Sadlock v. The Walt Disney Company

Background

Joshua Sadlock brought a class action against The Walt Disney Company under Pennsylvania’s Wiretapping and Electronic Surveillance Control Act. He alleged that Disney, through Oracle’s BlueKai product, intercepted his keystrokes, mouse clicks, viewed webpages, and other communications while he browsed ESPN.com. The opinion identifies the case as involving a single statutory claim.

Disney moved to compel arbitration and stay the court case. Disney relied on arbitration provisions in terms governing ESPN accounts and Disney streaming services. Those provisions required individual binding arbitration for covered disputes and waived class proceedings.

Contract-Formation Issue

Sadlock challenged whether he had agreed to arbitrate. The court applied state-law principles of contract formation and used California law because the parties agreed that the relevant states’ laws would produce the same result. The court explained that, when a website does not establish a user’s actual knowledge of its terms, an online agreement is enforceable under an inquiry-notice theory only if the terms are reasonably conspicuous and the user takes an action that unambiguously shows assent.

The court rejected Disney’s reliance on Sadlock’s ESPN account registration because Disney did not provide evidence showing what information was presented when he registered. Disney also did not establish whether Sadlock used one of two possible processes when he enrolled in the Disney Bundle, although it showed that he had to use one of them.

The court concluded that the payment webpage used in the relevant registration process did not provide reasonably conspicuous notice of the Subscriber Agreement. The reference appeared near the bottom in relatively small, muted text, was embedded in a six-line paragraph, and was surrounded by promotional and payment-related material. The court also concluded that clicking the “Agree & Subscribe” button did not unambiguously show assent to the Subscriber Agreement because the button could have been understood as agreeing only to pay for the subscription.

Email Notice and Assent

Disney also relied on two emails sent to Sadlock about an updated Subscriber Agreement. The emails stated that the agreement was being updated, explained when the new terms would take effect for existing subscribers, encouraged him to review the agreement, and specifically identified an update to the arbitration provision.

The court found that the emails gave reasonably conspicuous notice of the Subscriber Agreement and its arbitration provision. It further held that Sadlock unambiguously assented to the updated terms by continuing to use the Disney streaming service after receiving the emails. The court noted that its decision was based on the facts and arguments presented, including that Sadlock did not claim he failed to receive or see the emails.

Ruling and Disposition

The court concluded that the parties formed an agreement to arbitrate. Sadlock had challenged only contract formation; he did not challenge Disney’s assertions that arbitrability issues had been delegated to the arbitrator or that the arbitration agreement was not unconscionable.

The court granted Disney’s motion to compel arbitration and stay the action pending arbitration. The order disposed of Docket No. 18. It did not decide whether Sadlock’s Pennsylvania statutory claim was substantively valid.