OPINION AND ORDER GRANTING MOTIONS FOR SUMMARY JUDGMENT
THIS MATTER comes before the Court pursuant to the Plaintiffs Motion for Summary Judgment (# 105), the Defendants’
FACTS
The key facts in this action are not in dispute. At bottom, Mr. Grosvenor alleges that Defendant Qwest solicited him to purchase internet service through a “Price for Life Guarantee,” under which the monthly cost of such service would remain the same as long as Mr. Grosvenor remained a customer. He alleges that Qwest breached its contractual promise to provide service at a fixed price by subsequently raising the rate it charged him for internet service. Mr. Grosvenor’s Complaint (# 1) alleges claims for breach of contract, promissory estoppel, unjust enrichment, and a claim under the Colorado Consumer Protection Act, ostensibly on behalf of a putative class of Qwest internet customers.
However, the instant dispute focuses on a more narrow question. Qwest provides internet service pursuant to a Subscriber Agreement that, among other things, requires the parties to arbitrate disputes arising under it and prohibits the maintenance of class actions in cases alleging breach of the agreement. Shortly after this action was filed, Qwest moved (# 13) to compel arbitration of Mr. Grosvenor’s claims. By Order (# 65) dated September 30, 2010,
The parties proceeded to conduct discovery with regard to disputes relating solely to contract formation, and now both parties seek summary judgment on the question of whether there is a binding and enforceable agreement to arbitrate the claims in Mr. Grosvenor’s Complaint. Qwest’s motion (# 106), argues that the facts adduced in discovery indicate that Mr. Grosvenor accepted all of the terms of the Subscriber Agreement, and is thus bound to arbitrate his claims. Mr. Grosvenor’s motion (# 105) argues that any agreement to arbitrate is rendered illusory by the fact that Qwest claims an unfettered right to modify the arbitration provision. Citing Dumais v. American Golf Corp.,
ANALYSIS
A. Standard of review
Rule 56 of the Federal Rules of Civil Procedure fаcilitates the entry of a judgment only if no trial is necessary. See White v. York Intern. Corp.,
If the movant has the burden of proof on a claim or defense, the movant must establish every element of its claim or defense by sufficient, competent evidence. See Fed.R.Civ.P. 56(c)(1)(A). Once the moving party has met its burden, to avoid summary judgment the responding party must present sufficient, competent, contradictory evidence to establish a genuine factual dispute. See Bacchus Indus., Inc. v. Arvin Indus., Inc.,
If the moving party does not have the burden of proof at trial, it must point to an absence of sufficient evidence to establish the claim or defense that the non-movant is obligated to prove. If the respondent comes forward with sufficient competent evidence to establish a prima facie claim or defense, a trial is required. If the respondent fails to produce sufficient competent evidence to establish its claim or defense, the claim or defense must be dismissed as a matter of law. See Celotex Corp. v. Catrett,
This case involves cross-motions for summary judgment. “Because the determination of whether there is a genuine dispute as to a material factual issue turns upon who has the burden of proof, the standard of proof and whether adequate evidence has been submitted to support a prim a facie case or to establish a genuine dispute as to material fact, cross motions must be evaluated independently.” In re Ribozyme Pharmaceuticals, Inc., Securities Litig.,
B. Qwest’s Motion
Logicаlly, the Court begins with Qwest’s motion, insofar as the question of whether a contract was formed must precede the question of whether the terms of that contract might be illusory.
