We all routinely “agree” to clickwrap agreements – that is agreements found on the Internet and other electronic media where the user views the terms of service and is asked to click “OK” or “I Agree” – but can we be compelled to arbitrate when we do?
While the Maryland courts have yet to rule directly on this issue, such agreements likely would bind a business – but not necessarily a consumer – to arbitrate.
And here’s why.
The Federal Arbitration Act (FAA) provides that agreements to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” In AT&T Mobility LLC v. Concepcion, the Supreme Court held that the FAA preempted California’s judicial rule regarding the unconscionability of class arbitration waivers in consumer contracts, but reiterated that “[t]his saving clause permits agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” Thus, Maryland’s substantive law regarding contract formation applies to arbitration agreements and is not preempted by the FAA.
As the Court of Appeals “noted more than 60 years ago, the question of arbitrability is one of intention. No one is under a duty to resort to arbitration tribunals, however helpful their process, except to the extent that he has signified his willingness.” In Blue Bird, LLC v. Nolan, a case between businesses involving the validity of a clickwrap agreement’s forum selection clause, the Maryland Circuit Court noted that under Maryland law, a party’s conduct may manifest intent to be bound to a written contract and found that the defendants accepted the terms of their click-wrap agreement when they clicked on the “I Accept” button. Is there really more to the issue?
In Hancock v. AT&T, the Tenth Circuit noted that, applying state law contract principles, “[c]ourts evaluate whether a clickwrap agreement’s terms were clearly presented to the consumer, the consumer had an opportunity to read the agreement, and the consumer manifested an unambiguous acceptance of the terms.” In that case, consumer plaintiffs were presented with a printed copy of terms (including the arbitration clause) related to the use of defendant’s Internet service, and specifically had to click an “I Acknowledge” button on a technician’s laptop prior to installation, and had to click another “I Agree” button when registering for the service. The court affirmed the district court’s enforcement of the arbitration provision.
Thus, when seeking to enforce an arbitration clause in a clickwrap agreement in Maryland – particularly against an individual – the arbitration provision should be presented clearly, the user should be given an opportunity to review it, and the user should be asked to “click” his or her assent unambiguously.