Ferrell v. SnapCommerce Holdings

Background

Amber Ferrell and Sara Schneider filed this action individually and on behalf of a proposed class. They alleged that Super—SnapCommerce Holdings, Inc., doing business as Super.com and SnapMoney, Inc., doing business as Super.com—sent text-message solicitations and made commercial telephone calls to consumers who had placed themselves on the National Do Not Call Registry. Their claims arise under the federal Telephone Consumer Protection Act and the Oklahoma Telephone Solicitation Act.

Super moved to compel arbitration and separately filed an administrative motion for an evidentiary hearing. The signup process on Super’s website and app required a new user to enter a phone number. At the bottom of the page, the user saw the statement, “By clicking ‘Send code’ you agree to our Super.com Terms of Use.” The statement appeared in small, gray font on a white background, and “Super.com Terms of Use” was underlined and linked to a separate page containing an arbitration agreement.

Legal standard

The Federal Arbitration Act generally makes written arbitration agreements enforceable. On a motion to compel arbitration, the court determines whether a valid agreement to arbitrate exists and, if so, whether it covers the dispute. Because the parties disputed whether an agreement existed, California contract-formation principles applied. Under those principles, the party seeking arbitration had to show, by a preponderance of the evidence, that the users had notice of the agreement and manifested mutual assent.

For constructive notice, an online notice must be reasonably conspicuous—displayed so that a reasonably careful internet user would likely see it. The user must also take an action that clearly shows agreement to the terms.

Court’s analysis

The court held that Super’s notice was not reasonably conspicuous. The Terms of Use link was in very small gray font, was smaller than the other text on the page, appeared at the bottom of the page, and was only underlined rather than distinguished by bolding or a contrasting color. The court concluded that merely underlining the hyperlink did not sufficiently alert users that it led to terms governing their use of the website or app.

The court rejected Super’s comparisons to other cases in which courts approved notices that used additional visual cues, such as blue or capitalized text, or arose in the context of a paid subscription. The court also noted that Super controlled the website and app’s design but chose to use a small, gray, underlined link.

Because Super did not show that its website and app provided reasonably conspicuous notice, it did not meet its burden to show that entering a phone number formed a contract to arbitrate. The court therefore did not decide whether the plaintiffs actually entered their phone numbers into Super’s website or app.

Disposition

The court denied the motion to compel arbitration. Because it resolved the motion without relying on disputed facts, it also denied the administrative motion for an evidentiary hearing. The opinion did not decide the underlying Telephone Consumer Protection Act or Oklahoma Telephone Solicitation Act claims.