Judge: Joseph Lipner, Case: 24STCV08477, Date: 2024-08-01 Tentative Ruling

Case Number: 24STCV08477    Hearing Date: August 1, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant ExpertVoice, Inc. (“Defendant”) moves for an order compelling Plaintiff Miguel A. Licea (“Plaintiff”) to arbitrate his claims against Defendant and dismissing this action or staying it pending the outcome of arbitration.

The Court DENIES Defendant’s motion.

Background

Defendant operates an e-commerce website with a chat feature that consumers can use to contact customer service. Plaintiff alleges that Defendant engages a third party to automatically record the contents of consumer chats. Plaintiff used Defendant’s consumer chat service and alleges that Defendant recorded Plaintiff’s communications with Defendant’s website. Plaintiff alleges that Defendant aided and abetted the third party in eavesdropping on Plaintiff’s conversations with Defendant’s website in real time.

Plaintiff filed this case on April 3, 2024, raising one claim for violation of the California Invasion of Privacy Act (“CIPA”).

On July 3, 2024, Defendant filed this motion to compel arbitration. Plaintiff filed an opposition and Defendant filed a reply.

Request for Judicial Notice

The Court grants Plaintiff’s request for judicial notice.

Legal Standard

Under both the Federal Arbitration Act (“FAA”) and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc., § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference” (Cal. Rules of Court, rule 3.1330.) “With respect to the moving party's burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges.” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160 [internal citations omitted].)

Discussion

The Arbitration Agreement

Defendant’s website contains links to its Privacy Policy and Terms of Service at the bottom of each page. (Llewellyn Decl. ¶ 5, Ex. 4.) Users visit the home page are shown a page which includes buttons that say “Join Now” and “Join for Free Today.” (Llewellyn Decl. ¶ 4, Ex. 3.) If a user clicks the “Join for Free Today” button, they will be shown a screen prompting to enter their first name, last name, email, and password. (Llewellyn Decl. ¶ 4, Ex. 3.) Below those fields, just above another button that says “Join Now,” is text in a smaller font size that says “[b]y joining you agree to the Privacy Policy & Terms of Service”, which links to each. (Llewellyn Decl. ¶ 4, Ex. 3.)

At the beginning of the Terms of Use page is text that reads as follows:

“These Terms of Use contain an arbitration clause and class action waiver. By agreeing to these Terms, you agree (a) to resolve all disputes with us related to the ExpertVoice Services through binding individual arbitration, which means that you waive any right to have those disputes decided by a judge or jury, and (b) to waive your right to participate in class actions, class arbitrations, or representative actions in connection with your use of the ExpertVoice Services. You have the right to opt-out of arbitration as explained below.”

(Llewellyn Decl. ¶ 6, Ex. 5.)

Further down in the Terms of Use is the full arbitration agreement (the “Arbitration Agreement”, which states, in relevant part:

“Arbitration and Class Action Waiver

You agree that in the event of any dispute between you and ExpertVoice or any ExpertVoice entity, you will first contact ExpertVoice and make a good faith sustained effort to resolve the dispute before resorting to more formal means of resolution, including without limitation, any court action. After the informal dispute resolution process, any remaining dispute, controversy, or claim (collectively, “Claim”) relating in any way to your use of the ExpertVoice Services, will be resolved by arbitration, including threshold questions of arbitrability of the Claim, except as permitted herein. You and the Company agree that any Claim will be settled by final and binding arbitration, using the English language, administered by JAMS [….]

You and Company agree that each party may bring Claims against the other party only in an individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding, including without limitation federal or state class actions, or class arbitrations. [….]

You have the right to opt-out and not be bound by the arbitration and waiver of class provisions set forth in these Terms of Use by sending written notice of your decision to opt-out at https://expertsupport.expertvoice.com/hc/en-us/requests/new. The notice must be sent to the Company within thirty (30) days of your registering to use the ExpertVoice Services or agreeing to these Terms of Use (or if this Section is amended hereafter, within 30 days of such amendment being effective), otherwise you shall be bound to arbitrate disputes in accordance with these Terms of Use, and the notice must specify your name and mailing address. If you opt-out of these arbitration provisions, ExpertVoice also will not be bound by them.

