On February 12, 2024, in Patrick v. Running Warehouse LLC, the Ninth Circuit held that a defendant’s arbitration agreement contained in a website terms of use was enforceable, using the test the court articulated in 2022 in Daniel Berman v. Freedom Financial Network. The court’s analysis is straightforward and the result is about what one would expect given the facts, but the opinion goes slightly off the rails in describing the terms of use at issue as a “browsewrap” agreement. We have been critical of the generally confusing and unhelpful (but ubiquitous) “-wrap” terminology for many years, and this opinion is a good illustration of how that terminology tends to create more problems than it solves.
In Berman, the Ninth Circuit examined a website interface that displayed the text “I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy” in a tiny gray font (with “Terms & Conditions” and “Privacy Policy” functioning as hyperlinks to the applicable terms), above a large green “Continue” button. Users were required to click the “Continue” button to proceed to the next screen of the website. The defendants argued that, by clicking the “Continue” button, the plaintiffs (who had submitted their information to the websites at issue and then received unwanted telemarketing calls and text messages) had agreed to be bound by the arbitration provision in the terms of use.
The Berman court determined that, unless a website operator can show that the user had actual knowledge of the underlying arbitration agreement, the user can only be held to the arbitration terms if: (1) the website provided reasonably conspicuous notice of the terms; and (2) the user took some action, such as clicking a button or checking a box, that unambiguously manifests assent to those terms. In Berman, the court decided that the defendants’ web pages did not provide reasonably conspicuous notice because of the small font size and format and because the hyperlink to the terms was not readily apparent.
In Patrick, the court came to the opposite conclusion on different facts. Here, the “call to action” was much more explicit: “On each website, the following statement appears immediately adjacent to the account creation checkbox: ‘[b]y creating an account, you agree to our privacy policy and terms of use.’” In addition, users were required to confirm their orders by clicking a final button to “Place Order” or “Submit Order,” and immediately adjacent to this final button was the following statement: “By submitting your order you agree to our privacy policy and terms of use.” As in Berman, the “terms of use” text functioned as a hyperlink to the actual terms of use.
Applying the Berman test to these facts, the court determined that the language about agreeing to the website’s terms was reasonably conspicuous, and the hyperlinks to the terms themselves were readily apparent, so the plaintiffs, each of whom had purchased goods on the websites and clicked the relevant buttons, were in fact bound by the arbitration provision in the terms of use.
This seems straightforward enough, but for some reason the Patrick court refers to the defendants’ terms of use implementation as a “browsewrap,” which it clearly is not. The phrase “browsewrap” typically refers to an implementation where terms are presented to users merely by including a link on a page or screen without requiring affirmative acceptance (see some of our prior coverage on browsewraps). Courts often refuse to enforce browsewraps, but typically look more favorably on “clickwrap” agreements where users agree to be bound by, for example, checking a box or clicking an “I accept” button.
In the Byzantine world of “-wrap” terminology, the implementation at issue in Patrick would likely be categorized as a “sign-in wrap” or “hybridwrap” (ugh), and would be seen as falling somewhere between a pure browsewrap and a classic clickwrap in terms of enforceability. By incorrectly referring to this implementation as a browsewrap but then holding that it is enforceable, the Patrick court creates potential confusion by suggesting that, hey, maybe browsewraps are enforceable after all!
A better approach would have been simply to apply the Berman test to the facts to determine that: (1) the terms were presented clearly and conspicuously, (2) the plaintiffs took action to unambiguously manifest their assent to the terms, so (3) the terms are enforceable. It is entirely possible to apply that analysis without ever addressing what category of “-wrap” the terms fall into. And that about wraps up this installment of online contracting gripes!