Bretto v. AMC Entertainment Holdings, Inc.Bretto v. AMC Entertainment Holdings, Inc.
MEMORANDUM AND ORDER
Plaintiffs Jasmine Bretto and Naomi Kopinsky, individually and on behalf of those similarly situated, brought this proposed class action lawsuit against defendant AMC Entertainment Holdings, Inc. Plaintiffs allege that after they purchased movie tickets from its website, AMC violated the Video Protection Privacy Act (VPPA) by sharing statutorily protected information with Facebook. AMC then filed a Combined Motion to Compel Arbitration, or in the Alternative, to Dismiss for Failure to State a Claim. AMC contends plaintiffs agreed to arbitrate their claim when they purchased movie tickets. Alternatively, AMC argues that plaintiffs can’t state a claim for relief under the VPPA. Plaintiffs responded, opposing AMC’s Combined Motion. Doc. 26. AMC replied, addressing only the arbitration portion of its Combined Motion. Doc. 28.
Before its reply was due—in an attempt to preserve interlocutory appeal rights under the Federal Arbitration Act—AMC requested that the court stay briefing on the Motion to Dismiss portion of its Combined Motion. Doc. 27. Or, alternatively, AMC requested leave to withdraw its Motion to Dismiss without prejudice to refiling. Id. Plaintiffs responded, opposing AMC’s request. Doc. 29. AMC replied. Doc. 30. The court now is ready to rule on these motions.
The court finds plaintiffs didn’t enter a binding agreement to arbitrate their claim
I. Background
The court briefly recites the facts relevant to these motions.
AMC is one of the largest movie theater operators in the world. Doc. 1 at 1 (Compl. ¶ 2). Plaintiffs allege that they purchased movie tickets from AMC’s website and AMC then unlawfully shared information about those transactions with Facebook. Id. at 11–12 (Compl. ¶¶ 49–56, 58–65). Plaintiffs argue this information sharing violated the VPPA. Id. at 15 (Compl. ¶¶ 76–82). They brought this federal question action and seek class certification and legal and equitable relief. Id. at 15–16 (Compl. ¶ 83, Prayer for Relief).
AMC, for its part, contends that plaintiffs—by purchasing tickets through AMC’s website—agreed to arbitrate their claim. Doc. 22 at 11–20. Plaintiffs respond, asserting they never assented to arbitration. Doc. 26 at 12–17. At bottom, then, the court must resolve whether plaintiffs—by purchasing movie tickets through AMC’s website—assented to AMC’s terms and conditions, including a binding arbitration provision. The parties submitted screenshots of AMC’s website. Doc. 22 at 12; Doc. 24 at 4; Doc. 26-2 at 2–10. Based on these screenshots, the court briefly summarizes the layout of the relevant webpage: AMC’s ticket checkout screen.
The “Purchase” button appears prominently at the bottom right of the screen. It is attached to a frozen—or stickied—panel at the bottom of the page. No matter where the consumer scrolls, this panel remains visible at the bottom of the screen. Next to the purchase button is a warning. Though it’s somewhat difficult to read in hard copy format, this warning provides, “You must complete all required fields[.]” And next to that warning is the price. Before the consumer inputs an email address and payment method, the “Purchase” button is unavailable, appearing only in gray. After the consumer inputs an email address and payment method, the warning—“You must complete all required fields”—disappears, and the “Purchase” button lights up and becomes available to activate.
On the left side of the webpage—detached from the frozen panel—is a field for the user to enter an email address. Below that field is an area that reads “Payment Method[,]” which lists several different payment options including BitPay, Google Pay, PayPal, Venmo, and the option to add a card. Under that field is another field providing the consumer with the option to pay with gift cards. Then, below that option, is a field for a “Ticket Voucher[.]” Finally, at the bottom left of the webpage—underneath all the payment options—come two textual warnings. The first says, “Sorry no refunds provided after the displayed showtimes.” The second one warns, “By selecting Purchase, I agree to the AMC Terms and Conditions.” The text “AMC Terms and Conditions” provides a blue hyperlink to the referenced terms. Doc. 22 at 12.
Doc. 26-2 at 3.
Appendix A—at the end of this Order—includes the full library of screenshots on which this textual description is based. Consulting these screenshots provides the factual context for the court’s textual description.