Notwithstanding anything in these Terms of Use to the contrary, you may instead assert your Claim in “small claims” court, but only if your Claim qualifies, your Claim remains only in such court, and your Claim remains on an individual, non-representative and non-class basis. Further, you and ExpertVoice will have the right to bring an action in a court of proper jurisdiction for injunctive or other equitable or conservatory relief, or if the Claim relates to intellectual property infringement or misappropriation.”

(Llewellyn Decl. ¶ 6, Ex. 5.)

Mutual Assent

“Contracts formed on the Internet come primarily in two flavors: ‘clickwrap’ (or ‘click-through’) agreements, in which website users are required to click on an ‘I agree’ box after being presented with a list of terms and conditions of use; and ‘browsewrap’ agreements, where a website's terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.” (Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1175–1176.)

Neither party presents evidence that Plaintiff created an account on Defendant’s website. Thus, Plaintiff appears not to have accepted the Terms of Service in their capacity as a clickwrap agreement, as Defendant specified that it was the creation of an account on the website that would manifest assent to the Terms of Service. Furthermore, Plaintiff did not see the Terms of Service when he used the website and did not anticipate that he would enter into a contract with Defendant. (Licea Decl. ¶ 3.) Thus, Plaintiff did not have actual notice of the Arbitration Agreement’s terms, and did not assent to a clickwrap agreement.

“Unlike a clickwrap agreement, a browsewrap agreement does not require the user to manifest assent to the terms and conditions expressly ... [a] party instead gives his assent simply by using the website.” (Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 862 [quotation marks omitted], citing Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1176.) “The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.” (Ibid [quotation marks omitted].)

“Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of a website's terms and conditions.” (Long, supra, 245 Cal.App.4th at pp. 862-863 [quotation marks omitted], citing Nguyen, supra, 763 F.3d at p. 1176.) “The validity of [a] browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract.” (Id. at p. 763, citing Nguyen at p. 1176.)

Defendant contends that Plaintiff had constructive knowledge of the Terms of Service.

“Federal courts relying on Long and Nguyen have generally considered similar criteria when determining whether a textual notice is sufficiently conspicuous under California law. These criteria include: (1) the size of the text; (2) the color of the text as compared to the background it appears against; (3) the location of the text and, specifically, its proximity to any box or button the user must click to continue use of the website; (4) the obviousness of any associated hyperlink; and (5) whether other elements on the screen clutter or otherwise obscure the textual notice.” (Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 473.) This analysis is “a fact intensive inquiry” and “the criteria are largely subjective[.]” (Ibid.)

The text containing the link to the Terms of Service on the signup page is smaller than all of the other text on the page. (Llewellyn Decl., Ex. 3.) The text is moderately light grey, on a lighter grey backdrop. (Llewellyn Decl., Ex. 3.) The text on the signup page is at the bottom of the signup box, a significant distance away from the fields where a customer would enter their information to make an account. (Llewellyn Decl., Ex. 3.) The signup box is arranged in a way that a user’s eyes are naturally drawn to the fields that they must fill out and to the bright orange “Join Now” button at the bottom, making it easy to skip over the text warning the user of the Terms of Service. (Llewellyn Decl., Ex. 3.)

The text containing the Terms of Service link at the bottom of the other website pages is even more difficult to spot. It is significantly smaller than all other text on the page, and is the lightest shade of grey of all of the text on the page. (Llewellyn Decl., Ex. 4.) Although the hyperlinked words “Terms of Service” in the signup page are underlined, indicating a hyperlink, the text on the other pages is not even underlined, and is presented in the same font as the nearby copyright notice. (Llewellyn Decl., Ex. 4.)

Defendant argues that, as a seasoned consumer privacy advocate, Plaintiff would have read the website’s Terms and Conditions and seen the Arbitration Agreement. There are two problems with this argument. First, the standard is that a browsewrap agreement must put a reasonably prudent person on inquiry notice – not a consumer rights advocate. (Long, supra, 245 Cal.App.4th at pp. 862-863.) Second, Defendant’s argument that Plaintiff would necessarily have read the Terms and Conditions is speculative and lacks evidentiary support.

            The Court therefore finds that the website would not put a reasonably prudent person on inquiry notice as to the Terms of Service. It therefore did not create a valid browsewrap agreement.

            Because Defendant has not carried its burden to show the formation of an agreement to arbitrate this dispute, the Court denies Defendant’s motion.