Lopez v. Terra's Kitchen, LLC
331 F. Supp. 3d 1092
S.D. Cal.2018Background
- Terra's Kitchen sells meal-subscription services via its website; Plaintiff Lopez purchased a subscription and brought a putative California class action asserting violations of the Automatic Renewal Law (ARL) and the Unfair Competition Law (UCL).
- Lopez alleges Terra's subscription pages did not present automatic-renewal/continuous-service terms clearly and conspicuously near the consent request, failed to obtain affirmative consent, and failed to provide a retainable acknowledgment including cancellation terms.
- Terra moved to compel arbitration and stay the case, relying on an arbitration clause and class-waiver in its online Terms & Conditions (T&C).
- The T&C (including the arbitration clause) was accessible by hyperlink in the website footer (appearing on every page) and on the checkout page below the "place order" button; Terra characterized the agreement as a hybrid/clickwrap or, alternatively, a browsewrap.
- Lopez declared he never saw or read the T&C or arbitration provision; the court found no evidence to rebut that declaration.
- The district court concluded the online contract was a browsewrap, that Lopez lacked actual and constructive (inquiry) notice, and therefore denied Terra's motion to compel arbitration and to stay the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Type of online agreement (clickwrap/hybrid vs. browsewrap) | Lopez: no assent; T&C not presented for affirmative assent | Terra: T&C hyperlink on every page and near checkout makes it a hybrid or otherwise binds users | Court: Agreement is a browsewrap (no affirmative manifestation of assent) |
| Actual notice of arbitration clause | Lopez: declares he never saw/read T&C or arbitration clause | Terra: contends Lopez (as user) should have known T&C were available | Court: Lopez's uncontradicted declaration establishes lack of actual notice |
| Inquiry (constructive) notice from website design | Lopez: hyperlink was inconspicuous; checkout text did not say clicking constituted assent | Terra: hyperlink on footer and centered green link under "place order" gave constructive notice | Court: Hyperlink placement and appearance (footer + link under button) insufficient under Nguyen; no inquiry notice |
| Enforceability / motion to compel arbitration | Lopez: No agreement formed; arbitration clause unenforceable as to him | Terra: Compel arbitration and bar class action per T&C | Court: Denied motion to compel arbitration and stay; did not reach scope/enforceability issues because Lopez never assented |
Key Cases Cited
- AT&T Mobility v. Concepcion, 563 U.S. 333 (arbitration agreements favored and generally enforceable)
- Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468 (ambiguities in arbitration clause construed in favor of arbitration)
- Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir.) (browsewrap links in footer and even below checkout button are insufficient for inquiry notice without more)
- Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir.) (browsewrap principles and necessity of notice for assent)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (district courts must compel arbitration when valid agreement covers dispute)
- Meyer v. Uber Technologies, Inc., 868 F.3d 66 (2d Cir.) (distinguishing clickwrap/hybrid agreements where checkout language notifies user that clicking indicates assent)