II. Motion to Compel Arbitration
A. Legal Standard
The Federal Arbitration Act (FAA),
When an agreement contains an arbitration clause, “a presumption of arbitrability arises[.]” ARW Expl. Corp. v. Aguirre, 45 F.3d 1455, 1462 (10th Cir. 1995) (citing AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986)). But, the key word in this sentence is “agreement.” That’s so “because ‘arbitration is a matter of contract’ and the authority of an arbitrator arises only from the parties[’] agreement to that forum in advance[.]” Sanchez v. Nitro-Lift Techs., L.L.C., 762 F.3d 1139, 1146 (10th Cir. 2014) (quoting AT & T Techs., 475 U.S. at 648–49). So, “‘a party cannot be required to submit to arbitration any dispute which it has not agreed so to submit.’” Id. (brackets omitted) (quoting AT & T Techs., 475 U.S. at 648–49); see also Dodson Int’l Parts, Inc. v. Williams Int’l Co., 12 F.4th 1212, 1219–20 (10th Cir. 2021) (explaining that “the presumption is not a license to override the parties’ expressed intent” and so, courts “must not undermine ‘the first principle that underscores all the Supreme Court’s arbitration decisions: Arbitration is strictly a matter of consent’” (brackets omitted) (quoting Granite Rock, 561 U.S. at 299)).
The presumption of arbitrability thus “falls away” when the parties dispute whether they have entered a valid and enforceable arbitration agreement with one another. See Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (10th Cir. 1998). A court may compel arbitration “only when satisfied that the making of the agreement to arbitrate is not at issue.” Nat’l Am. Ins. Co. v. SCOR Reinsurance Co., 362 F.3d 1288, 1290 (10th Cir. 2004) (quotation cleaned up). The court
B. Analysis
The court denies AMC’s Motion to Compel Arbitration. The court reaches this result based on one simple conclusion: Plaintiffs didn’t assent to a binding agreement to arbitrate.
Kansas law governs whether a contract existed between the plaintiffs and AMC.2 Kansas follows ordinary principles of contract formation. “A binding contract typically entails an offer of terms, an acceptance of those terms, and consideration or a thing of value passing from each party to the other.” Duling v. Mid Am. Credit Union, 530 P.3d 737, 744 (Kan. Ct. App. 2022) (citing M West, Inc. v. Oak Park Mall, 234 P.3d 833, 844 (Kan. Ct. App. 2010)); see also
Wakeman v. Uber Techs., Inc., No. 23-cv-02092-TC-TJJ, 2024 WL 836985, at *3 (D. Kan. Feb. 28, 2024) (“Kansas law requires an offer, an acceptance, and an exchange of legal consideration between parties with capacity to enter a contract in order for a contract to be formed.”). “The parties must each accept the essential terms of the contract and outwardly communicate that acceptance in a way reasonably intended to be understood as such.” Duling, 530 P.3d at 744 (first citing Sw. & Assocs. Inc. v. Steven Enters., LLC, 88 P.3d 1246, 1249 (Kan. Ct. App. 2004); and then citing Morales v. Sun Constructors, Inc., 541 F.3d 218, 221 (3d Cir. 2008)).3
Historically, courts have categorized online agreements as either “clickwrap” or “browsewrap.” Meyer v. Uber Techs., Inc., 868 F.3d 66, 75 (2d Cir. 2017); Eakins v. Whaleco Inc., No. CIV-23-560-J, 2024 WL 1190766, at *2 (W.D. Okla. Mar. 5, 2024), appeal docketed, No 24-6048 (10th Cir. July 8, 2024) (citations omitted) (“Broadly speaking, there are two types of online agreements: ‘clickwraps’ and ‘browsewraps.’”). Clickwrap agreements “require users to click an ‘I agree’ box after being presented with a list of terms and conditions of use[.]” Meyer, 868 F.3d at 75; Berman, 30 F.4th at 856. Because clickwrap agreements require express assent, courts generally find them enforceable. Berman, 30 F.4th at 856. Browsewrap agreements, in contrast, “do not require the user to expressly assent.” Meyer, 868 F.3d at 75. Instead, they “post terms and conditions on a website via a hyperlink at the bottom of the screen.” Id. “Courts have consistently held this type of agreement to be unenforceable, as individuals do not have inquiry notice.” Keebaugh v. Warner Bros. Ent., Inc., 100 F.4th 1005, 1014 (9th Cir. 2024).