This motion presents the most fundamental of contract law questions— when is a contractual agreement formed. The parties appear to agree that the matter is governed by Colorado law. That law provides that a contract is formed “when one party makes an offer and the other party accepts it, and the agreement is supported by consideration.” Sumerel v. Goodyear Tire & Rubber Co.,
This matter involves contract formation questions attendant to a party manifesting its agreement to a contract’s terms by “clicking” on a button during installation of a software program. Numerous courts have considered the contractual effect of such “clickwrap” or “click-through” agreements. Perhaps thе most detailed analysis of the unique issues presented in these circumstances is Specht v. Netscape Communications Corp.,
None of the plaintiffs testified that they scrolled past the “Download” button to see the reference to the program’s license terms, but the court explained what would have occurred had they done so. By clicking on the “Please review and agree ...” sentence, users would be taken to another webpage entitled “License and Support Agreements.” Id. at 23-24. That page instructed that ‘You must read and agree to the license agreement terms BEFORE acquiring a product” and “BEFORE you install the software.” Id. at 24. Below that advisement was a link to a license agreement for a “product family” that included the SmartDownload program in question. Id. That license agreement stated that installation of the program constituted agreement to the licensing terms, including a requirement that disputes arising from use of the software would be subject to arbitration. Id.
Faced with the defendant’s motion to compel arbitration, the court examined whether a contrаctual agreement had been formed. It first noted that contractual formation questions implicate state law, and concluded that California law governed. Id. at 28-29 & n. 13. It noted that under California law, acceptance of an offer was judged from an objective standard, rather than what the offeree subjectively understood itself to be agreeing to, but that “an offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he is unaware, contained in a document whose contractual nature is not obvious.” Id. at 30. Turning to the question of whether an objectively reasonable user would have reviewed the license terms before downloading the software, the court
Colorado contract law bears some similarity to the California law assessed in Specht. For example, Colorado law also determines whether an offeree has accepted an offer by an objective standard— whether the offeree’s words or conduct, objectively-viewed, manifests an intent to accept. Marquardt v. Perry,
Accordingly, the Court turns to the parties’ evidence. In large part, the underlying facts are not in significant dispute. Mr. Grosvenor first subscribed to Qwest internet service in mid-2006. Qwest sent him a disc containing certain software to install to activate the service. When first opened, the install window contains the title “Legal Agreements” and states “Please read the terms including arbitration and limits on Qwest liability at www.quest.com/legal (“Qwest Agreement”) that governs your use and Qwest’s provision of the service(s) and equipment you ordered from the list below.” (Emphasis in original.) Among the listed services is “Qwest High-Speed Internet Service,” the product Mr. Grosvenor had ordered. The text then continues, stating “Please also read the (1) information on term and early termination fee, and (2) disclaimers and the end use license agreemеnt related to the installation and software you receive during in (“Install Agreements”) in the scroll box below.”
Below that text is a box entitled “Important, Binding Legal Information.” The box displays six lines of text, and contains a scroll bar that allows the user to scroll through additional text. As initially displayed, the first six lines of text read:
Your click below on “I Accept” is an electronic signature and acknowledges: (1) you agree the Qwest Agreement contains the terms under which service and*1027 equipment are provided to you, (2) you understand and agree to such terms, (even if you don’t read them), and (3) you understand and agree to the Install Agreements. Federal and some state laws provide for certain disclosures and the relevant language from the federal act is in this scroll box or at www.qwest com/legal/electronicsignatures. htmh You may get a paper copy of the agreements freе of charge by printing from this page and www.qwest.eom/legal. Qwest does not otherwise provide you with a paper copy. A standard connection to the Internet/World Wide Web, a device that sends and accepts standard email, and a software program that3
Below the box, text reads ‘Your click on ‘I Accept’ is an electronic signature to the agreements and contracts set out herein. Please review the material in the above box for important, binding legal information.” The user may then click on a button that says “I Accept” or a button that says “Cancel.” The software installation will not proceed unless the user clicks on the “I Accept” button.
Before delving further, the Court pauses at this point to assess what a reasonable user would understand from this information. From the upper portion of the installation window, the usеr would be aware that there are “terms [of service] including arbitration and limits on Qwest’s liability” that accompany the user’s use of the internet service. The user would also reasonably understand that those terms are not being presented in the window itself; rather, the user would understand that those terms — collectively referred to as the “Qwest Agreement” — must be viewed at the web address of www.qwest.com/legal. In addition, the user would recognize that there are additional agreements — referred to as the “Install Agreement” — as reflected in the scroll box. Both the.immediately-visible terms of the Install Agreement as well as information found below the scroll box indicate to the user that clicking on the “I Accept” button manifests the user’s acceptance of both the Qwest Agreement and the Install Agreement.
