SCHNABEL v. TRILEGIANT CORP.Docket No. 11-1311-CV.
697 F.3d 110 (2012)
Lucy SCHNABEL, Edward Schnabel, & Brian Schnabel, o/b/o Themselves and All Others Similarly Situated, Plaintiffs-Appellee,
TRILEGIANT CORPORATION, Affinion, Inc., Defendants-Appellants.
TRILEGIANT CORPORATION, Affinion, Inc., Defendants-Appellants.
United States Court of Appeals, Second Circuit.
Argued: April 4, 2012.
Decided: September 7, 2012.
Patrick A. Klingman ( James E. Miller, Karen M. Leser-Grenon, James C. Shah, Nathan C. Zipperian, Rose F. Luzon Shepherd, Finkelman, Miller & Shah LLP, Media, PA, Chester, CT, San Diego, CA, David A. Burkhalter, Burkhalter, Rayson & Assoc. P.C., Knoxville, TN, on the brief) for Plaintiffs-Appellees. Kenneth M. Kliebard ( Gregory T. Fouts, Morgan Lewis & Bockius LLP, Chicago, IL, James H. Bicks, Wiggin and Dana LLP, Stamford, CT, on the brief) for Defendants-Appellants.
Before: McLAUGHLIN, SACK, and LIVINGSTON, Circuit Judges.
SACK, Circuit Judge:
The question presented to us on this appeal is whether the plaintiffs are bound to arbitrate their dispute with the defendants as a consequence of an arbitration provision that the defendants assert was
We conclude that despite some limited availability of the arbitration provision to the plaintiffs, they are not bound to arbitrate this dispute. As regards the email, under the contract law of Connecticut or California — either of which may apply to this dispute — the email did not provide sufficient notice to the plaintiffs of the arbitration provision, and the plaintiffs therefore could not have assented to it solely as a result of their failure to cancel their enrollment in the defendants' service. As regards the hyperlink, we conclude that the defendants forfeited the argument that the plaintiffs were on notice of the arbitration provision through the hyperlink by failing to raise it in the district court.
Because this appeal comes to us from the district court's denial of the defendants' motion to compel arbitration, we accept as true for purposes of this appeal factual allegations in the plaintiffs' complaint that relate to the underlying dispute between the parties. Fensterstock v. Educ. Fin. Partners,
Lucy Schnabel, Edward Schnabel, and Brian Schnabel, are the named plaintiffs in this putative class action. Lucy and Edward are married to one another. Brian is their son. All three are residents of Pleasant Hill, California.
The defendants Affinion Group, LLC, and its wholly owned subsidiary Trilegiant Corp., are incorporated in the State of Delaware with their principal places of business in Connecticut. Trilegiant is in the business of marketing and selling online programs that offer discounts on goods and services in exchange for a "membership fee." The plaintiffs allege
"Great Fun" is the name of one of Trilegiant's services.
In 2007, Brian Schnabel was enrolled in Great Fun after making a purchase on the online travel site Priceline.com. In 2009, his father, Edward Schnabel, was enrolled in Great Fun after making a purchase on the sports memorabilia site Beckett.com.
The initial Great Fun solicitation, which appears on the merchant's order confirmation page confirming that the user has completed an online purchase, invites the
According to Trilegiant, Edward would only have been brought to Great Fun's enrollment page after clicking on the hyperlinked invitation to "See Details," and Brian after clicking on a similar invitation to "Learn More," posted on the purchase confirmation pages of the Beckett and Priceline sites, respectively. See Mallozzi Aff., Ex. 1 to Mot. to Dismiss or Stay and Compel Arbitration, Schnabel v. Trilegiant Corp., 10-cv-00957 (D.Conn. Sept. 29, 2010) ("Mallozzi Aff.") ¶¶ 6, 10.
The enrollment page, like the original purchase confirmation page, does not plainly indicate that the offer is from a third party — Trilegiant — rather than the merchant with whom the user has just completed a purchase — Beckett or Priceline. Indeed, in the case of the enrollment page for Beckett, there is a statement at the top of the page indicating that the purchaser has received a "Special Award for Beckett Customers." See Mallozzi Aff. Ex. A. Toward the bottom of the page, near an overview of some of the "Benefits" of the program, though, there do appear the logos of several popular brands besides Beckett, suggesting that by accepting the offer, the purchaser will somehow be able to receive discounts when purchasing other goods or services.
