Terms of Service in “Clickwrap” Agreement Sufficient to Bar Negligence Claim

• Posted on: Feb 22 2019

In today’s world of e-commerce, a person cannot buy something online, subscribe to a service, or join a club or organization without agreeing to the provider’s “terms of service”. These terms are often lengthy and difficult to read (i.e., they are not written in plain English). For these reasons, among others, most consumers simply click the “I agree” button or link without reading the text or thinking about what they agreed to.

To many consumer advocates, such electronic terms of service should not be binding. The reason, important terms, such as arbitration requirements or other conditions precedent to a claim, are buried in a sea of words that consumers do not read or understand.  Thus, argue these advocates, it is unfair to bind consumers to agreements that are nothing more than contracts of adhesion.

As discussed in O’Brien v. Trooper Fitness LLC, 2019 NY Slip Op 30319(U) (Sup. Ct. N.Y. County Feb. 8, 2019) (here), the courts do not agree with the critics of online contracts. Indeed, courts have held that “[t]here is nothing automatically offensive about such agreements, as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement.” Sgouros v. Trans Union Corp., 817 F.3d 1029, 1033-34 (7th Cir. 2016). For this reason, “[c]ourts around the country have recognized that [an] electronic ‘click’ can suffice to signify the acceptance of a contract.” Id. See also Meyer v. Uber Techs., Inc., 868 F.3d 66, 75 (2d Cir. 2017).

There are two common types of electronic agreements: clickwrap and browsewrap. Each provides a different manner of assent by the user. Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016). The former requires users to click an “I agree” box after being presented with a list of terms and conditions of use, while the latter requires the user to click on a hyperlink at the bottom of the screen that takes the user to the terms and conditions on a website. Id. at 233; Meyer, 868 F.3d at 75; Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175-76 (9th Cir. 2014).

In addition to the foregoing, some online agreements require the user to scroll through the terms before the user can indicate his/her assent by clicking “I agree.” See, e.g., Berkson v. Gogo LLC, 97 F. Supp. 3d 359, 386, 398 (E.D.N.Y. 2015) (terming such agreements “scrollwraps”); Meyer, 868 F.3d at 75. Other agreements notify the user of the existence of the website’s terms of use and, instead of providing an “I agree” button, advise the user that he/she is agreeing to the terms of service when registering or signing up. Id. at 399 (describing such agreements as “sign-in-wraps”). See also Meyer, 868 F.3d at 75-76.

Courts routinely uphold clickwrap agreements for the principal reason that the user has affirmatively assented to the terms of agreement by clicking “I agree.” Meyer, 868 F.3d at 75; Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 837 (S.D.N.Y. 2012) (collecting cases). “Under New York law, [click-wrap] contracts are enforced so long as the consumer is given a sufficient opportunity to read the [contract], and assents thereto after being provided with an unambiguous method of accepting or declining the offer.” People ex rel. Spitzer v. Direct Revenue, LLC, 19 Misc. 3d 1124(A), 2008 N.Y. Slip Op. 50845(U), *4 (Sup. Ct., N.Y. County 2008) (here). “Claims that a consumer was not aware of the agreement or did not actually read it must be disregarded where … the agreement was acknowledged and accepted by clicking on the relevant icon.” Id. (holding that the click-wrap agreement was binding and barred a claim for deceptive or unlawful conduct).

Browsewrap agreements, on the other hand, do not require the user to expressly assent. Meyer, 868 F.3d at 75 (citing Juliet M. Moringiello, Signals, Assent and Internet Contracting, 57 Rutgers L. Rev. 1307, 1318 (2005) (“[B]rowse-wrap encompasses all terms presented by a web site that do not solicit an explicit manifestation of assent.”)). “Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of a website’s terms and conditions.” Nguyen, 763 F.3d at 1176 (citation omitted).

In O’Brien, the Court dismissed a personal injury complaint involving a clickwrap agreement, finding that the plaintiff was bound by the terms and conditions in the agreement.

O’Brien v. Trooper Fitness LLC

O’Brien arose in the context of a personal injury action. Plaintiff, Kristen O’Brien (“Plaintiff” or “O’Brien”), claimed that she was injured while exercising at a gym (the “Gym”) owned, operated, managed and maintained by defendant, Trooper Fitness LLC (“Trooper”). O’Brien claimed that she was at the Gym pursuant to a subscription she had with the defendant, Class Pass Inc. (“Class Pass”), which “provided access, via an [a]pp, to its members and/or subscribers, to a variety of [g]ym locations,” including the Gym.

Plaintiff became a member of Class Pass, which “own[ed] and operate[d] an e-commerce platform through which subscribed members [could] enroll in health and fitness classes offered by independent studios, gyms, and fitness centers”, by creating an account with the company. Only members of Class Pass were permitted to sign up for classes at Trooper through the Class Pass app. Before O’Brien could join Class Pass, she was required to accept the company’s Terms of Use.