Mr. Grosvenor contends, and Qwest apparently does nоt dispute, that a user who navigated to www.qwest.com/legal on or about the 2006 installation' date would have found that the main body of the page consisted of several paragraphs of various legal notices that are unrelated to the issues presented here. On the left side of the page, however, are a list of links to other pages, as set forth below:
• Legal Notices
• Customer Proprietary Network Information Sharing
• Acceptable Use Policy
• Service Level Agreement
• CPE
• Regulatory Documents
• Arizona Consumers
• Washington Consumers
• Colorado Consumers
• Network Disclosures
• High-Speed Internet Subscriber Agreement
*1028 • Qwest Choice TV & Online Legal Notices
• North America IP Network Peering Policy [etc.]
If the user clicked on the link for “High-Speed Internet Subscriber Agreement,” it would be taken to another page that contains the arbitration agreement, class action limitation, and other terms relevant to the claims here.
To summarize, a user activating Qwest internet service would become aware of the terms of the agreement (and manifest assent) through the following steps: (i) the installation software directs the user to “Please read the terms ... at www. quest, com/legal ... that governs ... the service(s) and equipment you ordered.”; (ii) the user would navigate to the linked page (the “legal” page); (iii) the user, installing Qwest high-speed internet service, would then click on the “High-Speed Internet Subscriber Agreement” link on that page, thus being taken to yet another page; (iv) the user would review that subscriber agreement; and (v) the user would return to the installation software and manifest assent to the subscriber agreement by clicking “I Accept.” The question, then, is whether these facts constitute “reasonably conspicuous notice” of the agreement’s terms.
Specht is too factually distinct from this case to offer meaningful guidance. There, the users were attempting to download a free product,
The other cases cited by Mr. Grosvenor in his summary judgment response are equally inapplicable. Schnabel v. Trilegiant Corp.,
Several cases have concluded that where, during a software installation, the user is presented with the text of an agreement in a scroll box and required the click a button expressing assent to those terms before installation continues, a contract is formed. See e.g. Caspi v. Microsoft Network, LLC, 323 NJ.Super. 118,
There are two facts that are unique to this scenario. First, Mr. Grosvenor could not review Qwest’s terms of service simply by clicking on the link www.qwest.com/ legal; doing so would have only taken him to a page where he would have to continue to search for a link to the applicable contractual terms. The Court cannot say that, as a matter of law, requiring a user to navigate through two links in order to review the terms of an offer prevents any contractual formation, each additional step required of the user tips against a finding that the terms were sufficiently conspicuous. Second, and perhaps more importantly, the fact that a user must navigate to a web page in order to ascertain terms of an offer is particularly difficult where the software being installed is the means by which the internet can be accessed. In the absence of some other means of accessing the internet, Qwest’s program did not allow Mr. Grosvenor to go to unm. qwest.com/legal or review the applicable documents. The record does not reflect whether Mr. Grosvenor had other operative internet service when he began installation of Qwest’s software. In the absence of other operative internet service, Mr. Grosvenor had no way of assessing the terms of Qwest’s agreements until he completed installаtion of the software, and completion of the software installation would not occur until Mr. Grosvenor manifested his acceptance of the terms or the agreement. Under these circumstances, where there is no assurance that a user could view the operative terms prior to agreeing to them: Thus, despite the representations made as to the effect of pressing the “I Accept” button, the Court has some doubt that doing so created an enforceable contract.
Second, it is undisputed that on July 24, 2006, Qwest followed up Mr. Grosvenor’s activation of his internet service by sending a “Welcome Letter.” That letter— which Mr. Grosvenor does not dispute receiving although he professes no specific recollection of it — includes a paragraph reading “Please review the important information about service and terms for use ... on the back of this letter.” The back of the letter contains the following text:
*1030 Qwest High-Speed Internet Service and related products are offered under the Subscriber Agreement terms, which are located at www.qwest.com/legal (may also be encolosed). Please review the terms, which include arbitration and limits on Qwest liability. If you do not agree, call Qwest to cancel your service within 30 days.
