Ninth Circuit Denies Motion to Compel Arbitration Because of Broken Hyperlink

This is a nice, short case, and it provides a tidy review on the California test for consent to an electronic contract. Juan Plata brought a putative class action against Lands’ End, Inc. (Lands’ End) alleging various violations of California’s consumer protection laws. As we shall see, the details of the claims do not matter for now.

Lands’ End moved to compel arbitration, claiming that Mr. Plata had agreed to terms of service that included an arbitration provision before he made a purchase from Lands’ End. Just one problem. The link that was supposed to direct Mr. Plata to the company’s terms of service actually sent him to a Help Center. On that basis, the District Court denied Lands’ End’s motion to compel arbitration, and in an unpublished opinion in Plata v. Lands’ End, Inc., the Ninth Circuit affirmed.

California uses a two step test for determining when web contracts such as this one are enforceable. The Court called this a “sign-in wrap,” which it appears, is distinct from ordinary click wrap. In click wrap, the user manifests agreement by clicking a box that says something explicit like “I agree to the terms.” In sign-in wrap, assent comes through clicking a button indicating a willingness to continue with the purchase after having been given notice of the terms. In any case, California requires that “(1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms.”

The Court held that it does not need to determine which prong fails in this instance. It makes no difference whether the notice was not conspicuous because the link led nowhere useful or whether there was no meaningful assent because the user had no way of knowing what they were agreeing to. Either way, the Court concludes that no contract was formed between the parties. Likely what the Court means is that there was no agreement to arbitrate, as that was the only issue before the Court.