Dawson v. Target Corporation

Background

Target Corporation and Shipt, Inc. asked the court to compel arbitration. The court explained that arbitration depends on the parties’ consent, so the defendants had to prove that an enforceable arbitration agreement existed and that Dylan Dawson clearly agreed to it. Dawson said he never saw the arbitration agreement.

The court applied California law to the question whether an agreement was formed, despite a Minnesota choice-of-law provision in Target’s terms. It said the result would be the same under Minnesota law. The court also held that it, rather than an arbitrator, had to decide whether an agreement to arbitrate was formed.

Why the Court Rejected the Arbitration Motions

The court found that the defendants had not shown that Dawson clearly agreed to arbitration. Because they did not claim that Dawson had actual notice, they had to show that he had inquiry notice: the terms had to be presented conspicuously, and Dawson had to take an action that clearly showed agreement.

The evidence did not establish what Dawson saw when he created his Target account in 2014. Target submitted an undated account-creation screen that, according to its declaration, had been similar since October 2022. The court held that a screen from 2022 could not prove Dawson’s consent in 2014.

The sign-in screen also did not establish agreement. Target did not show that Dawson encountered that screen, including in June 2024. Target submitted additional evidence for the first time in its reply brief. The court declined to consider that evidence, sustained Dawson’s objection, struck paragraphs 3 through 8 of the supplemental declaration, and disregarded the related arguments.

The checkout screen likewise did not establish agreement. Dawson’s screenshot showed that, on the iPhone application he used for his June 14, 2024 purchase, the terms were not visible unless a consumer scrolled to the bottom, which was not necessary to complete the purchase. The court found that requiring a consumer to search for terms hidden at the bottom of the screen was insufficient to show clear agreement.

The court separately found that the screens submitted by Target did not provide reasonable notice of the terms, even assuming Dawson had seen them. The links and disclaimers were in small, difficult-to-read text, were not sufficiently separated from surrounding text, and in some instances were not shown in a contrasting color. The court also found that the terms were separated from the buttons used to sign in or place an order.

Ruling

The court held that the defendants failed to prove by a preponderance of the evidence that Dawson unambiguously agreed to an enforceable arbitration agreement. It therefore denied Target’s motion to compel arbitration and Shipt’s motion to compel arbitration. The order did not decide the merits of the underlying claims.