The District Court of Appeal for the Third District of Florida ("3rd DCA") recently reversed a trial court's order denying a defendant's motion to compel arbitration, holding that monthly text messages with a hyperlink to the defendant's terms of service provided the consumer with sufficient notice that disputes regarding his relationship with the defendant was subject to arbitration.
A copy of the opinion is available at: Link to Opinion
A consumer ("Consumer") filed a putative class action lawsuit against his cellular telephone provider alleging that it improperly charged the Consumer and other customers sales tax on the full price of mobile phones purchased using a rebate, in supposed violation of Florida's Deceptive and Unfair Trade Practices Act, Fla. Stat. 501.201, et seq. ("FDUTPA").
The telecom provider moved to compel arbitration pursuant to a provision within its terms and conditions of service. The trial court denied the motion. The defendant appealed, and the 3rd DCA reversed the summary denial "for a determination after an evidentiary hearing of the threshold issue of whether the arbitration clause was contained in a binding agreement between the parties."
At the evidentiary hearing on remand, the Consumer disputed receipt of any written documents at the time of sale which put him on notice of the arbitration provision. This diverged from the testimony of the defendant that a service form provided with all new phones required acknowledgment and acceptance of the company's terms and conditions of service —including arbitration of any disputes — and a "quick start guide" that accompanies all phones included the arbitration provision.
The Consumer did acknowledge that he received monthly text messages both reminding him to make payment and acknowledging receipt of same, stating "Terms & Conditions apply," and providing a web link to access the terms and conditions, but stated that he never used the hyperlink and "had no reason to go there." After the litigation was initiated, the monthly payment reminder texts expressly stated that the Telecom Company's "Terms & Conditions including arbitration apply" and provided a link to terms of service.
Based upon the evidence presented, the trial court concluded that there was no binding agreement to arbitrate because the Consumer did not receive the purchase documents and because the text messages did not put Consumer on notice of the arbitration provision. Accordingly, the motion to compel arbitration was again denied. The instant appeal ensued.
At issue on appeal was whether or not Consumer was on notice of the arbitration provision contained in the defendant's terms and conditions. Under Florida law, a consumer may be compelled to arbitrate a dispute only if he or she agreed to do so (Basulto v. Hialeah Auto., 141 So. 3d 1145, 1157 (Fla. 2014)), and well-settled legal principles of contract formation suffice to decide cases such as this one, involving contracts entered into and evidenced by electronic means (citations omitted).
The 3d DCA turned to its sister court's decision in Vitacost.com, Inc. v. McCants, 210 So. 3d 761, 762 (Fla. 4th DCA 2017) for guidance and analysis of the two types of agreements generally found in internet sales cases which concern issues of notice and assent.
A 'clickwrap' agreement occurs when a website directs a purchaser to the terms and conditions of the sale and requires the purchaser to click a box to acknowledge that they have read those terms and conditions." Id.
"A 'browsewrap' agreement occurs when a website merely provides a link to the terms and conditions and does not require the purchaser to click an acknowledgement during the checkout process. The purchaser can complete the transaction without visiting the page containing the terms and conditions." Id.
In Vitacost.com, the Florida appellate court held that the agreement was not sufficiently conspicuous because the purchaser had to scroll through multiple pages of products before locating the hyperlink at the bottom of a final webpage.
Here, the Appellate Court concluded that although the agreement did not fit squarely into either category, it was akin to a 'browsewrap' agreement in that the Consumer completed his transaction with the defendant without visiting the web page containing the terms and conditions.
However, the pre-litigation text messages to the Consumer here were more direct and conspicuous than those in Vitacost.com and other 'browsewrap' pages, in that the notice and reference to the Telecom Provider's terms and conditions was a hyperlink at the end of short text messages which Porter could use to read the terms and conditions. The Consumer did not dispute receipt of the text messages, and in fact, testified that he understood the messages contained a hyperlink which he could use to read the terms and conditions, but simply chose not to click on the hyperlink.
Noting well-established Florida case law that "a person has no right to shut his eyes or ears to avoid information, and then say that he has no notice," the Appellate Court concluded that the Consumer was put on sufficient notice that his contact with the defendant was subject to arbitration. Sapp v. Warner, 141 So. 124, 127 (Fla. 1932); see also Meyer v. Uber Techs., Inc. 868 F.3d 66, 74-75 (2d Cir. 2017) ("Where there is no evidence that the offeree had actual notice of the terms of the agreement, the offeree will still be bound by the agreement if a reasonably prudent user would be on inquiry notice of the terms.").
Accordingly, the trial court's order denying arbitration was reversed and remanded for further proceedings.
Ralph T. Wutscher
Maurice Wutscher LLP
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