But the clickwrap and browsewrap categories don’t encompass every circumstance. “[T]here are infinite ways to design a website . . . and not all interfaces fit neatly into the clickwrap or browsewrap categories.” Meyer, 868 F.3d at 75. Here, for example, AMC’s website doesn’t fit squarely into either of these categories. It isn’t clickwrap because AMC’s users aren’t required to assent affirmatively to the terms before purchasing movie tickets. See Sellers, 289 Cal. Rptr. 3d at 15. And it isn’t browsewrap because the AMC website ostensibly provides notice to consumers that by clicking the “Purchase” button, they also assent to the terms and conditions. See id. Instead, courts refer to this kind of agreement as “sign-in wrap.” See, e.g., id.; Keebaugh, 100 F.4th at 1014; Eakins, 2024 WL 1190766, at *3. As the California Court of Appeals explained:
Sign-in-wrap agreements are those in which a user signs up to use an internet product or service, and the sign-up screen states that acceptance of a separate agreement is required before the user can access the service. While a link to the separate agreement is provided, users are not required to indicate that they have read the agreement’s terms before signing up. Instead, the website is designed so that a user is notified of the existence and applicability of the site’s “terms of use” usually by a textual notice when proceeding through the website’s sign-in or login process.
Sellers, 289 Cal. Rptr. 3d at 15 (quotation cleaned up).
Where a consumer doesn’t have actual awareness of an agreement, a website operator must give “reasonably conspicuous notice of the terms to which the consumer will be bound[.]” Berman, 30 F.4th at 856; see also Soliman v. Subway Franchisee Advert. Fund Tr., Ltd., 999 F.3d 828, 835 (2d Cir. 2021) (“[R]egardless of the precise nature of a web-based contract, the ultimate question concerning inquiry notice on a motion to compel arbitration . . . [is] whether the notice of arbitration provision was reasonably conspicuous and manifestation of assent
(1) the size of the text; (2) the color of the text compared to the background; (3) the location of the text and its proximity to where the user clicks to consent; (4) the obviousness of an associated hyperlink; and (5) other elements on the screen which clutter or obscure the textual notice.
In re Stubhub Refund Litig., No. 22-15879, 2023 WL 5092759, at *2 (9th Cir. Aug. 9, 2023) (citing Sellers, 289 Cal. Rptr. 3d at 23).4 The court finds these factors useful in determining whether plaintiffs contracted with AMC to arbitrate their claims.5
Applying these factors, the court holds that plaintiffs didn’t agree to arbitrate their claim. As a threshold matter, plaintiffs maintain that they weren’t actually aware of AMC’s terms and conditions. Doc. 26-3 at 1 (Bretto Decl. ¶ 4); Doc. 26-4 at 1 (Kopinsky Decl. ¶ 4). AMC doesn’t contest this assertion.6 See generally Doc. 28. So, the agreement to arbitrate binds
First, an AMC consumer could purchase movie tickets without ever seeing AMC’s warning about its terms and conditions. This is evident in the screenshots plaintiffs submitted in response to AMC’s arbitration motion. Doc. 26-2 at 2–10. The notice of AMC’s terms and conditions appears at the bottom of the screen, under the payment method section of the webpage.
Doc. 26-2 at 5; Doc. 22 at 12. When a consumer first enters the page to purchase a ticket, the large “Purchase” option is grayed out and unavailable.
Doc. 26-2 at 2; Doc. 22 at 5. But when the consumer inputs a payment method and email address, the “Purchase” button lights up; that is, it’s no longer grayed out
Doc. 26-2 at 2–4. Importantly, consumers can select a payment method without scrolling to the bottom of the page. Id. So, a consumer could select a payment method and complete a purchase without AMC’s notice of terms and conditions ever appearing on the consumer’s screen.
