Bobbie James v. Global TelLink Corp
2017 U.S. App. LEXIS 5448
| 3rd Cir. | 2017Background
- GTL provides inmate telephone services; users create accounts via GTL’s website (click "Accept") or an interactive voice-response (IVR) telephone system (audio notice pointing to website terms).
- GTL’s online terms of use include an arbitration agreement and class-action waiver; users have 30 days to opt out.
- Four named plaintiffs opened accounts by telephone and received only an audio statement that the service was governed by terms posted online; they were not required to visit the site or affirmatively accept the terms. One plaintiff opened an account online and clicked "Accept."
- Plaintiffs sued GTL in a putative class action alleging unconscionable charges and multiple statutory/state-law claims; GTL moved to compel arbitration for claims covered by its terms.
- The District Court compelled arbitration for the web user but denied GTL’s motion as to telephone users, finding no mutual assent because the IVR did not inform users that using the service constituted acceptance of the online terms. GTL appealed.
Issues
| Issue | James' Argument | GTL's Argument | Held |
|---|---|---|---|
| Whether telephone users assented to arbitration terms posted only on GTL’s website | Telephone users (James) argued they did not assent because they never received or expressly accepted the website terms and were not told use = acceptance | GTL argued that repeated audio notice that the account was governed by website terms, plus continued use, manifested assent to those terms including arbitration | Held: No. Under New Jersey contract law, there was no mutual assent; IVR notice without affirmative acceptance or clear notice that use constituted assent was insufficient |
| Whether silence/continued use can constitute acceptance absent conspicuous notice | James: Silence/continued use cannot bind absent clear notice that use equals assent | GTL: Continued use after audio notice suffices as implied acceptance | Held: Silence does not ordinarily manifest assent; offeror must give reason to understand silence manifests assent; not present here |
| Whether incorporation by reference to website terms binds users who never visited the site | James: Cannot bind someone who neither knew nor assented to incorporated terms | GTL: Incorporation by reference is valid because users were informed terms existed online | Held: Incorporation requires knowledge and assent; telling users terms exist online without providing or making them readily accessible does not establish assent |
| Applicability of browsewrap/clickwrap doctrines to hybrid IVR–web model | James: IVR notice is functionally like a browsewrap without conspicuous or affirmative assent; thus unenforceable | GTL: Analogous precedents on assent by use or online hyperlink enforcement support enforcement | Held: Court treated IVR-to-web scheme as akin to browsewrap; absent conspicuous notice or affirmative assent, arbitration clause unenforceable for IVR users |
Key Cases Cited
- Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir.) (en banc) (plenary review of arbitration validity)
- Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51 (3d Cir. 1980) (arbitration requires express agreement)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (state-law principles govern contract formation for arbitration)
- Atalese v. U.S. Legal Servs. Grp., L.P., 99 A.3d 306 (N.J.) (mutual assent and knowing waiver standard for arbitration)
- Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (FAA does not compel arbitration absent agreement)
- Weichert Co. Realtors v. Ryan, 608 A.2d 280 (N.J.) (silence ordinarily does not manifest assent)
- Schnabel v. Trilegiant Corp., 697 F.3d 110 (2d Cir.) (limits on enforcing terms spatially/temporally decoupled from transaction)
- Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir.) (browsewrap enforceability hinges on conspicuous notice)
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir.) (hyperlink obscurity defeats constructive notice)
- Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir.) (terms linked in obscure locations do not bind users)
- Carnival Cruise Lines v. Shute, 499 U.S. 585 (U.S. 1991) (forum-selection clause enforceable where passengers received and knew ticket terms)