The message on the enrollment page also promises "up to" $20 off on the purchaser's Beckett purchase, along with several benefits for other goods and services, including "10% to 50% [savings] at over 40,000 Participating Restaurants" and "10% to 50% [savings] on Top Attractions and Activities." Id. It indicates in relatively small print that Great Fun will email the purchaser "Great Fun membership information so [he or she] can start saving today," but that "[t]here's no obligation to continue ... Great Fun benefits.... [The purchaser can] call us to cancel before the
To the left of the fields where a purchaser can enter his or her "City of Birth" and password appears a two paragraph description of some of the general terms of the agreement, including a statement that the first month of membership will be free but that the purchaser's credit card will be charged $14.99 per month if he or she does not cancel the membership by toll-free phone call. Id. The text also states that by entering his "City of Birth" and password and clicking the "Yes" button, the purchaser agrees that the vendor (in this case Beckett) will transmit his or her credit-card information to Great Fun. Id. Further, by clicking the "Yes" button, the purchaser acknowledges that he or she has read the "Terms & Conditions" of the agreement. Id.
Trilegiant also asserts that it was its custom and practice, to which it routinely adhered, to email to each newly enrolled member a written document entitled "Great Fun Membership Terms and Conditions" following his or her online enrollment in the service. If the email bounced back, then Trilegiant would send a paper version of the document to the member at his or her billing address.
Edward Schnabel acknowledges that after learning of Trilegiant's practice, he reviewed his old emails and determined that in fact he had received "several emails" from Great Fun. Ex. 1 to Opp. to Mot. to Dismiss or Stay and Compel Arbitration, Edward Schnabel Decl. ¶ 7, Schnabel v. Trilegiant Corp., 10-cv-00957 (D.Conn. Oct. 19, 2010), ECF No. 24 ("Edward Schnabel Decl."). Brian, on the other hand, denies ever having received an email from Great Fun. Because we conclude that even if Brian and Edward received the terms and conditions, including the arbitration provision, by email, the terms did not form a part of a binding agreement between the parties, the factual dispute among the parties as to whether these emails were ever received by the plaintiffs is immaterial for present purposes.
The arbitration provision states that any dispute between the member and "GF" — or Great Fun
In early 2010, Edward Schnabel and his wife Lucy Schnabel discovered that Edward's credit card had been charged $14.99 per month for every month between September 2009 and February 2010 for Edward's membership in Great Fun. He never made any allegedly discounted purchases for which we was qualified as a Great Fun member. Instead, he asked for a full refund of the charges. Trilegiant offered to refund four of the six months of charges, but no more.
In March or April of that year, Lucy Schnabel pointed out to her son Brian that he had similarly been charged $11.99 per month since December 2007 by Trilegiant for membership in Great Fun. Brian asserts that he then called Great Fun to complain. In response, he says, Trilegiant offered to refund four of the thirty months of charges.
District Court Proceedings
On July 17, 2010, the plaintiffs brought suit against Trilegiant and Affinion in the United States District Court for the District of Connecticut on behalf of a class of themselves and similarly situated plaintiffs. They alleged, inter alia, that the defendants had engaged in "unlawful, unfair, and deceptive practices [through] ... unauthorized enrollment practice[s] [known as] ... `post transaction marketing' and `data pass.'" Compl. at ¶¶ 2-3.
According to the plaintiffs, "data pass" occurs when a consumer agrees to pay a third-party service without having to reenter credit card or other payment data initially entered in order to purchase a good or service from a different online merchant. Id. at ¶ 4. "Post transaction marketing" occurs when "(1) `interstitial sales' offer pages, which appear between the checkout page and the confirmation page of the e-retailer from whom the consumer intends to make a purchase, (2) `pop-up' windows, which appear on top of the confirmation page, and (3) hyperlinks or `banners' that are included directly on the confirmation page itself." Id. at ¶ 3. Central to the factual allegations of the plaintiffs' complaint was a United States Senate investigation into these allegedly unfair practices. See Compl. at ¶¶ 3-5.
The complaint asserted claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, the Electronic Communications Privacy Act, 18 U.S.C. § 2510, the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. Ann. § 42-110a, the California Consumer Legal Remedies Act, Cal. Civ.Code § 1770, the California False Advertising Law, id. at § 17500, and the California Unfair Competition Law, id. at § 17200. Compl. at ¶¶ 43-103. On September 29, 2010, the defendants filed a motion to dismiss and compel arbitration pursuant to the emailed arbitration provision. On February 24, 2011, the district court (Janet C. Hall, Judge) denied the motion to compel arbitration, concluding that the parties had never agreed to arbitrate. Schnabel v. Trilegiant Corp., 10-CV-957, 2011 WL 797505, at *6, 2011 U.S. Dist. LEXIS 18132, at *20-*21 (D.Conn. Feb. 24, 2011).