Among other things, the Terms of Use provided that: “By accessing and/or using the [s]ite, you accept and agree to be bound by [the Terms of Use], just as if you had agreed to these terms in writing. If you do not agree to these [t]erms do not use the [s]ite.” The Terms of Use required that all disputes between Class Pass and one of its members had to be resolved by arbitration unless the member opted out of arbitration in the manner prescribed in the agreement. Further, Class Pass members seeking to bring a claim against the company were required to provide written notice of such a claim in order to afford Class Pass an opportunity to resolve the dispute before it was litigated or arbitrated.

O’Brien conceded that when she signed up for Class Pass, she did not “see any language on the website or App where [she] agreed to waive her right to trial in favor of [a]rbitration” and had “no specific recollection of seeing any disclaimers or waivers to that effect.” Like most consumers, O’Brien did not “specifically review [the Terms of Use] during the sign up process or subsequent to the sign up process.”

O’Brien commenced the action alleging, among other things, that, prior to the date of the accident, she reserved access to the Gym by means of the Class Pass app. She claimed that Trooper and Class Pass negligently caused her accident since they either created a dangerous condition at the Gym or had actual and/or constructive notice of a dangerous condition at the premises and failed to address it.

Class Pass moved to dismiss the complaint based on documentary evidence (CPLR § 3211(a)(1)) or, in the alternative, to compel arbitration pursuant to CPLR § 7501.

Class Pass argued that the complaint should be dismissed because O’Brien waived the right to bring personal injury claims against the company under the Terms of Use and because she failed to provide Class Pass with notice of the claim as required by the Terms of Use. Alternatively, Class Pass argued that, in the event the complaint was not dismissed, Plaintiff should be compelled to arbitrate her dispute pursuant to CPLR § 7501 and the Terms of Use.

In opposition, O’Brien argued that the arbitration provisions were unenforceable as a matter of public policy because they were buried in the Terms of Use, which “require[d] an additional click or scrolling to display.”

In reply, Class Pass argued that O’Brien was bound by the Terms of Use, whether she read them or not, since she clicked on the link agreeing to accept them.

The Court’s Ruling

The Court agreed with Class Pass and dismissed the compliant. The Court held that the agreement was enforceable and, therefore, O’Brien was bound by the Terms of Use therein.

Plaintiff admits that she was at the gym on the day of her accident through the use of her Class Pass membership. However, plaintiff could not have joined Class Pass without agreeing to its Terms and Conditions, which were accessible through a hyperlink on the sign in page and which she accepted by clicking on a box on the said page. By agreeing to the Terms and Conditions, she is now bound by them.

Slip Op. at *5.

Since the agreement was enforceable, the Court found that O’Brien had waived her right to bring a personal injury claim against Class Pass. Id.

The Court also held that O’Brien failed to satisfy the notice requirement set forth in the Terms of Use. As such, she failed “to satisfy a condition precedent to suit” necessitating dismissal of her complaint. Id. at *6.

Finally, the Court addressed the dilemma consumers often find themselves in when they use an app to buy goods or services: they must agree to lengthy terms and conditions in order to use the app or access the website. In this regard, the Court found that neither case authority nor public rendered clickwrap agreements unenforceable:

She essentially opposes the motion by arguing that information such as the Terms and Conditions is “often contained in hyperlinks that generally require an additional click or scrolling to display” and that, even if a user accesses such information, it is too “onerous to actually read through from start to finish.” However, she speaks only in generalities and does not address the Terms and Conditions at issue herein. Additionally, she admits that she “never read” the Terms and Conditions and “has no specific recollection of even seeing [them] when she signed up for Class Pass.” Thus, she does not deny that the Terms and Conditions existed or that she was able to access them. Further, plaintiff cites no legal authority whatsoever for the foregoing arguments, or for her contention that the Terms and Conditions are unenforceable as against public policy.

Id.

Takeaway

The courts have been clear that the “making of contracts over the internet ‘has not fundamentally changed the principles of contract.’” Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362, 366 (E.D.N.Y. 2009) (quoting Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004), aff’d, 380 Fed. App’x 22, 25 (2d Cir. 2010) (summary order)). Accordingly, parties seeking to enforce an electronic contract must demonstrate “an offer, acceptance, consideration, mutual assent and intent to be bound.” Register.com, 356 F.3d at 427 (internal citation and quotation marks omitted). As shown in O’Brien, these elements are satisfied with respect to clickwrap agreements because the terms and conditions are available for the user to review and require the user to affirmatively declare their assent to them before the user can use the app or access the website. Serrano v. Cablevision Sys. Corp., 863 F. Supp. 2d 157, 164 (E.D.N.Y. 2012).

Tagged with: Breach of Contract, Browsewrap, Clickwrap, Commercial Litigation, Online Contract, Scrollwrap, Sign-In-Wrap