Case: Berkson v. Gogo LLC (2015)
Adam Berkson and Kerry Walsh sued Gogo LLC and its affiliates on their own behalf and on behalf of the class of similarly situated persons. 97 F. Supp. 3d at 365. They alleged that Gogo, a provider of internet access on airline flights, had misled them into signing up for a service with a monthly recurring charge when the plaintiffs believed they were making a one-time purchase for service for a single month. Id. The plaintiffs alleged “common law breach of the implied covenant of good faith and fair dealing, common law unjust enrichment, and violation of various consumer protection statutes.” Id. The court’s opinion supported its denial of Gogo’s motion to transfer venue or to compel arbitration and its refusal to enforce the provisions in Gogo’s terms of service that required the parties to litigate in Illinois, or in Berkson’s case required arbitration. Id. at 376. (Not treated in this summary is Gogo’s motion to dismiss for lack of standing, which the court also denied.)
Judge Weinstein recalled the reasonable communicativeness test, which arose in the mid-20th century in response to the proliferation of form contracts or “contracts of adhesion” between producers/sellers and consumers. Id. at 382. According to that test, “(1) The burden is on the [producer/seller] to impress upon the [consumer] the importance of the binding contract being entered into by the latter; and (2) The duty is on the [producer/seller] to explain the relevance of the critical terms governing the [consumer’s] substantive rights contained in the contract. ” Id.
Judge Weinstein then adopted the following evaluative framework (quoted from the judge’s opinion):
- Did the merchant clearly draw the consumer’s attention to material terms that would alter what a reasonable consumer would understand to be her default rights when initiating an online consumer transaction from the consumer’s state of residence: The right to (a) not have a payment source charged without notice (i.e., automatic payment renewal); (b) bring a civil consumer protection action under the law of her state of residence and in the courts in her state of residence; and (c) participate in a class or collective action? If not, then (a), (b), or (c) should not be enforced against the consumer.
Id. at 402.
The court distinguished Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) where the U.S. Supreme Court enforced a forum-selection clause printed on a cruise ticket. It noted that the cruise ticket’s legend was printed in capital letters, made two references to the word “contract,” included the words “important” and “please read,” and provided information about where to find the contract terms. Id. at 403.
Gogo appealed to Second Circuit in April 2015, but by spring 2016, the parties had agreed to postpone the court’s consideration, and in May 2016 the appellant withdrew its appeal. See docket for Berkson v. Gogo LLC, 15-1407 (2d Cir. April 28, 2015).
Categories and definitions
Judge Weinstein provided (or reaffirmed) the following helpful definitions and classifications.
Id. at 395 (quotations and citations omitted).
Clickwrap agreements require a user to affirmatively click a box on the website acknowledging awareness of and agreement to the terms of service before he or she is allowed to proceed with further utilization of the website.” By requiring a physical manifestation of assent, a user is said to be put on inquiry notice of the terms assented to.
Id. at 397 (quotations and citations omitted).
Id. at 399.
Generalizations from the caselaw
Weinstein generalized about courts’ treatments of the various categories of wrap contract. He noted that “[b]ecause of the passive nature of acceptance in browsewrap agreements, courts closely examine the factual circumstances surrounding a consumer’s use.” Id. at 395. In contrast, though federal circuit courts have not held that clickwrap agreements are presumptively enforceable, “almost every lower court to consider the issue has found ‘clickwrap’ licenses, in which an online user clicks ‘I agree’ to standard form terms, enforceable.” Id. at 397 (quotations and citations omitted).
Weinstein argued (as others have) for a distinction between scrollwrap and clickwrap contracts more generally. He did not generalize about the enforceability of scrollwrap agreements. All the cases he cited found the terms enforceable. Finally, he considered sign-in-wrap, noting that courts have found them enforceable under circumstances that “emphasized notice and an effective opportunity to access terms and conditions.” Id. at 400.
Gaps in empirical research
In considering how the average internet user would respond to presentation of EULAs in this case and others, the judge decided to examine academic research studies, which he said “proved inadequate.” Id. at 377. The gaps he noted in the research included:
- “the degree to which [the average user] is aware that each time a purchase is conducted over the internet, a binding contract regarding more than just the promise to pay may be being entered into.” Id.