Engen v. Grocery Delivery E-Services USA Inc.

Background

Amanda Engen alleged that telephone calls from Grocery Delivery E-Services USA Inc., doing business as HelloFresh, violated the Telephone Consumer Protection Act of 1991. She sought damages and injunctive relief for herself and, if certified, two proposed nationwide classes.

Engen created a HelloFresh account, signed up for meal-kit delivery, and placed an order on January 21, 2017. During that process, she clicked a box stating, “I accept the terms and conditions and I have read the privacy policy.” The terms in effect at that time—the 2016 Terms and Conditions—did not contain an arbitration provision. They did contain provisions allowing HelloFresh to revise its terms and stating that users would be subject to the terms in effect when they ordered products.

HelloFresh later added arbitration provisions, including a requirement for individual arbitration and a waiver of class actions. On January 6, 2019, Engen logged into her account, reactivated her subscription, changed her meal plan, and placed an order that she later canceled that day. HelloFresh said that it sent Engen more than 50 emails between April 2017 and March 2019, each containing a link to the applicable terms. HelloFresh relied on those emails and Engen’s January 2019 website activity to argue that she agreed to the 2018 Terms and Conditions.

The parties gave different accounts of the later calls. Engen said she received repeated calls asking her to resubscribe and that she asked HelloFresh on multiple occasions to stop calling. HelloFresh said its vendors made three calls, and that Engen asked that the calls stop during the third call.

Issue and governing law

HelloFresh moved to compel individual arbitration and stay the court proceedings. Because the parties presented and the court considered evidence outside the pleadings, the court treated the motion as one for summary judgment under Federal Rule of Civil Procedure 56.

Under the Federal Arbitration Act, an arbitration agreement is enforceable, but a person cannot be required to arbitrate a dispute that she did not agree to arbitrate. The party seeking arbitration bears the burden of proving a valid and enforceable agreement. The court applied New York law because the Terms and Conditions contained a New York choice-of-law provision, and Engen did not challenge that provision.

Under New York law, an online agreement requires a clear manifestation of mutual assent. A user may be bound by terms when they are clearly presented and the user affirmatively acknowledges them, such as by clicking a box agreeing to the terms. Passive use may be enough only when the website gives clear and conspicuous notice that continued use will show assent.

Analysis

The court determined that Engen accepted the 2016 Terms and Conditions when she clicked the acceptance box and placed her first order. But those terms contained no arbitration provision. The court also concluded that the provision allowing HelloFresh to revise its terms was not inherently invalid under New York law.

Even so, HelloFresh had to show that Engen manifested assent to the later 2018 Terms and Conditions and their arbitration provisions. The court held that the evidence was legally insufficient. The promotional email HelloFresh submitted did not tell Engen that the Terms and Conditions had changed or that arbitration had been added. Its link to the terms appeared in small print at the bottom of the email, below promotional content and other links, and was not clear or conspicuous.

The court also found that Engen’s January 2019 website visit did not establish assent. Unlike cases involving a required click accepting revised terms, the record did not show that Engen had to click a button or take a similar affirmative action to agree to the 2018 Terms and Conditions. HelloFresh acknowledged that the website visit alone could not establish notice or assent.

Disposition

The court held that Engen and HelloFresh did not agree to arbitrate their disputes. It therefore denied Defendant Grocery Delivery E-Services USA Inc.’s motion to compel arbitration and stay proceedings. The court did not decide whether Engen’s Telephone Consumer Protection Act claims fell within the scope of the arbitration provision because it found no agreement to arbitrate.