Commercial Litigation and Disputes and Consumer Class Actions Update

California Court of Appeal JustAnswer Decision Provides Important Reminders for Creating Binding Online Arbitration Agreements

January 31, 2022

A recent decision from the California Court of Appeal is a helpful reminder that customers’ notice and express assent can be necessary to create enforceable website terms and conditions. In Sellers v. JustAnswer LLC, 2021 WL 6144075, the Court of Appeal considered the enforceability of an arbitration agreement contained in JustAnswer’s “sign-in wrap agreement” for its automatic renewal membership program, which required customers to sign up through a screen stating that clicking “Start my trial” confirms acceptance of JustAnswer’s Terms of Service without also requiring customers to confirm they reviewed the terms.

The Court of Appeal held that JustAnswer could not compel arbitration because its sign-up process did not contain sufficiently conspicuous disclosures of the mandatory arbitration clause to bind plaintiffs. When plaintiffs first accessed JustAnswer’s website, they were presented with a box to type a question for response by an “expert,” clicked “Continue,” and were taken to a payment page containing a form for submitting credit card information. Below the form was a button for “Start my trial,” and below that button an additional disclaimer read, “By clicking ‘Start my trial’ you indicate that you agree to the terms of service and are 13+ years old.” The underlined “terms of service” was a hyperlink that led to another webpage with approximately 26 pages of terms, including a binding arbitration clause and class action waiver. Plaintiffs were not required to actually view the hyperlinked terms of service to begin using JustAnswer’s service and were automatically enrolled in a monthly membership by clicking “Start my trial.”

In finding that the notices on JustAnswer’s “Start my trial” screens were not sufficiently conspicuous to provide plaintiffs with inquiry notice, the Court of Appeal emphasized that “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers” and highlighted, among other factors, the format and placement of the disclosure of the terms of service outside of the area where customers would likely be focused. The Court of Appeal reasoned that, because the disclosure appeared below the payment form outside of the user’s primary area of focus, was written in small type, lacked contrast to make the disclosure apparent, and did not present the terms of service to draw the user’s attention, JustAnswer did not provide sufficiently conspicuous notice of the terms to create a binding arbitration agreement.

JustAnswer reaffirms the importance of obtaining customers’ assent to an online contract and is a reminder of certain key principles for providing conspicuous disclosures:

Place the disclosure in close proximity to the button customers must click to complete a transaction (e.g., above the button).
Expressly preview the arbitration clause in the disclosure referencing the terms of service.
Where possible, require customers to check a box to affirmatively indicate assent to the terms.

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