Berkson v. Gogo LLC
2015 U.S. Dist. LEXIS 46899
E.D.N.Y2015Background
- Plaintiffs Kerry Welsh (CA) and Adam Berkson (NY) brought a putative class action against Gogo LLC and Gogo Inc. alleging that Gogo misled consumers into recurring monthly charges for in‑flight Wi‑Fi while presenting terms online that were hidden or not affirmatively agreed to.
- Plaintiffs allege they believed they purchased one‑month access but were billed automatically each month; Berkson received a charge reversal from American Express, Welsh received a partial refund after complaining and later a refund check sent directly by Gogo after his counsel delivered a CLRA demand letter.
- Gogo relied on online "Terms of Use" containing Illinois choice‑of‑law and venue provisions (and later, an arbitration clause) and moved to transfer venue, compel arbitration, and dismiss for lack of standing, arguing plaintiffs assented to those terms during signup.
- The signup pages differed by time: in 2011 the account page had optional checkboxes and a hyperlinked "Terms of Use"; in 2012 the sign‑in/create pages showed small hyperlinked "terms" text near prominent SIGN IN/NEXT buttons but did not force users to view terms in a pop‑up or require scrolling to accept.
- Central legal questions: whether the sign‑in‑wraps provided inquiry notice and manifest assent to material terms (forum/arbitration/auto‑renewal) and whether plaintiffs had Article III standing given refunds or reimbursements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of online sign‑in wrap (venue & arbitration) | Plaintiffs: design/placement of hyperlinks and optional checkboxes did not give inquiry notice or unambiguous assent to terms | Gogo: presence of hyperlinked "terms" adjacent to sign‑in/next constituted notice and assent; terms govern forum and arbitration | Court: denied motions to transfer and to compel arbitration — sign‑in‑wrap did not give adequate notice or require assent to material terms |
| Sufficiency of website notice / inquiry notice standard | Plaintiffs: average internet user would not be put on inquiry notice by small hyperlinked text; material terms obscured | Gogo: hyperlink language and proximity to buttons was adequate; users could access terms | Court: applied a four‑part framework; vendor must actively draw attention to material terms; Gogo failed to show reasonable notice |
| Effect of third‑party reimbursement on standing (Berkson) | Plaintiffs: injury occurred at time of unauthorized charges even if later reimbursed; reimbursement by card company does not eliminate plaintiff's individualized injury | Gogo: reimbursement eliminates injury in fact; no concrete harm remains | Court: held plaintiffs suffered concrete, particularized injury when cards were charged; reimbursement by third party does not defeat Article III standing |
| Post‑demand settlement/offers and no‑contact rule (Welsh) | Plaintiffs: Gogo’s direct refund to Welsh after counsel’s CLRA demand letter does not moot class claims and may violate no‑contact prohibition | Gogo: refund moots Welsh’s claims and undermines his standing | Court: Welsh retained standing; offer/refund after counsel’s demand did not moot action and direct contact implicates no‑contact concerns |
Key Cases Cited
- Specht v. Netscape Comm’cns Corp., 306 F.3d 17 (2d Cir. 2002) (browsewrap hidden below download button did not give inquiry notice; assent not established)
- Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (forum‑selection clause on ticket enforceable where passenger had clear notice; used as contrast for conspicuous notice)
- Schnabel v. Trilegiant Corp., 697 F.3d 110 (2d Cir. 2012) (inquiry‑notice analysis for online terms; vendor bears burden to show notice)
- Deposit Guaranty Nat’l Bank v. Roper, 445 U.S. 326 (1980) (defendant cannot moot a putative class by picking off named plaintiffs; named plaintiff retains interest to appeal certification denial)
- Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) (distinguishes Roper; Supreme Court left open some questions but held FLSA claim mooted where the plaintiff’s individual stake was fully satisfied)
- ABN Amro Verzekeringen B.V. v. Geologistics Am., Inc., 485 F.3d 85 (2d Cir. 2007) (an offer/ tender that does not resolve the entire dispute may leave a live case or controversy)
- Hines v. Overstock.com, Inc., [citation="380 F. App'x 22"] (2d Cir. 2010) (browsewrap links that are not prominent do not give reasonable notice; terms unenforceable)