The Ninth Circuit has never been shy about declining to compel arbitration, and the Court has issued multiple cases outlining what constitutes sufficient notice of certain provisions in consumer-facing terms and conditions, including website terms and conditions.
Just last year, in Berman v. Freedom Financial Network LLC, the Court agreed that a motion to compel arbitration should be denied where the plaintiff alleged that he did not see a notice stating, “I understand and agree to the Terms & Conditions which includes mandatory arbitration.”
The Court noted that the text that purported to notify users that they were agreeing to a mandatory arbitration provision was displayed “in a tiny gray font considerably smaller than the font used in the surrounding website elements, and indeed in a font so small that it is barely legible to the naked eye.” The Court further criticized how the notice was “further deemphasized by the overall design of the webpage, in which other visual elements draw the user’s attention away from the barely readable critical text.”
Based on these design flaws, the Court held that the plaintiffs did not have constructive notice of the terms and conditions, a showing of which requires “reasonably conspicuous notice of the terms to which the consumer will be bound” and “[u]nambiguous manifestation of assent,” elicited notifying the user of the legal significance of the action she must take to enter into a contractual agreement. The Court denied the motion to compel arbitration.
Inevitably, other plaintiffs would appeal to the Court’s interest in graphic design and ask the Court to find that there had been no constructive notice of an arbitration agreement based on the alleged use of “dark patterns,” i.e., design elements intended to trick or deceive a user into agreeing to an action she does not really want. We’ve written and presented extensively on the popularity of dark patterns with the Federal Trade Commission, the Consumer Financial Protection Bureau, and state attorneys general.
Last week, in Oberstein v. Live Nation Entertainment, Inc., the Ninth Circuit issued a decision rejecting the plaintiffs’ allegations that the use of “dark patterns” in the website design had obscured the language notifying the users of the terms of use (and mandatory arbitration clause). In their complaint, the plaintiffs even provided expert declarations and an expert report with diagrams laying out the alleged “dark patterns” on the website.
The district court in Oberstein didn’t see a need for an expert opinion to explain what the court could observe, and the Ninth Circuit has agreed. Instead, the Ninth Circuit upheld the order compelling arbitration, finding, among other things, that the notice employed on the websites to alert users to the terms of use and arbitration provision was materially different from the “tiny gray font” that was “barely legible to the naked eye” in Berman.
The Court described the “Terms of Use” hyperlink as “conspicuously distinguished from the surrounding text in bright blue font, making its presence readily apparent.” In fact, the conspicuousness of the hyperlink was so readily apparent that the Ninth Circuit dispatched with plaintiffs’ argument that the district court had not considered their expert’s testimony, explaining that plaintiffs had conflated “what is necessarily a fact-intensive inquiry with the existence of a material factual dispute.”
Lest there be any confusion, the Court continued: “When uncontested features of a webpage meet the baseline requirements for constructive notice, additional evidence of subjective intent is not required for a court to determine that constructive notice exists.”
Notably, in both Berman and Oberstein, the Ninth Circuit discussed the differences between “clickwrap,” “browsewrap,” and other types of “wrap” agreements. But these labels were not central to either holding. Rather, the court looked at the face of the websites to determine whether visitors had constructive notice of the terms containing the mandatory arbitration provision.
It is promising to see courts’ movement away from these labels, given the trend toward “hybrid” wrap agreements. The takeaway from thesecases is clear: linking to online terms, including arbitration agreements and class action waivers, is permissible, and demonstrating constructive notice remains a fact-intensive inquiry that a court can undertake based on the presentation of the webpage.
In providing users a link to access the terms of use, the font should clear, conspicuous, appropriately placed, and distinct from its surroundings. (In Oberstein, the Court references the “blue” font four times and cites to two other opinions approving of hyperlink notices in blue font, and in Berman, the Court took issue with the website’s failure to underline the hyperlink.) The website should also clearly explain the legal effects of taking the action to enter the agreement.
The Ninth Circuit’s holding demonstrates that it will not take plaintiffs—or even their experts—at face value when they allege “dark patterns” on a website. Hopefully, courts will follow these holdings when analyzing other cases challenged by class action plaintiffs, the Federal Trade Commission, the Consumer Financial Protection Bureau, and state attorneys general. As “dark pattern” challenges continue with full force, other courts will be forced to weigh in. Stay tuned.
