New York State Court Refuses to Enforce Website’s Forum Selection Clause Reply

E-Commerce News provided by BuckleySandler LLP for informational purposes only, and should not be construed as legal advice on any subject matter.

April 7, 2012

On March 20, New York’s District Court of Nassau County refused to enforce a forum selection clause because the defendant did not make an affirmative effort to reasonably communicate that key term to the other party or otherwise do enough to ensure the clause became a part of the parties’ contract. Jerez v. JD Closeouts, LLC, No. CV-024727-11, 2012 WL 934390 (N.Y. Dist. Ct. Mar. 20, 2012). The plaintiff filed suit alleging that products ordered over the Internet following an e-mail solicitation from the defendant were defective. The defendant moved to dismiss, arguing that a forum selection clause in the parties’ contract required that the dispute be heard in a Florida state court. The court found that the forum selection clause was not reasonably communicated through any of a printed contract, a confirming letter agreement incorporating provisions from the website by reference, or a click-through acceptance. Rather, the court found, the clause was included in terms and conditions “buried” and “submerged” on the defendant’s website, on a page “that could only be found by clicking on an inconspicuous link to the company’s ‘About Us’ page.” The court denied the defendant’s motion to dismiss.

Federal District Court Enforces Arbitration Clause Included in Clickwrap Terms Reply

E-Commerce News provided by BuckleySandler LLP for informational purposes only, and should not be construed as legal advice on any subject matter.

April 7, 2012

On March 26, the U.S. District Court for the Northern District of Illinois required arbitration of a dispute regarding alleged overcharging by an Internet service provider (ISP) because the consumer had agreed to an arbitration provision included in the ISP’s clickwrap terms of service. Sherman v. AT&T Inc., No. 11-C-5857, 2012 WL 1021823 (N.D. Ill. Mar. 26, 2012). The court held that the plaintiff’s assent to the terms during the online activation process constituted acceptance of those terms, regardless of when he believed the contract was formed. To activate his Internet service, the plaintiff was required to confirm through an online process that he had read and agreed to the ISP’s terms of service. The activation and confirmation page included a link to the terms of service, which included an agreement to arbitrate all disputes. The plaintiff argued (i) that his contract with the ISP was formed during a phone call with an ISP customer service agent pursuant to which he ordered the service, prior to the online activation process, and therefore the terms of service do not apply, and (ii) the terms were not expressly incorporated into the broader conditions of his contract and were procedurally unconscionable. The district court granted the ISP’s motion to compel arbitration of the plaintiff’s allegation (made on behalf of a putative class) that the ISP systematically overcharged consumers for residential Internet service by advertising promotional plans while actually charging standard rates. The court reasoned that vendors may enclose the full legal terms with their products rather than reciting them prior to purchase, for practical purposes, even if the full terms are not delivered until after the consumer’s order and payment. The court also held that the terms were not procedurally unconscionable, as they were not difficult to find, read or understand, and the plaintiff had a full and fair opportunity to review the terms prior to activation.