The district court began its analysis by deciding that the court was not required to resolve a complex choice-of-law question — whether California or Connecticut law applied — because "regardless of the law applied, the result is the same." Id. at *3, 2011 U.S. Dist. LEXIS 18132, at *7-*8. Under either law, the court determined, the defendants had failed to raise a genuine issue of material fact as to whether the plaintiffs had assented to the arbitration provision. Id. at *4, 2011 U.S. Dist. LEXIS 18132, at *15. "Even assuming Edward and Brian read all of th[e] information
The defendants filed this interlocutory appeal pursuant 9 U.S.C. § 16(a)(1)(C)
I. Standard of Review and Legal Framework
The Supreme Court has repeatedly instructed that the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., first enacted in 1925, "embod[ies] a national policy favoring arbitration." AT & T Mobility LLC v. Concepcion, ___ U.S. ___,
The threshold question facing any court considering a motion to compel arbitration is therefore whether the parties have indeed agreed to arbitrate. Inasmuch as the arbitrator has no authority of any kind with respect to a matter at issue absent an agreement to arbitrate, the question of whether such an agreement exists and is effective is necessarily for the court and not the arbitrator. See AT & T Techs., Inc. v. Commc'ns Workers of Am.,
Under the FAA, "[i]f the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4. But a trial is warranted only if there exists one or more genuine issues of material fact regarding whether the parties have entered into such an agreement. See Opals on Ice Lingerie v. Bodylines Inc.,
On appeal, a district court's denial of a motion to compel arbitration is reviewed de novo. Specht, 306 F.3d at 26. The question of whether the parties have
II. State Contract Law
Whether or not the parties have agreed to arbitrate is a question of state contract law. See Specht, 306 F.3d at 26; Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co.,
The terms and conditions at issue here include a choice-of-law provision, which — like the arbitration clause — was not shown on the enrollment screen. The provision therefore does not determine the law that the Court should apply to determine whether the arbitration clause was part of any agreement between the parties unless and until it is determined that the parties have agreed to and are bound by it. Applying the choice-of-law clause to resolve the contract formation issue would presume the applicability of a provision before its adoption by the parties has been established. See, e.g., Trans-Tec Asia v. M/V Harmony Container,
Considering this matter without deciding whether the choice-of-law provision is binding, then, the law of either California — where the Schnabels were located when they were enrolled in Great Fun — or Connecticut, where Trilegiant is located — may apply to this dispute. But as the district court recognized, neither that court nor this one need resolve this typically thorny choice-of-law question, because both Connecticut and California apply substantially similar rules for determining whether the parties have mutually assented to a contract term. Schnabel, 2011 WL 797505, at *3, 2011 U.S. Dist. LEXIS 18132, at *7-*8. Which state's law applies is therefore without significance.
The touchstone of the inquiry under either state's law is the parties' outward manifestations of assent. See, e.g., Chicago Title Ins. Co. v. AMZ Ins. Servs., Inc.,
The conduct manifesting such assent may be words or silence, action or inaction, but "[t]he conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know[
In this case, Trilegiant, in the argument it has not forfeited, asserts that the plaintiffs assented to the arbitration provision by enrolling in Great Fun, receiving the emailed terms, and then not cancelling their Great Fun memberships during the free trial period. As we explained at length in Register.com, Inc. v. Verio, Inc.,
Therefore, in cases such as this, where the purported assent is largely passive, the contract-formation question will often turn on whether a reasonably prudent offeree would be on notice of the term at issue. In other words, where there is no actual notice of the term, an offeree is still bound by the provision if he or she is on inquiry notice of the term and assents to it through the conduct that a reasonable person would understand to constitute assent. "Inquiry notice is actual notice of circumstances sufficient to put a prudent man upon inquiry." Specht, 306 F.3d at 30 n. 14 (internal quotation marks omitted). In making this determination, the "[c]larity and conspicuousness [of the term is] important...." Id. at 30.
