Facts of the Case
The Federal Arbitration Act
The Federal Arbitration Act requires courts to compel arbitration of claims that are subject to an enforceable arbitration agreement. 9 U.S.C. §3. The court is asked to determine two things in enforcing the FAA:
- Does a valid arbitration agreement exist?
- If so, does it apply to the issue at hand? Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004).
If a court determines that a valid arbitration agreement is present and it applies to the issue of the case, then it must enforce the agreement. The court found that a proper arbitration agreement existed in this case and applied to the issues at hand.
Does the Arbitration Have to Include a Party's Full Legal Name to be Enforceable?
- "Parties capable of contracting
- Their consent
- A lawful object, and
- A sufficient cause or consideration." Cal. Civ. Code §1550.
Live Nation Entertainment, Inc. also appears in the agreement as the entity with which to commence an arbitration proceeding as well as the contact for questions and concerns. Although Ticketmaster's full legal name in not included in the Terms, a user could locate it by looking on the "Purchase Policy" link, which is contained in paragraph two of the agreement. The agreement mainly uses the Appellees common trade names rather than their full legal names, but this practice is generally acceptable under California law. "California law requires only that it be possible for a reasonable user to identify the parties to a contract." Cal. Civ. Code § 1558. Here the Appellees use both their trade names as well as their full legal names at various points throughout the agreement.
The Ticket Purchasers also argue that Live Nation Entertainment is a "mere recipient of notices and questions." The Terms state, however, that they "govern the use of Live Nation and Ticketmaster's sites and mobile applications…and the purchase, possession, or use of any Live Nation or Ticketmaster tickets, products, or services." The court reasoned that the use of collective terminology such as we and us, "can reasonably be understood as referring to any Live Nation or Ticketmaster tickets, products, or services." Thus, the court held that the Appellees are sufficiently defined as parties to the agreement and the use of the full legal name in every reference is not required under California as the Ticket Purchasers contend. It was reasonably possible for Tickets Purchasers to identify the Appellees as parties to the agreement.
Did the Appellees Fail to Provide Constructive Notice?
In determining whether appropriate notice was given to users of the website, the court first examined what is necessary to form a valid online contract. With the changing nature of contracts existing online rather than in physical form, courts have determined that "elemental principles of contract formation apply with equal force to contracts formed online." Kauders v. Uber Techs, Inc., 48 Mass. 557, 159 N.E.3d 1033 (2021). An enforceable online agreement may be found if:
- A website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and
- The consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. Meyer v. Uber Techs, Inc., 868 F.3d 66 (2d. Cir. 2017).
In order to comply with the first prong of the test, the notice must be clearly displayed "in a font size and format that the court can fairly assume that a reasonably prudent internet user would have seen it." Berman v. Freedom Fin. Network, 30 F.4th 849 (9th Cir. 2022). For the second prong the inquiry is rather simple. "A user's click of a button can be construed as an unambiguous manifestation of assent only if the user is explicitly advised that the act of clicking will constitute assent to the terms and conditions of an agreement." Id. The notice must explicitly notify a user of the legal significance of the action she must take to enter into a contractual agreement.
- Delineating the terms in a bright blue font, which was set apart from the rest of the text
- The blue text was located directly above or below the action button at each of the three independent stages where the user was required to agree to certain terms before purchasing the tickets.
Clickwrap & Browsewrap Agreements
A clickwrap agreement consists of specified contractual terms that appear on a pop-up screen and require users to check a box stating that they agree to the terms. Nguyen v. Barnes & Noble, Inc. 763 F.3d 1171, 1175-76 (9th Cir. 2014). Clickwrap agreements are routinely enforced by courts. Id. Browsewrap agreements, on the other hand, offer access to terms through a hyperlink often at the bottom of the page. These terms state that the user assents to those terms simply by continuing to use the website. Nguyen at 1176. Courts are more hesitant to enforce browsewrap agreements because users are often unaware that they are assenting to contract terms by the mere use of the site. More often, however, the Terms on a website fall between these two extremes. "When an online agreement falls between these two extremes, courts analyze mutual assent under an objective-reasonableness standard." Kauders, 159 N.E.3d at 1049.
In this case, the Terms are not pure clickwrap because they do not require that users click a box before they are able to proceed. It is also not a browsewrap situation where the links to the Terms are buried at the bottom of the web page. This situation is somewhere in between.
Best Practices for Online Agreements
- Highlight arbitration agreements and other key terms so they are easily noticeable and accessible to users of the site.
- Provide as many visual cues as possible to alert the user to key terms such as "click here to continue", bold fonts and other delineations of important terms.
- To ensure that an online agreement passes muster, clickwrap is the safest choice.