2019 was an exciting year for clickwrap litigation.
Numerous companies from a variety of industries faced the uphill battle of enforcing their online terms in court. And with an overall win rate of 70%, many of these companies brought their “A” game to the field. This post gives a high-level overview of what we saw play out with clickwrap litigation in the courts over the past 12 months.
Of the three main types of online agreements disputed this year, 60% were clickwrap agreements, 25% were sign-in-wrap agreements, and 13% were browsewrap agreements. 80% of clickwrap agreements litigated were successful, 65% of sign-in-wrap agreements were successful, and only 38% of browsewrap agreements were successful.
Arbitration clauses were the most common contract clause companies tried to enforce, with rulings on motions to compel arbitration comprising a solid 75% of the cases that came out this year. Forum selection clauses were the second most common contract clause at issue, with cases involving forum selection or venue transfers trailing far behind those of arbitration at merely 10%.
The travel industry experienced the most clickwrap litigation. 20% of clickwrap cases involved travel-related companies like JetSmarter, Southwest Airlines, and Expedia. Ecommerce came in at a close second. 16% of cases involved companies like Amazon and Wayfair. Other industries hit consistently include finance, software, health, and social media.
Evidence used to persuade the court to enforce the company’s terms fell into three main categories: affidavits or declarations by key employees, screenshots, and back-end records.
In 27% of cases, the company seeking to enforce their terms relied solely on declarations or affidavits of key employees. In another 27% of cases, companies didn’t seem to offer any evidence other than what was written in the motion to enforce the terms, the complaint, the answer, replies, etc.
In 20% of cases, the company relied on a combination of declarations or affidavits and screenshots. Additionally, in 14% of cases, the company relied on a combination of declarations or affidavits and back-end records. Finally, in 8% of cases, the company relied on all three types of evidence, bringing in a combination of back-end records, screenshots, and declarations or affidavits by key employees.
The most commonly violated best practice was the company’s (in)ability to produce a robust back-end record of contract acceptance. This includes the inability to provide individualized records as well as the inability to offer more than just the user and the date the user signed up for the account.
Poor screen design was the second most commonly violated best practice. Companies violating this best practice failed to design their screen in a way that would put the user on constructive notice that they were entering into an agreement.
The use of browsewrap agreements, inability to authenticate back-end records, and failure to afford the user a meaningful opportunity to read the terms prior to accepting were also commonly violated best practices. Additionally, one company was unable to provide adequate evidence in time and missed the court deadline, therefore losing by default.
The fact that the most commonly violated best practice is lack of a good back-end record indicates that courts are starting to expect better evidence of contract acceptance. Additionally, courts seem to be paying closer attention to screen design and how the agreement is displayed to the user. Finally, the 80% success rate of clickwraps indicates that courts have stopped automatically enforcing agreements that are presented as clickwrap agreements, as they often did in the past. Rather, courts are looking into what evidence is presented in terms of what data is captured upon user acceptance, how the screen is displayed to the user, etc., in determining the validity of all online agreements regardless of type.
The following cases were particularly important this year:
In re: Facebook, Inc., Consumer Privacy User Profile Litigation: This case is important for two reasons. First, it was heavily followed because it arose out of the Cambridge Analytica Scandal, which tainted Facebook’s image in the eyes of millions of consumers. Second, this case indicates that courts are taking this type of litigation seriously and are starting to be more demanding with the evidence required to prove valid contract acceptance.
Williams v. Eaze Solutions, Inc.: This case is important because it highlights a trend we expect will continue. Specifically, plaintiffs’ lawyers are starting to point to issues of contract formation, rather than enforceability, to circumvent a company’s attempt to enforce their terms.
Holley v. Bitesquad: This case is a good example of a plaintiff’s lawyer making the fraud argument. Although unsuccessful in this case, lawyers are arguing that records are fraudulent or forged when in the exclusive control of the party seeking to introduce them as evidence.
Independent Living Resource Center San Francisco v. Uber Technologies: This case highlights another interesting stance plaintiffs (and their lawyers) are taking to prevent the enforcement of clickwrap terms. In this case, the plaintiffs never personally downloaded the Uber app, and therefore never assented to Uber’s terms. The plaintiffs argued that lack of privity precluded them from being bound by the contract’s terms.
Clickwrap litigation will continue to rise, and courts will continue to get more sophisticated in how they evaluate online agreements. To learn more about the clickwrap litigation trends and the significant increase in clickwrap litigation over the years, download the white paper.