Edward and Brian assert that they were not on actual notice of the arbitration provision, and Trilegiant cannot point to any evidence in the record upon which a jury could rely to conclude otherwise. The questions we must address, then, are whether the plaintiffs were on inquiry notice of the arbitration provision through the emails sent after their enrollments and, if so, whether their conduct in enrolling in Great Fun, and then not cancelling their memberships before the free trial period expired, constituted an objective
Trilegiant does not dispute (as, of course, it cannot) that the arbitration provision does not appear on the pages that either of the plaintiffs would have first encountered during his enrollment in Great Fun. It argues, however, that the plaintiffs were put on notice of the provision, and thus were in a position to assent to it both through the "terms and conditions" hyperlink on the enrollment form available before enrollment, and through the email sent to each plaintiff after his enrollment.
A. The Email
The issue preserved on appeal
1. Timing of Contract Formation. "As a general principle, an offeree cannot actually assent to an offer unless the offeree knows of its existence." 1 WILLISTON ON CONTRACTS § 4:16. An offer — and all of its terms — therefore ordinarily precede acceptance.
Trilegiant nonetheless asserts that the plaintiffs assented to terms emailed to them after the plaintiffs enrolled in Great Fun. And indeed there are cases — Trilegiant argues that this is one — where terms are effectively added to an agreement at the instance of the offeror subsequent to the establishment of a contractual relationship. The conventional chronology of contract-making has become unsettled over recent years by courts' increased acceptance of this so-called "terms-later" contracting. See generally John E. Murray, Jr., The Dubious Status of the Rolling Contract Formation Theory, 50 DUQ. L.REV. 35 (2012) ("Murray"); Eric A. Posner, ProCD v. Zeidenberg and Cognitive Overload in Contractual Bargaining, 77 U. CHI. L.REV. 1181, 1184 (2010) ("Posner").
There are at least two analytical approaches available to Trilegiant to argue that despite the time sequence here and its divergence from the typical offer-with-all-terms-then-acceptance progression, the parties entered into a contract that included the arbitration provision emailed to each plaintiff after his enrollment.
First, Trilegiant might contend that the arbitration clause became effective after the plaintiffs received the terms-and-conditions email and then assented to the offer by not cancelling their Great Fun memberships. This conception of the parties' dealing is similar to the theory undergirding conventional shrinkwrap-license cases.
In shrinkwrap-license cases, the terms at issue are typically provided inside the packaging of consumer goods.
Alternatively, the plaintiffs' initial enrollment in Great Fun may be seen, as the district court saw it, to be the formation of an agreement for each of them to pay a specified monthly fee in exchange for the membership benefits offered by Great Fun. See Schnabel, 2011 WL 797505, at *4, 2011 U.S. Dist. LEXIS 18132, *13 ("By the time Edward and Brian received an email from Trilegiant, any contract had already been formed."). The arbitration provision and other additional terms contained in the email would then be proposed amendments to that existing contract. According to Trilegiant, the emailed terms would have been accepted by the plaintiffs' acts of continued payments of fees on their credit cards and maintenance of the opportunity to make use of Great Fun — or, put otherwise, their failure to cancel the service in a timely manner.
The two approaches — amendment and terms-later contract, like in the shrinkwrap approach — differ with respect to the timing of contract formation: when the consumer enrolls, using the first approach, and when the consumer receives the terms and fails to cancel the service in the second. But this distinction is ultimately of little importance here.
2. Notice. A person can assent to terms even if he or she does not actually read them, but the "offer [must nonetheless] make clear to [a reasonable] consumer" both that terms are being presented and that they can be adopted through the conduct that the offeror alleges constituted assent. Specht, 306 F.3d at 29; see also, e.g., Guadagno v. E*Trade Bank,
a. Law of effective notice in terms-later contracting
Courts have recognized that in the modern commercial context, there are reasons to allow parties to contract without consideration of, and the possibility to negotiate, every term. "Cashiers cannot be expected to read legal documents to customers before ringing up sales." Hill, 105 F.3d at 1149. But cases applying the "duty to read" principle to terms delivered after a contracting relationship has been initiated do not nullify the requirement that a consumer be on notice of the existence of a term before he or she can be legally held to have assented to it. "While new commerce on the Internet [and elsewhere] has exposed courts to many new situations, it has not fundamentally changed the principles of contract." Register.com, 356 F.3d at 403.
What constitutes sufficient inquiry notice of a term not actually read by the offeree depends on various factors including, but not limited to, the conspicuousness of the term, the course of dealing between the parties, and industry practices. Cf. L & R Realty v. Conn. Nat'l Bank,
Courts, including this one, have concluded as a matter of law in some circumstances that parties were on inquiry notice of the likely applicability of terms to their contractual relationship even when those terms were delivered after that relationship was initiated. These decisions appear to have in common the fact that in each such case, in light of the history of the parties' dealings with one another, reasonable people in the parties' positions would be on notice of the existence of the additional terms and the type of conduct that would constitute assent to them.
