490 F.Supp.3d 1265
M.D. Tenn.2020Background
- On December 6, 2019 Anderson (guest buyer) purchased two seat‑belt extenders from Walmart.com; checkout required clicking a “Place Order” button placed beneath bold, hyperlinked notice: “By clicking Place Order, you agree to Walmart’s Updated Privacy Policy and Terms of Use.”
- Walmart’s Terms of Use (linked) prominently warned on page 1 of a binding arbitration clause (Section 20) and contained a detailed arbitration provision forbidding class actions.
- Anderson sued Walmart (alone among the plaintiffs) for fraud/negligent misrepresentation regarding seatbelt extenders; other plaintiffs’ claims against Amazon/eBay were separately compelled to arbitration.
- Walmart moved to compel arbitration and dismiss Anderson’s claims; Anderson argued the Terms were a “browsewrap,” procedurally unconscionable, and therefore unenforceable.
- Court considered choice of law (Tennessee v. contract’s California choice), but concluded result would be the same under either law.
- Court held the Terms constituted a valid clickwrap/hybrid agreement with adequate notice, found Anderson failed to show procedural or substantive unconscionability, compelled arbitration, and dismissed Anderson’s claims without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Anderson agreed to arbitrate | No; he didn’t check a box or explicitly click “I agree” and therefore lacked assent (browsewrap) | Assent was given by required click to “Place Order” directly below conspicuous hyperlink and notice (clickwrap/hybrid) | Agreement enforceable; clicking Place Order with visible notice constituted assent to Terms and arbitration clause |
| Whether arbitration clause is procedurally unconscionable | Hyperlink to 17‑page Terms was onerous and not reasonably conspicuous; no meaningful choice | Terms and clause were prominent (bold/capital notice) and routine online contract practice; failure to read does not vitiate assent | Not procedurally unconscionable under Tennessee or California law |
| Whether arbitration clause is substantively unconscionable | (Implied) length/boilerplate and class waiver unfair | Arbitration provision contains consumer‑friendly procedural protections (teleconference hearings, reasonable location, agency enforcement preserved) | Plaintiff raised no substantive challenge; clause not substantively unconscionable |
| Choice of law and effect on analysis | (implicit) Tennessee law should apply because contract formed where Anderson clicked | Terms include California choice; but Walmart argued federal arbitration law governs enforcement | Court found outcome same under Tennessee or California law and declined to resolve material‑connection issue; enforced arbitration |
Key Cases Cited
- Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967 (6th Cir. 2007) (FAA embodies national policy favoring arbitration)
- Glazer v. Lehman Bros., Inc., 394 F.3d 444 (6th Cir. 2005) (court must compel arbitration if valid agreement exists)
- Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) (four‑step framework for motions to compel arbitration)
- Fazio v. Lehman Bros., Inc., 340 F.3d 386 (6th Cir. 2003) (doubts as to arbitrability resolved in favor of arbitration)
- Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000) (party challenging arbitration bears burden to show claims nonarbitrable)
- Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669 (Cal. 2000) (both procedural and substantive unconscionability required; sliding scale approach)
- Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159 (Tenn. Ct. App. 2001) (definition and standard for unconscionability under Tennessee law)