Courts routinely cite visibility of terms—without the need to scroll—as an important factor for determining whether those terms are sufficiently conspicuous. See, e.g., Wilson v. Huuuge, Inc., 944 F.3d 1212, 1221 (9th Cir. 2019) (citations omitted) (explaining that “courts decline to enforce agreements where the terms are available only if users scroll to a different screen”); Heuberger, 2022 WL 2316377, at *4 (“The entire page appears on a single screen and does not require the user to scroll beyond what is already visible to see the Terms of Service.”); Small Justice LLC v. Xcentric Ventures LLC, 99 F. Supp. 3d 190, 197 (D. Mass. 2015) (“That screen, along with at least two of the other screens used in the posting process, also contained blue links to the terms of service at the bottom of the page which were conspicuously visible without scrolling beyond the ‘continue’ button used to progress to the subsequent screen.”). And for good reason: Contract terms shouldn’t bind consumers who had no reason to know those contract terms existed.
AMC’s responsive arguments don’t persuade the court. AMC argues that its terms are “directly below the Payment Method section.” Doc. 28 at 5 (emphasis in original). That’s true. But it doesn’t change the proposition that a consumer can select a payment method without ever scrolling and seeing the terms and conditions notice. And the terms aren’t included after the typical payment methods that a consumer would use—credit card, PayPal, Venmo, and so on. Instead, AMC placed them below two more fields for “Gift Cards” and “Ticket Voucher[s.]” See Doc. 22 at 12. AMC’s own screenshot reveals that a consumer—after inputting an email address and credit card information—would need to scroll for another half page to find the notice of terms and conditions.
AMC next argues that “common sense” suggests consumers would scroll to the end of the page to ensure that they had completed all fields. Doc. 28 at 6. Not so. AMC’s website design notifies reasonable consumers that they have completed all required fields when the “Purchase” button transitions from grayed out and unavailable to lit and available. Putting it another way, when the “Purchase” button lights up, a consumer has no reason to continue scrolling. This especially is true once AMC’s textual warning about completing all fields disappears from the screen. AMC’s website signals to consumers that they have no more required tasks after filling in an email address and selecting a payment method. A reasonable consumer would have no reason to continue scrolling at that point. And “consumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.” Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171, 1179 (9th Cir. 2014). By employing a website design that allowed users to complete purchases without ever encountering a notice of terms and conditions, AMC “ran the risk of a court concluding . . . that the notice was not sufficiently conspicuous.” See Berman, 30 F.4th at 867 (Baker, J., concurring).
Second, AMC’s terms and conditions were “spatially decoupled” from the “Purchase” button. The red “Purchase” button appears at the bottom right of the page and remains in place wherever the user scrolls; notice of AMC’s terms and conditions hides in the bottom left of the page and appears only if the user scrolls to the bottom of the webpage.
To be sure, the text’s color and the obviousness of the associated hyperlink support AMC’s position. The “AMC Terms and Conditions” appear in blue font, “the color typically used to signify the presence of a hyperlink.” Berman, 30 F.4th at 854. And that blue font contrasts with the webpage’s gray background. So, these factors help AMC’s cause. But they aren’t enough. AMC designed a website that allowed consumers to purchase movie tickets without ever seeing its notice of terms and conditions. What’s more, even if a user scrolled
III. Motion to Stay
After plaintiffs responded to AMC’s Combined Motion to Compel Arbitration or, in the Alternative, to Dismiss for Failure to State a Claim, AMC filed a motion asking the court to stay briefing on the Motion to Dismiss portion of its Combined Motion. Doc. 27. Alternatively, AMC requests leave to withdraw its Motion to Dismiss without prejudice to refiling. Id. at 3. AMC explains that it wishes to ensure that it has preserved its interlocutory appeal rights under the FAA. Id. at 1–3. Plaintiffs oppose these requests. Doc. 29. The court denies AMC’s request to stay briefing. Instead, the court grants AMC’s alternative request and will allow it to withdraw its Motion to Dismiss without prejudice to refiling.