In Register.com, we considered whether a website development service provider, Verio, was on "legally enforceable notice" of contractual terms restricting Verio in making certain uses of information supplied by Register.com although the terms were submitted to Verio after it had already downloaded the information from Register.com. Register.com, 356 F.3d at 401. We concluded that Verio was on sufficient notice of the terms because it accessed the information "daily" and was repeatedly confronted with the same terms. Id. Thus, even if the terms applying to any given download of information were transmitted after that download, because of the course of dealing between Verio and Register.com, there was a basis for "imputing ... knowledge of the terms on which the [information] was offered" each time the download occurred. Id. at 402.
Judge Leval, writing for the Court, provided an extended analogy to a situation in which an offeree would be considered to have assented to a term he or she had not actually read before receiving the benefits of the service or goods offered:
Id. at 401.
Similarly in the shrinkwrap cases, when a purchaser opens the packaging for goods and discovers that they are covered by additional provisions, the reasonable purchaser will understand that unless the goods are returned, he or she takes them subject to those provisions. See Hill, 105 F.3d at 1150 ("Competent adults are bound by such documents, read or unread."). The late-arriving terms are necessarily included with the product — they are inside the shrinkwrap with the item being transferred. See, e.g., M.A. Mortenson Co., Inc. v. Timberline Software Corp.,
The amendment cases cited by Trilegiant illustrate other ways in which parties may be put on notice of terms that arrive after a contract is formed — but all of these cases, too, are rooted, expressly or otherwise, in the reasonable expectations of the parties.
For example, in many of these cases the amendment is transmitted with a bill or billing statement concerning the offeree's continued use of the service. See, e.g., Milligan, 2007 WL 4885492, at *2-*3, 2007 U.S. Dist. LEXIS 96377, at *6-*7 (bill); Kurz,
b. Notice in this case
In the case at bar, the plaintiffs were presented with the arbitration provision in an email delivered to each of them after they had enrolled in Great Fun. Trilegiant asserts that the fact that we can assume that the email was received by the plaintiffs is enough to support the conclusion that they were on inquiry notice of its terms. But that someone has received an email does not without more establish that he or she should know that the terms disclosed in the email relate to a service in which he or she had previously enrolled and that a failure affirmatively to opt out of the service amounts to assent to those terms. See Campbell v. Gen. Dynamics Gov't Sys.,
In this case unlike, for example, Register.com, there was no prior relationship between the parties that would have suggested that terms sent by email after the initial enrollment were to become part of the contract. See Campbell, 407 F.3d at 555-58 (addressing the parties' past dealings in order to determine whether there would be an expectation that contractual terms would follow by email). Nor would a reasonable person likely understand in some other way that disputes arising between him or her and Trilegiant were to be resolved by an alternative dispute resolution procedure. Thus, assuming as Trilegiant asserts that the plaintiffs received the emails in question, "[t]here was [still] no basis for imputing [to the plaintiffs] knowledge of the terms on which [Great Fun] was offered." Register.com, 356 F.3d at 402.
Unlike shrinkwrap agreements, moreover, the recipient of the terms in this case would not have been confronted with the existence of additional terms before being able to benefit from Great Fun. As noted, even if a purchaser of a shrink-wrapped
By contrast, the arbitration provision here was both temporally and spatially decoupled from the plaintiffs' enrollment in and use of Great Fun; the term was delivered after initial enrollment and Great Fun members such as the plaintiffs would not be forced to confront the terms while enrolling in or using the service or maintaining their memberships. In this way, the transmission of the arbitration provision lacks a critical element of shrinkwrap contracting — the connection of the terms to the goods (in this case the services) to which they apply.