The Welcome Letter alleviates some of the issues noted above. First, it eliminates some of the confusion in the software’s reference to the “Qwest Agreement.” The Welcome Letter, specifically directs Mr. Grosvenor to the “Subscriber Agreement” on the qwest.com/legal page as being the document containing terms of service, “including] arbitration and limits on Qwest liability.” Although the “legal” page does not immediately display the Subscriber Agreement, users navigating to that page can readily locate the Subscriber Agreement, because there is only one link on the “legal” page referring to a “Subscriber Agreement.” The Welcome Letter, having arrived after internet service software was installed, also addresses the user’s potential difficulty in accessing the terms of Qwest’s offer in the absence of internet service. Finally, the letter provides time in which to consider the terms of the Subscriber Agreement without the inherent urgency associated with installing the software. It instructs users who do not agree to the terms of the offer to “cancel your service” within 30 days, and thus, a user who does not cancel service is assumed by Qwest to have assented to the agreement’s terms. Mr. Grosvenor did not cancel his Qwest internet service.
Taking the circumstances as a whole, the Court finds that on the undisputed facts presented here, Mr. Grosvenor’s conduct constitutes an objective manifestation of assent to the contractual terms. Although the presentation of the terms is hardly a model of clarity, the Court nevertheless finds that they were sufficiently conspicuous as to permit a reasonable user the opportunity to review them and either agree to them or to cancel the internet service. Among other things, the installation software conspicuously warned users of the existence of contractual terms that accompanied the service, specifically mentioning arbitration as one of the issues addressed. The software provided users with a link by which a reasonable user could locate — -albeit with some effort — the relevant contractuаl language, and required that the user affirmatively express its acceptance of Qwest’s terms. To the extent that presentation of the terms via the installation software can be said to be impractical or unclear, the Welcome Letter would be sufficient to cure a reasonable user’s confusion. That letter expressly identified arbitration as one of the important terms to be reviewed by the user, sufficiently identified the particular link on the “legal” page that contained the agreement, and arrived at a time when the user would certainly be able to access the internet to view the identified terms. The letter provided that the user’s continued use of the service after 30 days effectively manifested assent to the agreement’s terms. Although the Court declines to opine as to whether either prеsentation of the terms — the software installation and the Welcome Letter — -would, of itself, be sufficient, it finds that the combination of the two presentations rendered the contractual terms specifically clear that a reasonable user would be deemed to have understood the terms and assented to them. Accordingly, the Court finds that Mr. Grosvenor entered into a contractual agreement with Qwest in July 2006, in which he agreed to arbitrate disputes over his purchase of internet service.
The Court has some doubt that the November 2007 upgrade constituted a new contractual agreement between the parties. But assuming it did, the Court has already concluded that the combination of installation software and Welcome Letter from 2006 were sufficient to advise Mr. Grosvenor or the terms of his agreement with Qwest for using the internet service. Thus, when Mr. Grosvenor received another Welcome Letter in 2007, he cannot reasonably contend that the contract terms that he previously agreed to were no longer clear to him. The 2007 Welcome Letter was sufficient, of itself, to “refresh” Mr. Grosvenor’s understanding that Qwest required his assent to certain terms for use of the service, and to point Mr. Grosvenor to a location where he could review such terms. Consistent with the terms of the letter, Mr. Grosvenor’s continued use of the service manifested his continuing acceptance of those terms.