Whether to allow AMC to withdraw its motion is within the court’s discretion. See United States v. Filson, 347 F. App’x 987, 991 (5th Cir. 2009) (“Courts have consistently allowed parties to refile or amend motions and supporting documents as a valid exercise of their discretion in case management.” (citations omitted)). Generally, “there is no reason to deny the amendment when the trial judge believes it would be in the interests of justice to permit it.” 5 A. Benjamin Spencer, Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1194 (4th ed. 2024); see also Robinson v. Worthington, 544 F. Supp. 956, 963–64 (M.D. Ala. 1982) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)) (suggesting that leave to amend and withdraw motions should be freely given absent undue delay, bad faith or dilatory motive, repeated failures to cure, futility, or undue prejudice to the opposing party); Ortiz v. Minn. Life Ins. Co., No. 20-CV-00923-SDJ-CAN, 2023 WL 3993047, at *1 (E.D. Tex. June 9, 2023) (characterizing discretion to allow party to amend motion as “similar to the Court’s discretion whether to grant leave to amend pleadings under Rule 15”).
Likewise, “[a] court has broad discretion in managing its docket, which includes decisions regarding issuing stays for all or part of a proceeding.” Howard v. City of Albuquerque, 349 F. Supp. 3d 1137, 1144 (D.N.M. 2018) (citing Clinton v. Jones, 520 U.S. 681, 706 (1997)). But generally, a party seeking a stay faces a stiffer burden than a party seeking to amend a motion. Compare Howard, 349 F. Supp. 3d at 1144 (“The party seeking a stay generally faces a difficult burden.”), with Robinson, 544 F. Supp. at 963–64 (suggesting that leave to amend a motion should be “freely given”). So, the court concludes that allowing AMC to withdraw part of its motion is the best course. Staying briefing on the current motion prevents the court from resolving the present motion expeditiously. See
But allowing AMC to withdraw its Motion to Dismiss resolves these concerns. AMC’s request doesn’t appear to suffer from undue delay, bad faith or dilatory motive, repeated failures to cure, undue prejudice to plaintiffs, or futility—the infirmities identified in Robinson. 544 F. Supp. at 963–64. Indeed, plaintiffs identify no prejudice that withdrawal would impose.7 And
should AMC refile a motion to dismiss, plaintiffs will have the opportunity to respond to developments in the law that—at least facially—appear unfavorable to their cause of action. The overarching principle that the court freely should give leave to parties to amend their
IV. Conclusion
In sum, the court denies AMC’s request to compel arbitration. AMC’s website didn’t provide sufficient notice to bind plaintiffs. The court denies AMC’s request to stay briefing on its Combined Motion. But it grants AMC’s alternative request to withdraw the Motion to Dismiss portion of its Combined Motion without prejudice to refiling. The court thus denies the entirety of AMC’s Combined Motion: It denies AMC’s Motion to Compel Arbitration on the merits, and it denies AMC’s Motion to Dismiss as moot.
IT IS THEREFORE ORDERED BY THE COURT THAT defendant AMC Entertainment Inc.’s Combined Motion to Compel Arbitration, or in the Alternative, to Dismiss for Failure to State a Claim (Doc. 21) is denied.
IT IS FURTHER ORDERED THAT AMC’s Motion to Stay Deadlines (Doc. 27) is denied. But the court grants AMC’s alternative request to withdraw its Motion to Dismiss (Doc. 27) without prejudice to refiling.
IT IS SO ORDERED.
Dated this 10th day of September, 2024, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
V. Appendix A
Doc. 26-2 at 2.
Doc. 26-2 at 4.
Doc. 26-2 at 6.
Doc. 26-2
Doc. 26
Doc.
Notes
“Kansas choice of law principles suggest that the location of ‘the last act necessary’ to form the contract determines which state law governs contract formation dispute.” Howard, 748 F.3d at 982 (first citing In re K.M.H., 169 P.3d 1025, 1031–32 (Kan. 2007); and then citing Restatement (First) of Conflict of Laws § 332 (1934)). The named plaintiffs here are citizens of Massachusetts and Louisiana. Doc. 1 at 2 (Compl. ¶¶ 8, 9). So, it’s possible that the named plaintiffs purchased their movie tickets in their home states. In that case, Massachusetts and Louisiana might govern. But the plaintiffs haven’t alleged such facts. And if “a party fails to make ‘a clear showing that another state’s law should apply,’ Kansas choice of law principles require a court to default to Kansas substantive law.” Howard, 748 F.3d at 982 (quoting In re K.M.H., 169 P.3d at 1032). The court thus applies Kansas law to determine whether the parties agreed to arbitrate.