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Ninth Circuit:
App’s Black-on-White Notice Is Sufficient to Bind Users
Bennett Writes That Both Context and Design Elements of Sign-in Wrap Agreements Must Be Considered in Determining If There Is Conspicuousness to Create a Contract Under California Law
By Kimber Cooley, Staff Writer
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Above is a screen shot from the Game of Thrones: Conquest app, included in Friday’s Ninth U.S. Circuit Court of Appeals opinion which declares that, as a matter of law, a user clicking on “Play” agrees to the terms of use. |
Users of a mobile app are deemed to have accepted conditions—including arbitrating any dispute—because a notice in white type on a black background says “By tapping ‘Play’ I accept the Terms of Use” and a link to “Terms of Service” is provided, the Ninth U.S. Circuit Court of Appeals held Friday.
Circuit Judge Mark J. Bennett authored the opinion in which Senior Circuit Judges Richard C. Tallman and Robert S. Lasnik joined.
The opinion reverses the denial by District Court Judge Maame Ewusi-Mensah Frimpong of the Central District of California of a motion to compel arbitration. Frimpong found the notice of the terms to be insufficiently conspicuous to bind users.
Appealing the denial was Warner Bros. Entertainment Inc. In May 2022, plaintiffs Charissa Keebaugh, Stephanie Neveu, Heather Mercieri, Sophia Nicholson and P.W., a minor, filed a putative class action against Warner Bros. alleging false and misleading advertising relating to the entertainment giant’s mobile game app Game of Thrones: Conquest (“GOTC”).
Sign-In Wrap Agreement
Bennet noted that Internet contracts are classified in California by the way in which the user purportedly gives consent to be bound by the terms. A sign-in wrap agreement is one in which users are not required to review terms of service before accessing an app but instead click on a button agreeing to be bound by the terms, which are usually separately provided by virtue of a hyperlink.
Under California law, Bennet said, there’s an enforceable contract if there is “reasonably conspicuous notice of the terms” and the user “unambiguously manifests his or her assent” by taking some action, such as clicking on a button.
Bennett pointed out that “[n]o California appellate court had directly addressed the validity of sign-in wrap agreements” until the 2021 Fourth District case of Sellers v. JustAnswer LLC.
Justice Truc T. Do of Div. One the opinion in which she emphasized that the full context of the transaction is critical to the analysis because transactions in which “a consumer [is] signing up for an ongoing account” will cause a consumer to reasonably expect there to be terms governing that on-going interaction.
On the facts before her, Do reasoned that it was unlikely that the user would recognize the notice statement which appeared “in extremely small print, outside the white box containing the payment fields….”
Frimpong’s Error
Bennett opined that while Frimpong applied the analysis of Sellers, she incorrectly focused almost exclusively on the transactional context and disregarded the visual aspects of the notice itself.
He said that “[b]ecause users could play GOTC without first creating an account, the district court concluded the app did not involve the ‘sort of continuing relationship...that would require some terms and conditions” and thus did not put users on notice to look for and read the governing terms.
Declaring that courts must consider both the context and the specifics of the notice in question, the jurist wrote:
“The two cases decided by this court after Sellers both grouped context together with the traditional inquiry related to the visuals involved with the notice, such as font size, text placement, and overall screen design.”
Bennett continued:
“[T]he context of the transaction is a non-dispositive factor under California law, used to evaluate whether a website’s notice is sufficiently conspicuous. Courts must still evaluate the visual aspects of the notice.”
GOTC Notice
Bennett acknowledged that users of GOTC are not required to either purchase the game or create an account with Warner Bros., but disagreed with Frimpong’s finding that there was no on-going relationship. He wrote:
“The nature of downloading a mobile game to one’s phone is different than simply accessing a website. When downloading an app to one’s own device, the prudent internet user necessarily anticipates ongoing access to that app at the user’s discretion—at least until the user deletes the app, conditions imposed on the use of the app change, or the user decides to simply stop playing the game.”
He continued:
“Users are also made aware via the download screen on the various app marketplaces that GOTC contains in-app purchases, and the users would understand that their use of an app that allows for in-app purchases would be governed by some terms of use.”
Under these circumstances, Bennett wrote:
“GOTC satisfies the context-of-the-transaction test from Sellers.”
He also found that the visual factors of the notice made it conspicuous, opining “[t]he design elements use a ‘contrasting font color’ making the notice legible” and “puts the reasonable user on notice that they are agreeing to be bound by the Terms of Service.”
No Unconscionability
Bennet noted that the plaintiffs also allege that the terms in question are substantially unconscionable because the arbitration agreement contains a ban on public injunctive relief in violation of California law. Rejecting the argument, he said:
“[U]nenforceable is not the same as unconscionable; even if it were, it would not necessarily require voiding the entire arbitration provision as unconscionable.”
The judge continued:
“There is a portion of the Terms of Service, the individualized relief provision, which California courts have identified as unenforceable….But…the unenforceability of the waiver of one’s right to seek public injunctive relief does not make either this provision or by extension the arbitration agreement unconscionable or otherwise unenforceable.”
The case is Keebaugh v. Warner Bros. Entertainment Inc., 22-55982.
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