Mr. Grosvenor argues that the 2007 Welcome Letter was “misleading,” insofar as it purported to allow him 30 days to cancel his service if he disagreed with the terms of use, but that, as an upgrading customer, the Subscriber Agreement prohibited him from availing himself of the 30-day cancellation policy. But this argument fails to mesh with Mr. Grosvenor’s position in this case. If, as Mr. Grosvenor contends, his 2007 service upgrade gave rise to an entirely new contract with Qwest
Accordingly, the Court finds that, on the undisputed facts presented herein, Mr. Grosvenor manifested his assent to clearly-disclosed contractual terms that, among other things, included an agreement to arbitrate disputes. Thus, Mr. Grosvenor’s breach of contract claims are subject to that agreement to arbitrate unless, as discussed below, that obligation to arbitrаte is somehow rendered unenforceable.
C. Mr. Grosvenor’s motion
Mr. Grosvenor moves for summary judgment, arguing that any agreement to arbitrate that he may have entered into is illusory and thus unenforceable because Qwest reserved the unilateral right to
Qwest offers several arguments in response. First, it contends that challenges to the enforceability of the contract as a whole (rather than challenges to the enforcеability of the arbitration clause) are questions that are reserved to the arbitrator, not the courts. Qwest cites to Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
In Prima Paint, the parties entered into a contract to jointly do business together, including a term requiring arbitration of disputes. The plaintiff later alleged that the defendant fraudulently induced it into agreeing to the contract’s terms because the defendant was not sufficiently solvent to engage in the joint business contemplated by the agreement. The defendant sought to invoke the arbitration clause, but the Supreme Court found that the question of whether the validity of the contract was a question for the court or for an arbitration turned on whether the challenge went to the narrow issue of the parties’ agreement to arbitrate, or the broad question of parties’ agreement as a whole. “A federal court mаy consider only issues relating to the making and performance- of the agreement to arbitrate,” it explained, and if the challenge instead went to the validity of the contract as a whole, not specifically targeting the validity of the arbitration clause, the matter was one for the arbitrator to resolve. Id. at 403-04,
In Rentr-A-Center, the defendant employee brought discrimination claims against his employer, and the employer sought to compel arbitration of those claims pursuant to an arbitration agreement that the employee signed at the start of his employ. The employee opposed arbitration, arguing that the- agreement to arbitrate was unconscionable and thus unenforceable. Rent-A-Center rеsponded that the agreement expressly provided that an arbitrator would have “authority to resolve any dispute relating to the enforceability of this Agreement including, but not limited to, any claim that all or any part of this Agreement is void or voidable.” The Supreme Court explained that “there are two types of validity challenges” is cases such as these: “one type challenges specifically the validity of the agreement to arbitrate and the other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g. the agreement was fraudulently induced), or on the ground that the illegality of one of the contract’s provisions renders the whole contract invalid.”
Here, it appears that Mr. Grosvenor’s invocation of Dumais is an attack on the arbitration provision, rather than an attack on the illusory nature of the Subscriber Agreement as a whole. Dumais itself dоes not purport to address issues of illusory contracts generally; it is pinpoint-specific in stating that “we joint other circuits in holding that an arbitration agreement allowing one party the unfettered right to alter [its terms] is illusory.”
Qwest contends that Dumais is incorrectly-decided. Qwest states that a contract should be deemed illusory only if no other consideration for the agreement as a whole has been exchanged. Assuming that Qwest’s arguments оn this point are correct — and this Court makes no such finding — this Court is not permitted to deviate from 10th Circuit precedent that appears to be controlling in this scenario.
Qwest also argues that Dumais is factually-distinguishable from this case (and thus not controlling). First, it contends that in Dumais, “the employer had taken great pains to ensure that no provision in the handbook or employment documents other than the arbitration provision was binding on the employer,” and thus, the agreement to arbitrate was the only contractual agreement between the parties, such that if the arbitration clause was not secured by consideration, the entire agreement was rendered illusory. Qwest appears to infer this from Dumais, but the Court finds nothing in Dumais suggesting that such inference is reasonable. Indeed, Dumais seems to indicate that the employee also agreed to be “bound ... to the provisions of American Golfs employment handbook.”
