Cal. Court of Appeal Declines to Enforce Online Arbitration Clause

A few weeks ago, we wrote about the Seventh Circuit’s decision in Sgouros v. TransUnion Corp., declining to compel arbitration because the defendant’s website failed to clearly inform users that they were agreeing to arbitrate their claims.

Around the same time, the California Court of Appeal issued a published opinion reaching a similar conclusion in Long v. Provide Commerce, Inc.  The defendant’s website allows consumers to purchase flower arrangements.  At the bottom of the webpage is a “Terms of Use,” which is viewable via a hyperlink.  Within the Terms of Use was a binding arbitration clause.

The Court of Appeal distinguished “browsewrap” agreements from “clickwrap” agreements, in that “browsewrap agreements do not require users to affirmatively click a button to confirm their assent to the agreement’s terms; instead, a user’s assent is inferred from his or her use of the website.”

Based on the layout of the defendant’s website, the trial court concluded that the Terms of Use hyperlinks were too inconspicuous to impose constructive knowledge on the plaintiff.  The Court of Appeal affirmed, concluding that “the hyperlinks and the overall design of the website would not have put a reasonably prudent Internet user on notice of Provide’s Terms of Use, and Plaintiff therefore did not unambiguously assent to the subject arbitration provision simply by placing an order on”