Navarro v. SmileDirectClub, Inc.

Background

Arnold Navarro filed a putative class action against SmileDirectClub, Inc., SmileDirectClub, LLC, Jeffrey Sulitzer, and Jeffrey Sulitzer, D.M.D., P.C. (collectively, “SDC”). He alleged that SDC engaged in the unauthorized practice of dentistry under California law. His allegations included failure to comply with consumer-protection licensing requirements, negligent provision of dental care, and misleading or false representations about the dental services SDC could lawfully provide. The pleaded claims included negligence, breach of fiduciary duty, fraudulent inducement, violation of California’s Consumer Legal Remedies Act, and violation of California’s Unfair Competition Law.

SDC moved to compel arbitration under the Federal Arbitration Act. SDC argued that Navarro agreed to its Informed Consent, Terms, and SmilePay Conditions while creating an online account in April 2020. The website required users to affirmatively check a box agreeing to those terms before completing registration and receiving SDC services. The terms were available through hyperlinks, and the Informed Consent agreement contained an arbitration clause.

SDC initially provided insufficient evidence concerning how the clickwrap agreement appeared on April 23, 2020, the date it said Navarro accepted the terms. After the court ordered additional evidence, SDC submitted sworn declarations, archived website screenshots, and electronic records. SDC’s evidence stated that Navarro checked the box agreeing to the terms and that his customer file recorded his registration and acceptance of the terms.

Court’s analysis

The court explained that an online contract requires a mutual manifestation of intent to agree. A consumer need not have actual notice of an arbitration clause if the website would have put a reasonably prudent internet user on inquiry notice of the terms. The court distinguished clickwrap agreements, which require the user to click an agreement box, from browsewrap agreements, which generally rely on website use without an express assent step.

The court determined that SDC used a clickwrap agreement. It found that SDC provided sufficient evidence that Navarro was required to affirmatively check the agreement box, that the relevant terms were underlined and hyperlinked, and that the Informed Consent agreement displayed through the hyperlink included the arbitration clause. The court also found sufficient evidence that Navarro electronically accepted the terms during registration. Because Navarro had assented to the terms, the court concluded that he had also assented to the arbitration provision.

The court noted that Navarro had withdrawn his arguments challenging the arbitration agreement’s validity, enforceability, and delegation of arbitrability questions. The court therefore addressed whether he assented to the agreement and did not resolve the withdrawn challenges.

Evidentiary objections and other motion

The court agreed that Navarro’s supplemental brief exceeded the scope of the court’s earlier order, which had allowed him to submit a declaration with supporting evidence. Nevertheless, the court exercised its discretion to review Navarro’s 32 evidentiary objections. Applying a standard similar to the summary-judgment standard, the court concluded that the objections did not undermine the defendants’ evidence concerning the website’s appearance, Navarro’s assent, or the arbitration clause. The court overruled the evidentiary objections.

The court also denied as moot SDC’s administrative motion to strike Navarro’s supplemental brief.

Disposition

The court granted SDC’s motion to compel arbitration. It stayed the proceeding pending resolution of the arbitration under 9 U.S.C. § 3. The parties must submit a joint case-management statement six months after the order and every six months thereafter until the matter is resolved. They must notify the court within 14 days after the arbitration ends, stating whether the case should be dismissed or proceed.