In Wrap Agreements to Explicitly Advise Users That Certain Acts Will Signal Assent
By Kimber Cooley, associate editor
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Above is a screenshot from a webpage which the Ninth U.S. Circuit Court of Appeals said yesterday is insufficient to bind users to the company’s terms. |
The Ninth U.S. Circuit Court of Appeals held yesterday that a website’s display of an already checked box, next to a notation indicating that the user agrees to the company’s hyperlinked terms of service, failed to bind consumers because the company did not explicitly advise that clicking a button marked “[c]onnect now” would be a signal of assent, drawing a separate opinion criticizing the rule as an “erroneous doctrinal path.”
Noting that the purported contract was an attempt at a “sign-in wrap” contract, or one that includes text indicating that a user will be bound by terms without requiring a review of those provisions or express assent, the court said the company’s website must put a consumer on inquiry notice of the agreement.
According to Ninth Circuit precedent, in order for a sign-in wrap agreement to be binding under California law, the notice of the terms must be reasonably conspicuous, and the website must explicitly advise consumers that the act of clicking a box or button will constitute an agreement to be bound by the company’s governing rules.
Yesterday’s opinion found that the payment page in question failed to explicitly advise users that clicking on the “[c]onnect now” button would amount to assent to the hyperlinked provisions, and so the company was precluded from arguing that the consumers were bound by an agreement to arbitrate found in the terms.
Circuit Judge Ryan D. Nelson penned both the majority opinion and a concurrence criticizing the bright-line rule requiring an explicit advisement to consumers, saying precedent compelled the decision but arguing that the jurisprudence in this area amounts to a demand for “magic words” in contradiction to traditional contract law.
Senior Circuit Judge Richard A. Paez and Sandra S. Ikuta joined in the majority opinion.
Experts for Hire
JustAnswer LLC operates the website at issue, which connects users with experts in certain professional fields. Consumers can create accounts and pose questions to specialists for a fee.
Consumers are initially charged between $1 and $5 to receive an answer and, under the terms of service, are automatically enrolled in a recurring monthly subscription that costs between $46 and $60 per month.
Plaintiffs Jessica Quamina, Tasha Davis, Kristie Nelson, Kseniya Godun, Moya McDowell, Latoya Foust, and Renee Pettit signed on to the service to have a question answered and claim that they were enrolled in the monthly subscription service without their consent.
In 2022, they brought a putative class action against JustAnswer, alleging that the company violated the Electronic Funds Transfer Act, codified at 15 U.S.C. §1693 et seq., and state consumer protection laws. All parties agree that California law applies to the dispute.
Most of the plaintiffs were routed to payment pages that included the pre-checked boxes and “[c]onnect now” buttons, but Davis and Nelson encountered a different screen, which displayed the terms of service in small font and without much contrast to the background.
District Court Judge James Donato of the Northern District of California denied JustAnswer’s motion to compel based on an arbitration provision in the terms of service.
He noted that JustAnswer had been the subject of earlier litigation over its terms of service and found that the payment pages encountered by Davis and Nelson were “legally indistinguishable from” versions that the Fourth District of the California Court of Appeal found insufficiently conspicuous in the 2021 decision in Sellers v. JustAnswer LLC.
As to the other payment page, Donato took issue with the hyperlinked terms not being displayed in a unique color and with the lack of a warning to users that “clicking a button would be deemed acceptance of a contract.”
Yesterday’s opinion affirmed the denial of the motion to compel, agreeing with Donato that the pages Davis and Nelson encountered failed to give conspicuous notice and that the remaining plaintiffs were not explicitly advised that clicking the “[c]onnect now” button would amount to assent to the contractual provisions.
Warrant Attention
In his concurring opinion, Nelson wrote:
“Under our precedent, JustAnswer’s motion to compel arbitration was properly denied. I write separately to address two aspects of our precedent that warrant more attention.”
As to the rule that “a website [must] explicitly advise a user that certain acts will be taken to signal…assent,” he said:
“Here, we demand magic words—or, at least, we come very close….While this has the benefit of a bright-line rule, it is inconsistent with historical and traditional contract law.”
The jurist pointed out that online contracts are to be treated under the same fundamental principles as paper agreements and noted that “[i]n state contract law…assent does not hinge on explicit advisement.” He continued:
“[W]hen we turn around and demand that a website provider ‘explicitly advise[]’ internet users what actions will be taken to signal assent,…we do something else. And that doctrinal blurring is prone to, in turn, bleed into state law as states strive to create consistency by following our rococo rules.”
He pointed out that the Second Circuit “has avoided this pitfall and correctly suggested that California law (and the law of other states) wouldn’t demand these magic words,” and concluded:
“We got it wrong, the Second Circuit got it right, and we should pivot to follow its lead by revisiting…[the] explicit advisement rule. In cases like this one, our decision should be driven only by state law, which generally looks to the ‘reasonable meaning of [parties’] words and acts,’…to find assent, rather than our own invented standard that demands more.”
Visual Conspicuousness
Nelson also took issue with case law addressing the visual conspicuousness of the notice of terms, saying “the bottom line of the…inquiry is reasonableness” but “our precedent has created confusion, suggesting that we look for something more—or something in particular.”
Taking issue with language in certain of the court’s past decisions that seem to require that hyperlinks be both blue and underlined in order to be considered “reasonably conspicuous,” he said that a reasonably prudent internet user may recognize a link based on other factors.
The judge wrote:
“There’s no checklist, magic recipe, or set of per se rules to consult. The district court seemed to assume such a per se rule as it reviewed the screens…and it was wrong to do so.”
He added:
“In interpreting our authorities, district courts, future panels, and practitioners should take care not to allow dicta in our precedents…to be interpreted to freeze the internet in judicial amber. Instead, they should ask how a reasonably prudent internet user would navigate the page considering the totality of the circumstances.”
The case is Godum v. JustAnswer LLC, 24-2095.
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