Fugate v. PeopleWhiz CA1/4
A168050
| Cal. Ct. App. | Aug 30, 2024Background
- Plaintiffs Rick Fugate and Connie Debates filed a putative class action alleging PeopleWhiz, Inc. violated the Automatic Renewal Law (ARL) and other statutes.
- PeopleWhiz moved to compel arbitration based on an alleged online agreement (a sign-in wrap agreement) displayed on its website.
- The trial court denied the motion, finding that a reasonably prudent consumer would not have clearly assented to arbitration under the website's design.
- PeopleWhiz appealed, arguing that mutual assent to arbitrate existed through the website's account creation process.
- The ARL requires contract terms, especially those imposing automatic renewals, to be presented in a "clear and conspicuous" manner.
- The trial court's denial was reviewed de novo by the appellate court, which affirmed the finding that no enforceable arbitration agreement existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mutual assent to arbitrate existed via the website's sign-in wrap agreement | No clear and conspicuous notice; consumers were not adequately informed of arbitration terms | The agreement was sufficiently presented and notice was adequate under contract law | No mutual assent; notice was not clear and conspicuous |
| Whether the ARL's "clear and conspicuous" requirement was satisfied | Website's notice did not stand out or call attention to terms as required by ARL | Use of blue font and capitalization was enough to distinguish the hyperlinks | Notice was not clear and conspicuous under ARL |
| Relevance of transaction context and prior screens to assent | Prior screens led users to reasonably believe no ongoing relationship existed | Earlier disclosures and multiple acceptance opportunities establish assent | Context did not give sufficient notice of ongoing obligations |
| Application of federal/non-ARL precedent to enforce arbitration in this context | State ARL controls and supersedes less demanding federal precedent | Federal and non-ARL state cases support enforcement | ARL standard governs; less demanding precedents not persuasive |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (California law generally favors enforcement of arbitration agreements)
- Sellers v. JustAnswer LLC, 73 Cal.App.5th 444 (Cal. Ct. App. 2021) (Sign-in wrap agreements must provide sufficient notice to bind consumers)
- Perez v. Grajales, 169 Cal.App.4th 580 (Cal. Ct. App. 2008) (Legal arguments not raised below are forfeited on appeal)
- B.D. v. Blizzard Entertainment, Inc., 76 Cal.App.5th 931 (Cal. Ct. App. 2022) (Analysis of non-ARL arbitration enforceability)