Shultz v. TTAC Publishing, LLC

Background

Michelle Shultz alleged that, beginning in November 2019, she received unsolicited telemarketing text messages on her personal cellphone from or on behalf of TTAC Publishing, LLC. She alleged that the messages were sent using an automatic telephone dialing system and that she had not given prior express consent to receive them. Her sole claim was under the Telephone Consumer Protection Act. She sought statutory damages, injunctive relief, attorneys’ fees and costs, and to represent a proposed class.

TTAC moved to compel arbitration. It argued that Shultz had purchased a digital documentary from TTAC’s website in April 2018, provided her phone number, and agreed to the website’s Terms and Conditions by completing the purchase. The Terms and Conditions contained an arbitration clause and waived participation in class, collective, private attorney general, and other representative proceedings.

TTAC also moved in the alternative to strike the class allegations or stay, meaning pause, the case while the Supreme Court considered the definition of an automatic telephone dialing system in a separate case.

Arbitration ruling

The court explained that it had to decide whether a valid arbitration agreement existed before sending the dispute to an arbitrator. Because Shultz challenged whether she had agreed to the Terms and Conditions at all, the court—not an arbitrator—decided that issue.

The court treated the website as a hybrid of a “browsewrap” agreement, in which assent is inferred from website use, and a “clickwrap” agreement, in which a user must click to agree. The checkout page showed a pre-checked box next to the words “I agree to the terms and conditions,” but the customer did not have to click the box. The customer only had to click the large “Complete Purchase” button.

The court found no evidence that Shultz actually knew about the Terms and Conditions. It therefore considered whether the page gave her enough notice that a reasonably careful user would have understood that the hyperlink contained binding terms. The court found that it did not. The agreement language was very small compared with the large, colorful purchase button; the light-blue hyperlink was not underlined, highlighted, in capital letters, or otherwise set apart; and the page contained distracting promotional material, including a video, advertisements, and large checkmarks.

The court concluded that the hyperlink was not sufficiently noticeable to give Shultz constructive, or legally presumed, notice of the Terms and Conditions. It held that Shultz was not bound by the Terms and Conditions or the arbitration provision and DENIED TTAC’s motion to compel arbitration.

Motion to strike

TTAC also asked the court to strike the class allegations under Federal Rule of Civil Procedure 12(f). The court stated that such motions are generally disfavored and ordinarily are not granted unless it is clear that the challenged material could not affect the litigation.

TTAC’s motion to strike relied on the same theory as its arbitration motion: that Shultz and other proposed class members had agreed to the website’s Terms and Conditions when making purchases. For the reasons given in its arbitration analysis, the court DENIED the motion to strike.

Request to stay the case

TTAC alternatively requested a stay while the Supreme Court considered the meaning of “automatic telephone dialing system” under the Telephone Consumer Protection Act. TTAC argued that the Supreme Court’s ruling could affect an important issue and the scope of discovery.

The court was not persuaded that a stay was appropriate. It noted that Shultz alleged that TTAC used an automatic telephone dialing system, including a system with a random or sequential number generator, and stated that the nature of the system TTAC used would remain important to discovery regardless of how the Supreme Court defined the term.

Disposition

The court DENIED the motion in its entirety, including the requests to compel arbitration, strike the class allegations, and stay the action. It also set an initial case-management conference for November 10, 2020. Judge Haywood S. Gilliam, Jr. signed the order.