738 F.Supp.3d 1285
E.D. Cal.2024Background
- Jake Cavanaugh brought a putative class action against Fanatics, LLC, alleging deceptive shipping practices and breach of contract over an alleged $1.99 hidden handling fee despite promises of free shipping.
- Cavanaugh sought relief under California’s Unfair Competition Law, Consumer Legal Remedies Act, and for breach of contract, including damages and injunctive relief for consumers.
- Fanatics moved to compel arbitration based on the website’s Terms of Use, which contain an arbitration agreement.
- Cavanaugh argued he did not assent to the arbitration provision or the Terms of Use and disputed the conspicuousness of the hyperlinks presented to users on Fanatics’ website.
- The central facts concerned the design and language of the account creation and purchase screens on Fanatics’ website, and whether these screens sufficiently notified users of the arbitration agreement.
- The court considered evidence, including screenshots, declarations, and both parties’ arguments, applying summary judgment standards to determine whether a binding arbitration agreement existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the Terms of Use/arbitration agreement sufficiently conspicuous? | Hyperlinks not adequately visible: small, not bold, no contrasting color, easily overlooked due to screen clutter. | Hyperlinks were in contrasting color, placed near relevant buttons, reasonably visible to an ordinary user. | Checkout screen hyperlink was sufficiently conspicuous under law; account creation screen was not, but checkout screen was dispositive. |
| Did Cavanaugh unambiguously manifest assent to the Terms and arbitration agreement? | Clicking checkout was not sufficient assent because notice was inadequate. | Placing orders and account creation signified assent, with clear notice that clicking constituted agreement. | By placing an order and clicking the button, Cavanaugh manifested clear assent under governing law. |
| Was the issue of scope/enforceability delegated to the arbitrator? | Typically, courts determine threshold arbitrability; disputes as to contract formation cannot be delegated. | AAA rules delegation included in Terms, which is enforceable and clear under Ninth Circuit law. | Valid delegation of arbitrability via AAA rules; arbitrator decides scope/enforceability issues. |
| Appropriate remedy: Stay or dismiss action pending arbitration? | Entire motion should be denied; dismissal not addressed. | FAA requires stay while arbitration proceeds if requested. | Stayed action; not dismissed, pending arbitration outcome. |
Key Cases Cited
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (scope of arbitrable issues, presumption in favor of arbitration)
- AT&T Tech., Inc. v. Commc’ns Workers of Am., 475 U.S. 643 (arbitration denial standard)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (who decides arbitrability, presumption reverses for contract formation)
- Cox v. Ocean View Hotel Corp., 533 F.3d 1114 (allocation of authority under the FAA)
- Davis v. Nordstrom, Inc., 755 F.3d 1089 (application of state law contract principles for arbitration)
- Brennan v. Opus Bank, 796 F.3d 1125 (incorporation of AAA rules delegates arbitrability to arbitrator)