Perry-Hudson v. Twilio, Inc.

Background

This proposed class action concerns allegations that Keeps, a company offering men’s hair-loss treatments, used Twilio’s software to collect information about Jonathon Perry-Hudson and send him targeted advertisements. Perry-Hudson alleges that Keeps shared information with Twilio in the process. He sued Twilio for alleged violations of privacy statutes and California common law, but he did not sue Keeps.

Twilio moved to compel Perry-Hudson to arbitrate individually based on an arbitration agreement in Keeps’s Terms & Conditions. Twilio argued that Perry-Hudson agreed to those terms while using Keeps’s website. Perry-Hudson argued that the agreement was not enforceable because the website did not give reasonably conspicuous notice of the Terms & Conditions. He also argued that Twilio could not enforce the agreement because Twilio was not a signatory to it. The parties agreed that California law applied.

Notice and Assent

The court held that Perry-Hudson was on inquiry notice of the Terms & Conditions. Under the applicable standard, a website must provide reasonably conspicuous notice of the terms, and the user must take an action that clearly shows agreement.

Perry-Hudson did not dispute that the website had a “Continue” button followed by the statement: “By continuing, you agree to accept our Terms & Conditions and Privacy Policy.” He argued that the Terms & Conditions link was not sufficiently noticeable because it was not a different color from the surrounding text and was only underlined.

The court concluded that the overall website design made the link reasonably conspicuous. The link appeared directly beneath the “Continue” button, the page was not cluttered, and the black text contrasted with the white background. The court therefore found that Perry-Hudson had agreed to the Terms & Conditions, including the arbitration agreement.

Twilio’s Enforcement as a Nonsignatory

The court next considered whether Twilio could enforce the arbitration agreement even though Twilio was not a party to the agreement. It applied equitable estoppel, a doctrine that can prevent a party from avoiding arbitration when fairness and the relationship between the claims and the contract justify allowing a nonsignatory to enforce the arbitration clause.

The court found that two circumstances supporting equitable estoppel were present. First, Perry-Hudson’s claims were intimately founded in and intertwined with the Terms & Conditions and Privacy Policy. His claims depended on whether he consented to Twilio’s use of his personal information. The Privacy Policy, incorporated into the Terms & Conditions, discussed how Keeps collected, used, and shared user information, including disclosures to third-party vendors. Because Twilio argued that Perry-Hudson consented to Keeps sharing his data with Twilio through those documents, the court found that his claims could not be evaluated without reference to the agreement.

Second, the court found allegations of interdependent and concerted misconduct by Twilio and Keeps. Perry-Hudson alleged that he gave Keeps health information for the purpose of obtaining a prescription hair-growth medication, that Keeps continued sharing users’ health information with Twilio, and that he did not know Twilio had access to his information. He characterized the data-sharing arrangement between Twilio and Keeps as an agreement to intercept his communications. The court found that these allegations were connected to Keeps’s contractual obligations concerning consent and disclosure of data.

The court concluded that allowing Twilio to enforce the arbitration agreement was fairer than allowing Perry-Hudson to avoid his agreement with Keeps by suing only Twilio over alleged conduct centered on Keeps’s disclosure of his information.

Ruling and Case Status

The court granted the motion to compel individual arbitration. It denied the motion to dismiss as moot and stayed the case pending arbitration. The parties were ordered to file a joint status report every 120 days until arbitration ends.

The court also stated that the parties could avoid the recurring status-report obligation by stipulating to dismiss the action without prejudice, provided that Twilio waives any statute-of-limitations defense based on the period during which the dispute is before the arbitrator.

Judge Vince Chhabria signed the order.