The court in Oberstein v. Live Nation Ent. Inc., No. 21-56200 (9th Cir. Feb. 13, 2023) considered whether the arbitration clause included on Ticketmaster and Live Nation's websites was enforceable. The Oberstein plaintiffs sought to file a class action suit against Live Nation and Ticketmaster for antitrust violations resulting from the companies' alleged over-charging of fees for ticket purchases. In response Ticketmaster and Live Nation filed a motion to compel arbitration pursuant to the Terms of Use on their ticket sales websites.

Facts of the Case

Plaintiffs (Ticket Purchasers) sued Ticketmaster and Live Nation (Appellees) after they paid "supra-competitive" fees for tickets on the Appellees' websites. Appellees in turn moved for summary judgment arguing that the Terms of Use on their websites clearly included an arbitration clause. Plaintiff-Appellants are comprised of a putative class of ticket purchasers who appealed a motion to dismiss in favor of Defendants-Appellees Ticketmaster LLC and Live Nation Entertainment. The district court granted Appellees' motion ruling that the Terms of Use on their websites met the requirements for a valid agreement between the parties and that the use of trade names instead of full legal names still served to sufficiently identify them as a party. In addition, it found that proper constructive notice was given to website users. On appeal the court affirms.

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?

The Ticket Purchasers assert that the Terms of Use are invalid because they fail to clearly identify the Appellees as a party to the agreement. California law requires that contracts clearly state:

  • "Parties capable of contracting
  • Their consent
  • A lawful object, and
  • A sufficient cause or consideration." Cal. Civ. Code §1550.

Here users of the Appelles' website were directed to a page containing the contract terms after clicking a hyperlink that read "Terms of Use." The Terms of Use displayed to the user stated: “Welcome! The following are the terms of use (‘Terms’) that govern your use of Live Nation and Ticketmaster’s sites and mobile applications . . . and your purchase, possession, or use of any Live Nation or Ticketmaster tickets, products, or services.” The Terms of Use identify "Live Nation" nine times and "Ticketmaster" seven times. The page also displays the logos of the Appellees clearly.

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.

The panel held that the Appellees met the elements of this test here. The court listed specific measures that the Live Nation and Ticketmaster sites took to ensure users had notice of the Terms of Use and other contractual obligations. Specifically, the website displayed reasonably conspicuous notice of the terms by:

  • 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.
  • The notices clearly stated that by creating an account, signing in, or purchasing a ticket, the user also agreed to the sites "Terms of Use.

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.

The court looked to several key facts in determining whether the Appellees provided sufficient notice. They did require users to agree to the Terms of Use at three independent points of utilizing the site. A click acknowledging terms was required upon creating an account, signing into an account and completing a purchase. The arbitration agreement was included within those Terms of Use. The court found that this requirement was sufficient to give users constructive notice. The court also ruled that a reasonable user "would have seen the notice and been able to locate the Terms via hyperlink." The notice was conspicuously displayed directly above or below the action button in each instance. Finally, the language "By continuing past this page and clicking (the button), you agree to our Terms of Use and continued use will act as a manifestation of the user's intent to be bound." The hyperlink is also listed in a bright blue color, which distinguishes it from other links.

Given these facts, the panel found that the Appellees provided Ticket Purchasers sufficient constructive notice of the terms of use.

Best Practices for Online Agreements

  • Online terms of use need to clearly identify the parties to the agreement. While trade names may be acceptable in some situations, using a full legal name is the safest way to ensure that a court will acknowledge the identification of both parties.
  • 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.

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