United States: Placement Of Checkbox Can Make Or Break A Clickwrap Agreement

Richard Raysman is a Partner in Holland & Knight's New York office

The enforceability of a wrap agreement (browsewrap, clickwrap and shrinkwrap) can often turn on what to the untrained eye may be mere minutiae. Such minutiae can include the nuances of the design of a website. For example, in Friedman v. Guthy-Renker LLC, No. 2:14-cv-06009-ODW, 2015 WL 857800 (C.D. Cal. Feb. 27, 2015), a recent case from the Central District of California, the court was faced with objections to a website's browsewrap agreement. As the decision ultimately illustrated, the enforceability of these agreements can depend at least in part on the location of text relative to a checkbox a customer must click in order to manifest the requisite assent.

Facts

In a putative class action, the plaintiffs, including Amy Friedman (Friedman) and Krystal Henry-McArthur (Henry-McArthur), sued Guthy-Renker, a "direct marketing" corporation for allegedly selling them conditioner (WEN) that caused each of the plaintiff's hair to fall out. Specifically, they alleged that the hair loss caused by WEN was the result of a design and/or manufacturing defect. According to these plaintiffs, such a defect raised seven causes of action, including, inter alia, breach of warranty, strict products liability, and failure to warn negligence.

Guthy-Renker responded in its Motion to Dismiss by averring that its website Terms and Conditions, and the binding arbitration and class action waiver clauses contained therein, precluded the sort of litigation attempted by Friedman, Henry-McArthur, and the other plaintiffs. Assent to such Terms and Conditions required customers to "click[] an interactive check box" on the final checkout screen. Neither Friedman nor Henry-McArthur disputed that they had (1) clicked the interactive check box, nor (2) that the Terms and Conditions included class action waiver and binding arbitration clauses. Rather, these plaintiffs alleged that clicking the interactive check box did not constitute a manifest of knowing assent to such clauses.

Ultimately, the court arrived at opposite conclusions for the two plaintiffs named above, largely premised on the differences in the structure and design of Guthy-Renker's website at the time each respective purchase was made. See Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir. 2014) (holding that often website design can dictate the validity of an online contract) Therefore, a detailed explanation of the design of the pages of the website accessed by the plaintiffs is warranted.

At the time of Friedman's purchase, the final checkout screen, titled "Your Shopping Cart," was where the Friedman imputed her contract, billing, and payment information. In close proximity to the bottom of that page, there were two lines of text and the interactive checkbox. The text was above the checkbox. The text read: "By checking this box, you are electronically signing your order and authorizing us to charge payments against credit card provided above." The interactive checkbox was labeled "Agree to terms," and notes that clicking the box is required to complete the purchase. There is a "Helpful Links" section in an offset frame, and the third is to the "Terms & Conditions" page.

Guthy-Renker changed its website in two material ways between Friedman and Henry-McArthur's purchases. First, when Henry-McArthur made her purchase, the language directly next to the interactive checkbox stated "Agree to Terms and Conditions." This language is bold, underlined, and hyperlinked. Second, the credit card authorization language is now below the checkbox, and the modified language included a reference both to customer's credit card approval and assent to the Terms and Conditions.

Legal Conclusions/Analysis

The differences between the website design at the respective times of purchase by Friedman and Henry-McArthur were dispositive, as Friedman's claims survived a motion to dismiss, whereas Henry-McArthur's did not.

In citing to Nguyen, the court characterized the agreement signed by both plaintiffs to be browsewrap agreements, as neither agreements included a list of terms and conditions alongside the interactive checkbox when completing the purchase, and therefore could not be classified as clickwrap agreements. 763 F.3d at 1176. Browsewrap agreements are enforced if either (a) the consumer had actual notice of the agreement, or (b) the browsewrap agreement "resembles a clickwrap agreement - that is, where the user is required to affirmatively acknowledge the agreement before proceeding with the use of the website." Id. Absent the fulfillment of either of these conditions, a browsewrap agreement will be enforced if the website puts a "reasonably prudent user on inquiry notice of the terms of the contract ... [This determination] depends on the design and content of the website and the agreement's webpage."

Friedman's Agreement

With respect to the layout in place at the time of Friedman's purchase, the court focused on whether the website design is a "browsewrap that resembles a clickwrap." Specifically, its conclusion was premised mostly on where the text purporting to consummate the agreement was placed with respect to the checkbox. As the lines of text above the interactive checkbox referred solely to credit card authorization, a reasonably prudent person would think that the checkbox is only an acknowledgment of credit card authorization, and not an assent to the Terms and Conditions. The design also did not create a browsewrap akin to a clickwrap since the text itself advised the customer only of his agreement to the aforementioned payment authorization, and not to anything else.

It then preceded to the question of whether the browsewrap agreement agreed to by Friedman constituted an agreement that, through the design and content of the website, would put a reasonable person on inquiry notice of its terms. According to the court, the design and content presented to Friedman was insufficient to establish inquiry notice. Again, the court cited to the placement of the checkbox and its proximity (that is, below) the credit card authorization language. In addition, the court faulted Guthy-Renker's choice of language in labeling the checkbox itself. The checkbox was labeled "Agree to terms," and the uncapitalized use of a common term could not engender constructive notice in a user that agreement to "terms" was tantamount to an agreement to the "Terms & Conditions" linked below. Rather, a user could just as easily believe that "terms" referred to the credit card authorization language situated directly above the check box.

Accordingly, Friedman had not assented to the Terms & Conditions and could thus not be bound by the arbitration provision therein.

Henry-McArthur's Agreement

By the time Henry-McArthur purchased WEN, Guthy-Renker had made material changes to its website, and such changes were sufficient to uphold the company's Terms and Conditions against purchasers. In fact, according to the court, this iteration of the website "fits neatly into the requirements of Nguyen." Each change vitiated "principal concerns" of the design of the website when Friedman made her purchase. The language directly abutting the checkbox replaced "Agree to terms" with "Agree to Terms and Conditions." "Terms and Conditions" is in bold, hyperlinked, and underlined. Therefore, the checkbox is now unquestionably referring to the "Terms and Conditions" text adjacent to the box that is also hyperlinked there and separately further down on the page. Perhaps more important, the credit card authorization text is below the checkbox, and the language is modified to include references to the Terms and Conditions. The change in placement and content of the language associated with the checkbox mitigates the potential confusion associated with the design and the content of the website when visited by Friedman. As the language no longer precedes the checkbox, and does not refer solely to the credit card authorization, the purchaser would not intuit that signing the checkbox manifests assent only to the credit card authorization. In sum, it's reasonable for a person to believe that language immediately above a checkbox is the language to which signing the checkbox affirms. The changes to the website detailed above remove such a conclusion from a reasonable person. Therefore, Guthy-Renker had assented to be bound to the terms within this browsewrap as a clickwrap agreement.

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