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Online, consumer driven businesses are growing. With that success comes the need for companies to enforce their terms, such as arbitration clauses, forum selection clauses, or class action waivers in court.
Not being able to enforce these clauses = big money loss. Litigation can be tricky, expensive, and time-consuming. On top of that, online agreement best practices are constantly changing based on court application of the law. The need to keep up with recent cases is important. Don't worry, we took care of that for you in our monthly 'Case' Studies.
This month our legal team reviews cases from DoorDash, Intuit, eBay, Facebook, and more.
LendingClub was recently unable to enforce their terms in court. In Shron v. LendingClub Corporation, LendingClub required users to agree to their terms via clickwrap. Users had to check a box indicating their agreement to several sets of terms before they could proceed through the application process. Each of these agreements was named something along the lines of "borrower agreement" or "loan agreement." The court didn't like the names of the agreements, reasoning that even though users were required to check a box indicating their assent, "the language on the page does not alert the user to the legal significance of proceeding with that step." The court here seems to be a little nit-picky, but LendingClub likely would have fared better if they had chosen different names for their contracts and rephrased the contract language to say "read and agree" rather than just "agree" to the contracts.
Facebook recently enforced its terms in court in Kidstar v. Facebook, Inc. Facebook required users to agree to a User Agreement when signing up for an account through a sign-in-wrap agreement. The court found that users had reasonable notice of the terms, looking at "the plaintiff's online user experience, including the language used, the layout of the online interface, and the appearance and location of the hyperlink to the terms."
My Daily Choice recently sued a couple of former affiliates for violating its non-compete agreement in My Daily Choice, Inc. v. Hunter. The former affiliates tried to have the case dismissed, arguing that they never agreed to the non-compete in the first place. My Daily Choice required affiliates to agree to its Policies and Procedures by clicking a box during the sign-up process. The court sided with My Daily Choice and found an enforceable clickwrap agreement.
In the case, Anderson v. Amazon. com, Inc. et al., eBay recently enforced their terms in court. eBay used a sign-in-wrap agreement for user assent to their terms. Consumers are notified that by placing an order, the consumer agrees to eBay’s user agreement. eBay provided consumers with a means of opting out of certain provisions of the agreement, but the consumers at issue in the case did not take the steps to opt out. As a result, the court enforced eBay’s terms.
Pfizer recently enforced their terms in court. Pfizer required employees to click a box to acknowledge receipt of its policies. Pfizer also alerted employees that if they failed to click the box, yet continued working for Pfizer for 60 days, that also constituted acceptance of the policies. In Skuze v. Pfizer, Inc., the court held that Pfizer “clearly informed” employees that by continuing to work, they would be bound by Pfizer’s policies. As a result, the court sided with Pfizer and enforced their terms.
DoorDash recently enforced their terms in court. DoorDash employed a sign-in-wrap to capture consumer assent to their terms. On the sign up screen, DoorDash alerted users that “by signing up, you agree to our Terms and Conditions Agreement.” Additionally, when DoorDash modified their terms, they presented users with a pop-up screen notifying them of the updates. Users were unable to proceed unless they checked a box stating “I agree to the updated Terms” and clicked a button labeled “accept.” In Arkin v. DoorDash, Inc., the court liked these presentations and sided with DoorDash, enforcing their terms.
Stay tuned next month to get your online contract acceptance 'case' studies from the PactSafe Legal Team.
Update: We have released the 2021 report of clickwrap litigation trends with more up to date best practices and case rulings from the last year. Our Clickwrap Litigation Trends: 2021 Report also analyzes the impact of the pandemic and the boon of eCommerce on the trends we see. Download your copy!