15 F.4th 860
8th Cir.2021Background
- Plaintiffs (29 purchasers) bought Walmart gift cards that were later tampered with and found to be worthless; Walmart refused refunds and plaintiffs sued.
- Each gift card bore a notation directing purchasers to “See Walmart.com for complete terms,” and Walmart’s online Terms of Use included an arbitration clause stating users “accept” arbitration by “using or accessing the Walmart Sites.”
- Walmart moved to compel arbitration; the district court denied the motion, concluding plaintiffs lacked notice of the online arbitration clause and therefore could not have assented.
- The Eighth Circuit reviewed de novo, treating the motion as one raising factual disputes under the summary-judgment standard applicable to motions to compel accompanied by outside materials.
- The court found material factual disputes about (a) whether plaintiffs actually accessed or used Walmart’s website, (b) the website’s design and prominence of the terms hyperlink, and (c) the size/placement and conspicuousness of the back-of-card notice—so formation was in issue.
- Holding: the court reversed and remanded for a trial on whether an arbitration agreement was formed; it did not reach whether, if formed, the agreement would cover this dispute or be unconscionable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an arbitration agreement formed at point of purchase via the card notation | No — plaintiffs did not see the online terms and thus could not assent at purchase | Yes — the back-of-card direction to Walmart.com incorporated the online terms at purchase | No — Walmart set a different manner of acceptance (acceptance by using/accessing site); it cannot now treat purchase alone as acceptance |
| Whether plaintiffs accepted the arbitration clause by using/accessing Walmart’s website (browsewrap) | No — plaintiffs lacked actual or constructive notice and never agreed | Yes — accessing the site (or attempting online redemption) constituted the acceptance Walmart’s terms required | Not resolved — material factual disputes (whether plaintiffs accessed the site and whether notice was adequate) require a trial |
| Whether the court could decide formation on the present record (motion to compel with outside materials) | Formation cannot be decided because plaintiffs never had notice; summary disposition was inappropriate | Formation could be decided as a matter of law because website evidence and complaint admissions suffice | Court found genuine factual issues; under the FAA and governing precedent, the matter must be tried rather than decided on the present record |
| Whether the back-of-card notation was sufficiently conspicuous to put purchasers on inquiry notice | No — the notation’s size/placement and readability are unknown; insufficient to impute notice | Yes — the directive to Walmart.com could reasonably prompt inquiry and incorporate the online terms | Not resolved — conspicuousness and effect of the card notation are factual questions for trial |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (arbitration is a matter of contract)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (arbitrability governed by contract and its delegation rules)
- Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (distinguishing clickwrap and browsewrap; inquiry-notice standard for browsewrap)
- Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (browsewrap unenforceable when users lack notice of terms)
- Neb. Mach. Co. v. Cargotec Sols., LLC, 762 F.3d 737 (motion to compel with outside materials evaluated under summary-judgment standard; remand when facts disputed)
- Meyer v. Uber Techs., Inc., 868 F.3d 66 (factual disputes over online agreement formation require remand for trial)
- Halbach v. Great-W. Life & Annuity Ins. Co., 561 F.3d 872 (incorporation by reference upheld when terms are known or readily available)
- Newman v. Schiff, 778 F.2d 460 (offeror controls manner of acceptance)
- Cicle v. Chase Bank USA, 583 F.3d 549 (printed contractual terms can be sufficiently conspicuous)
- Howard v. Ferrellgas Partners, L.P., 748 F.3d 975 (material factual disputes on contract formation preclude resolution on motion)