Felter v. Dell Technologies, Inc.

Background

Robert Felter and Washington accepted Dell’s Terms of Sale by clicking “Accept” on the start-up screen of their computers. The screen displayed a Windows 10 license agreement in one column and Dell’s Terms of Sale in another. It stated that use and purchase of the product were governed by Dell’s Terms of Sale and that clicking “I accept” constituted agreement to those terms. The “Accept” button appeared immediately below the Terms of Sale. The arbitration provision itself was below the visible portion of the terms and required scrolling.

Felter bought his computer from Best Buy, which offered free returns. Washington bought his computer directly from Dell. The opinion states that Dell’s return policy allowed a 15% restocking fee and return-shipping fees, which could have totaled more than $500, although Dell argued that it allowed free returns during the relevant period.

Arguments and analysis

Felter and Washington argued that no contract was formed because the writing did not appear to be a contract and its terms were not sufficiently brought to their attention. They also argued that the agreement was an “in-the-box” contract—terms supplied after the purchase—and that no additional terms could be added after the computers were bought.

The court concluded that the start-up screen gave users reasonable notice of Dell’s Terms of Sale. A reasonably careful computer user would understand that scrolling was necessary to see the full agreement. The court also found the “in-the-box” analogy inapplicable because Felter and Washington affirmatively accepted the Terms of Sale.

The court acknowledged possible arguments that the Terms of Sale were unfair, that Washington’s return costs could support an unfairness challenge, or that acceptance could have occurred under economic pressure. But the arbitration agreement expressly gave the arbitrator exclusive authority to decide disputes about whether the arbitration provision or the broader agreement was enforceable, including challenges based on unfairness or invalidity. Because the plaintiffs did not specifically challenge that delegation clause, the court held that it had to enforce the delegation and leave challenges to the agreement’s validity for the arbitrator.

Disposition

The court granted Dell’s motion to compel arbitration and dismissed the case without prejudice. The opinion does not decide the underlying enforceability challenges; it assigns those questions to the arbitrator.