Rocha v. Urban Outfitters, Inc.

Background

Jessica Rocha filed a proposed class action against Urban Outfitters, Inc., alleging one violation of the California Invasion of Privacy Act, California Penal Code section 631. Rocha alleged that, in late 2022, she used the chat function on Urban Outfitters’ website and that her messages were first routed through a Salesforce server that intercepted the conversation in real time. Rocha had previously made at least two purchases from the website.

Urban Outfitters moved to dismiss and compel arbitration. It argued that Rocha agreed to the company’s arbitration agreement when she completed purchases on the website. The final purchase page displayed a “Place Order” button above language stating that placing an order meant agreeing to the website’s terms of use and arbitration agreement. The linked arbitration agreement required binding individual arbitration for covered disputes, delegated questions about the agreement’s scope and enforceability to the arbitrator, and waived participation in class actions and class arbitration.

Legal standard

Under the Federal Arbitration Act, a court generally determines whether a valid arbitration agreement exists and whether it covers the dispute. The party seeking arbitration must show that it provided notice of the arbitration terms and that the parties mutually agreed to arbitrate. The court first resolves challenges that an arbitration agreement was never formed; questions about the agreement’s validity or scope may be delegated to an arbitrator, but formation cannot be delegated.

The court applied ordinary California contract-formation principles. For an internet agreement, inquiry notice requires reasonably conspicuous notice of the terms and an action that clearly shows assent. A hyperlink may disclose contract terms, but its presence must be readily apparent and set apart from surrounding text.

Court’s analysis

The court characterized Urban Outfitters’ website as using a modified clickwrap agreement. The website expressly told customers that placing an order meant agreeing to the terms of use and arbitration agreement, and the customer had to click the “Place Order” button. But Urban Outfitters did not claim that Rocha had actual notice of the agreement. The issue was therefore whether the page gave her sufficient inquiry notice.

The court found that it did not. The arbitration disclosure appeared in small gray text on a white background, and the hyperlinks’ only distinguishing feature was an underline. The page also contained larger and darker headings, an order summary, contact, shipping, and payment information, delivery-date options, text-message enrollment, a promotional-code box, and a much larger “Place Order” box. Those features drew attention away from the arbitration disclosure. The court also ruled that the disclosure’s proximity to the button was not enough by itself to create constructive notice.

Because Rocha lacked inquiry notice, the court concluded that she did not manifest assent to the arbitration agreement and was not bound by it. The court therefore denied Urban Outfitters’ motion to dismiss and compel arbitration. The court set an initial case-management conference for March 7, 2024, and ordered related case-management deadlines.