A reasonable person may understand that terms physically attached to a product may effect a change in the legal relationship between him or her and the offeror when the product is used. But a reasonable person would not be expected to connect an email that the recipient may not actually see until long after enrolling in a service (if ever) with the contractual relationship he or she may have with the service provider, especially where the enrollment required as little effort as it did for the plaintiffs here. In this context the email would not have "raise[d] a red flag vivid enough to cause a reasonable [person] to anticipate the imposition of a legally significant alteration to the terms and conditions" of the relationship with Trilegiant. Campbell, 407 F.3d at 557. And there is nothing in the record to suggest that the email to the plaintiffs "`appear[ed] to be a contract [or that] the terms [were] called to the attention of the [plaintiffs].'" Specht, 306 F.3d at 30 (quoting Marin Storage & Trucking v. Benco Contracting & Eng'g,
To be sure, the "duty to read" rule combined with the "standardized form" contract makes it unlikely in many contexts that a consumer will actually read such a agreement beyond a quick scan, if that. See Charles L. Knapp, Taking Contracts Private: The Quiet Revolution in Contract Law, 71 FORDHAM L.REV. 761, 770 (2002). "A party who makes regular use of a standardized form of agreement does not ordinarily expect his customers to understand or even read the standard terms. One of the purposes of standardization is to eliminate bargaining over details of individual transactions, and that purpose would not be served if a substantial number of customers retained counsel and reviewed the standard terms." Restatement (Second) of Contracts § 211 cmt. b (1981). But inasmuch as consumers are regularly and frequently confronted with non-negotiable contract terms, particularly when entering into transactions using the Internet, the presentation of these terms at a place and time that the consumer will associate with the initial purchase or enrollment, or the use of, the goods or services from which the recipient benefits at least indicates to the consumer that he or she is taking such goods or employing such services subject to additional terms and conditions that may one day affect him or her.
Here, Trilegiant effectively obscured the details of the terms and conditions and the passive manner in which they could be accepted. The solicitation and enrollment pages, along with the fact that the plaintiffs were not required to reenter their credit-card information, made joining Great Fun fast and simple and made it
Courts endorsing the shrinkwrap-contracting framework often sprinkle their analyses of whether a consumer was on notice of the provision with the policies justifying shrinkwrap contracting. See, e.g., Hill, 105 F.3d at 1149; ProCD, 86 F.3d at 1452; Brower v. Gateway 2000, Inc.,
3. Assent. A requirement that the plaintiffs expressly manifest assent to the arbitration provision together with such assent would likely have overcome the email's defects in providing notice. See id. (describing emails including employment terms that call for the employee's express acknowledgment of receipt). Yet Trilegiant argues that the plaintiffs agreed to the provision through far more passive conduct — continuing to pay their monthly membership fees, which were automatically charged to the plaintiffs' credit cards, after receipt of the emails. It does not follow, however, from the fact that this conduct may, in other situations, be consistent with assent to a contractual term that there was indeed such assent here. In order to constitute acceptance, the failure to act affirmatively must carry a significance that reasonable people in the parties' positions would understand to be assent. See, e.g., Karlin v. Avis,
That is not the case here. The plaintiffs were never put on inquiry notice of the arbitration provision, and their continued credit-card payments, which were auto-debited from their credit cards, were too passive for any reasonable fact-finder to conclude that they manifested a subjective understanding of the existence of the arbitration and other emailed provisions and an intent to be bound by them in exchange
Both parties, and the district court, see Schnabel, 2011 WL 797505, at *6, 2011 U.S. Dist. LEXIS 18132, at *19-*20, analogize this case to the Supreme Court of Alabama's decision in Memberworks Inc. v. Yance,
Assuming that Yance did not read the arbitration provision and actually understand that not cancelling his membership would constitute assent to the provision,
B. The Hyperlink
The accessibility of the arbitration provision from a hyperlink on the enrollment screen, as appears to have been the case here, might have created a substantial question as to whether the provision was part of a contract between the parties.
"`[I]t is a well-established general rule that an appellate court will not consider an issue raised for the first time on appeal.'" Local 377, RWDSU, UFCW v. 1864 Tenants Ass'n,
In its Memorandum in Support of the Motion to Compel Arbitration, Schnabel v. Trilegiant Corp., 10-cv-00957 (D.Conn. Sept. 29, 2010), ECF No. 23 ("Mot. to Compel"), Trilegiant failed to mention the hyperlink. And accompanying the motion was an affidavit from an employee referring only to the emailed arbitration clause sent to each of the plaintiffs after their enrollment in Great Fun, not the clause that they say was available by clicking "Yes" on the sign-up button. See Mallozzi Aff. ¶ 13.
Although the district court record includes the screenshot of the enrollment screen, which displays the hyperlink, Mot. to Compel, Ex. A, under the principle of party presentation, the district court was free to "rely on the parties to frame the issues for decision...." Greenlaw v. United States, 554 U.S. 237, 243,
For the foregoing reasons, we affirm the order of the district court denying the defendants' motion to compel arbitration,
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