Website Design Implicated in Two Rulings on Enforceability of Online Terms – Highlights the Importance of Legal Review of Design Decisions

7 02 2017

This past summer, we wrote about two instances in which courts refused to enforce website terms presented in browsewrap agreements.  As we noted, clickthrough agreements are generally more likely to be found to be enforced.  However, even the enforceability of clickthrough agreements is going to depend, in part, on how the user experience leading to the “agreement” is designed.  Two recent decisions illustrate the importance of web design and the presentation of the “call to action” language in determining the enforceability of a site’s clickthrough terms.

In a decision from early November, a D.C. federal court ruled that an Airbnb user who signed up on a mobile device had assented to the service’s Terms and was bound to arbitrate his claims. (Selden v. Airbnb, Inc., 2016 WL 6476934 (D.D.C. Nov. 1, 2016)).   Conversely, in a notable decision from late August, the Second Circuit refused to rule as a matter of law that the plaintiff was bound by the arbitration clause contained in Amazon’s terms and conditions because the plaintiff did not necessarily assent to and was on constructive notice of the terms when he completed the purchase in question. (Nicosia v., Inc., 2016 WL 4473225 (2d Cir. Aug. 25, 2016)).


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Browsewrap Agreement Held Unenforceable – Website Designers Take Note!

30 01 2017

In Nghiem v Dick’s Sporting Goods, Inc., No. 16-00097 (C.D. Cal. July 5, 2016), the Central District of California held browsewrap terms to be unenforceable because the hyperlink to the terms was “sandwiched” between two links near the bottom of the third column of links in a website footer.  Website developers – and their lawyers – should take note of this case, part of an emerging trend of judicial scrutiny over how browsewrap terms are presented. Courts have, in many instances, refused to enforce browsewraps due to a finding of a lack of user notice and assent. In this case, the most recent example of a court’s specific analysis of website design, a court suggests that what has become a fairly standard approach to browsewrap presentment fails to achieve the intended purpose.


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Want An Enforceable Online Contract? Don’t Use A Footer Link Called “Reference”–Zajac v. Walker

30 01 2017

This lawsuit involves the purchase of items I don’t understand. Let’s just call them “thingies.” The buyer Zajac needed thingies with an appropriate rating. It bought the thingies from a distributor, Walker, then realized the thingies didn’t have the appropriate rating. Recriminations and a lawsuit ensued.

The thingies’ manufacturer, Turck, sought a venue change based on the “terms of use” section of its website. The buyer had reviewed the manufacturer’s website to confirm the thingies’ rating. The manufacturer took the position that the buyer’s website review incorporated the terms of use into the transaction. But what did the manufacturer do to draw the buyer’s attention to these terms of use? Apparently, bupkis:

the terms of use page could be accessed by clicking on a small link at the bottom of Turck’s website entitled “Reference.” Users were not prompted to read or affirmatively agree to the terms of use.

The court is totally unimpressed with the manufacturer’s arguments (yes, the court calls the TOU a browsewrap but I’ll overlook that transgression):

Merely including terms of use on a website is not sufficient to incorporate those terms into legal relations between the website operator and the user, even where the user purchases an item or downloads software from the operator’s website….


Case citation: Zajac, LLC v. Walker Industrial, 2016 WL 3962830 (D. Maine July 21, 2016)

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Court Enforces Arbitration Clause in Amazon’s Terms of Service–Fagerstrom v. Amazon

2 01 2017

This lawsuit alleges that Amazon overstated the extent of discounts it offered customers (in stating the extent of the discount customer achieved when shopping at Amazon versus competing retailers). Amazon moved to compel arbitration, and the court grants the motion. The efficacy of arbitration clauses in online terms of service agreements is an evergreen topic of interest, so although it was decided in late October I thought the case was worth noting.

The court agrees with Amazon that Washington law applies. Plaintiffs argued for application of California law, but were unable to point to a fundamental conflict between the laws of the two states.

The terms are not illusory. The agreement reserved the right for Amazon to make changes at any time and without prior notice. Plaintiffs argued that this rendered the agreement illusory. The court disagrees, and says that Amazon has agreed to arbitrate disputes as to products purchased. This obligation remains unchanged and cannot be altered by a later revised term. Additionally, Amazon is bound by the duty of good faith. So even if it can alter the agreement freely, this right is subject to limitations.

The terms are not undermined by procedural unconscionability. Plaintiffs raised three main arguments in support of procedural unconscionability:

  • the text of order affirming agreement to the terms were not sufficiently prominent
  • the arbitration clause was buried because it was included in a longer document that was only linked
  • the arbitration clause incorporated a set of AAA rules but were vague about which ones were incorporated

These arguments get no traction.

The terms were not substantively unconscionable: Plaintiffs’ substantive unconscionability arguments similarly failed. The court previously addressed plaintiffs’ argument that the unilateral right to amend rendered the agreement illusory. In addition to this, plaintiffs raised two other arguments.

First, plaintiffs argued that the carveout from the arbitration clause for intellectual property claims was one-sided, and in effect allowed Amazon to litigate the claims that were most important to it, while forcing consumers to arbitrate claims that were most important to them. The court finds this unpersuasive, noting that customers include rightsowners who may litigate intellectual property disputes against Amazon. Second, even if this represented some imbalance, this wasn’t a provision that shocked the conscience. It was within the realm of the typical give-and-take in a contract.

Second, plaintiffs focused on a provision voluntarily limiting Amazon’s right to seek attorney’s fees unless the arbitrator found the claims were frivolous. The court rejects this as well. First, it re-states state law on this point. Second, Washington law has a mandatory reciprocal fee provision, so whatever the effect of this provision, plaintiffs get the benefit of it as well. Finally, the provision does not limit plaintiffs right to seek fees in any way.

Although the court finds that it is not “a paragon of consumer protection” it says the agreement is not unconscionable.


(The ruling has been appealed.)

Case citation: Fagerstrom v. Amazon, Inc., 15-cv-96 BAS (S.D. Cal. Oct. 20, 2015)


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Can YouTube ‘Remove And Relocate’ User Videos Capriciously?–Darnaa v. Google (Forbes Cross-Post)

29 12 2016

Most of us uploading YouTube videos aren’t deeply invested in their continued availability. If YouTube removed our videos or relocated them to a different URL, we might be puzzled why but otherwise would probably shrug our shoulders. However, YouTube is the birthing ground for the next generation of music stars, and there’s a lot of money to be made from a successful viral YouTube video. When YouTube removes or relocates a video that an emerging star is investing in some marketing muscle to promote, it can disrupt the musician’s economic expectations–and, in theory, their hopes and dreams. Can YouTube make these remove/relocate decisions capriciously, or could it face legal liability for the decisions?

Several pending lawsuits against YouTube allege that it made remove-and-relocate without sufficient justification or that YouTube’s public characterization of the remove-and-relocate was misleading. YouTube won the most recent court ruling, but not as decisively as it would have liked–and with a few choice words from the judge as well.


Case Citation: Darnaa LLC v. Google, Inc., 2015 WL 7753406 (N.D. Cal. Dec. 2, 2015). The initial complaint.

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