Determining Whether “Clickwrap Agreement” Provides “Reasonable Notice” of an Arbitration Agreement Is a Fact-Intensive Inquiry

Carlton Fields

Carlton Fields

Timothy Hidalgo sued the Amateur Athletic Union of the United States Inc. (AAU) on behalf of a purported class for damages emanating from a data breach suffered by the AAU. The court granted the AAU’s motion to compel arbitration.

Hidalgo used the Safari web browser on his iPhone to access and complete the AAU membership application. Because the AAU application was “not compatible for smartphone use,” the plaintiff “had to move the screen back and forth for each line of text and zoom in and out because the full application was not visible on the iPhone screen at one time.” The application contained a “clickwrap agreement” that required Hidalgo to click an “I agree” box after being presented with a list of terms and conditions of use. The court noted that to be bound by an arbitration agreement contained within the clickwrap agreement, the web user must have “reasonable notice of the arbitration provision.” The parties disputed whether the web-based application provided sufficiently reasonable notice of the arbitration provision.

The court discussed several recent cases that examined the enforceability of arbitration provisions contained within clickwrap agreements and identified the following facts as relevant:

  • The font size, bolding, and capitalization of the relevant language;
  • The color of the hyperlink directing the user to the full agreement and whether it “stands out” from the other language;
  • Whether the language next to the checkbox sufficiently notifies the user that he or she is entering into an agreement (as opposed to merely completing a purchase or step, e.g., clicking “place your order” does not specifically manifest assent to additional terms);
  • The layout of the page, including whether the page is “cluttered”;
  • Whether the relevant language directing the user to the full agreement is conspicuously placed on the webpage;
  • The number of other links on the same webpage;
  • The number of different font types and sizes used on the same webpage;
  • Whether the page contains distracting elements, such as other “buttons” or “promotional advertisements”; and
  • Whether notice of the full agreement is provided contemporaneously with the user’s agreement (i.e., on the same page), or later in time (i.e., via a follow-up email).

In sum, the “inquiry whether a web user had ‘reasonable notice’ of contract terms contained in a contract accessible by hyperlink depends on the ‘totality of the circumstances.'” Here, the “AAU application screen clearly draws a reasonable user’s attention to it because of the blue hyperlinks, the red asterisks, the normal font size, and the clear contrast between the mostly black text and the yellow background.” In addition, the terms and conditions box was “prominently placed squarely in the middle of the very end of the application, which is a conspicuous part of the application because it is the last place an applicant looks before finishing the application process.” After discussing other characteristics of the webpage, the court found that the user had sufficient “reasonable notice” of the arbitration provision contained within the clickwrap agreement, and therefore the arbitration agreement was enforceable.

Hidalgo v. Amateur Athletic Union of the United States, Inc., No. 1:19-cv-10545 (S.D.N.Y. June 16, 2020).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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