Second, Qwest argues that Dumais the employer was not required to give the employee notice of any changes the employer might make, whereas the Subscriber Agreement requires Qwest to do so. There appears to be no foothold for this argument in Dumais; it contains no findings with regard to whether the employer
Even so, the Court is not convinced that a simple requirement that Qwest post any changes it makes to its agreement to a remote webpage is material.
Mr. Grosvenor argues quite persuasively that the terms of the Agreement treat his act of accessing the internet to see if changes have been made to the agreement as “use of the service,” and therefore his assent to changes he desired to review. By conflating the review of the changes with assent to them, there is no right to reject changed terms.
Qwest also argues that there is no evidence of record establishing that it has changed the arbitration terms. This is true, but irrelevant. The court in Dumais gave no indication that the employer had to have altered the terms of the arbitration agreement in order for it to be illusory. To the contrary, it recognized that it was the unilateral power of one party to change the arbitration terms that rendered the arbitration provisions illusory.
The Court finds that Dumais controls the outcome of Mr. Grosvenor’s motion. Because Qwest retained an unfettered ability to modify the existence, terms and scoрe of the arbitration clause, it is illusory and unenforceable.
For the foregoing reasons, Qwest’s Motion for Summary Judgment (# 106) is GRANTED, in so far as the Court finds that Mr. Grosvenor entered into a contractual agreement with Qwest upon his installation of the internet service and continued to be bound by that agreement throughout the events at issue here. This fact is deemed established for purposes of these proceedings.
However, Mr. Grosvenor’s Motion for Summary Judgment (# 105) is also GRANTED, insofar as the Court finds that the arbitration clause in that agreement is illusory and thus unenforceable.
The Court directs that the parties contact the Magistrate Judge forthwith to set a Scheduling Conference to address what remains to be done to prepare this matter for trial.
Notes
. Specht is actually the story of two software programs. One, "Netscape Communicator,” involved a stаndard clickthrough agreement, by which the user would be unable to install the program without clicking a button stating that the user expressly agreed to the program's license terms. The second program, "SmartDownload,” was installed as described above.
. The rule stated by the Specht court is fairly dense with qualifiers. For example, the rule clearly applies only to “free” software. As the court later explains, "[w]hen products are 'free' and users are invited to download them in the absence of reasonably conspicuous notice that they are about to bind themselves to contract terms,” analogies to existing contract law are not necessarily valid. Id. at 32.
. Mr. Grosvenor states that the remaining material contained in the scroll box comprises approximately 10 pages of text. Most of that material is irrelevant to the issues presented here. However, section 7.2 of the material in the scroll box describes "Remedies and Legal Actions.” Section 7.2(b) states that "Any dispute with SupportSoft, Inc. [apparently the author of the installation software] regarding the agreement” will be litigated in California. Section 7.2(c) states that "All other dispute regarding this Agreement” shall be litigated in courts in Colorado. As best the Court can see, the text in the scroll box makes no mention whatsoever of arbitration.
. The Court notes, in passing, that the 2006 Welcome Letter states that Mr. Grosvenor’s internet service was "Qwest Choice DSL Deluxe with MSN Premium 24-month term commitment.” It would appear, then, that Mr. Grosvenor was still subject that 24-month commitment with Qwest when he upgraded his service 16 months later.
. Section 4 further provided that Qwest was not required to give notice to users of any change in the agreement's terms, and thаt the changes became "effective upon posting to www.qwest.com/legal.” It also stated that a user's continued use of the service after such changes were posted constituted acceptance of the changes.
. In parentheticals discussing other cases, the court in Dumais noted that those cases permitted the employer to make changes to the arbitration clause "without notice," but otherwise, the word "notice” does not appear in Dumais.
. Qwest does not offer any reasonable explanation why users like Mr. Grosvenor would periodically visit www.qwest.com/legal and attempt to ascertain whether any terms in the Subscriber Agreement had changed since their last visit (without any apparent help from Qwest, as no redlined version, change-log, or other information is provided to guide users to recent changes in the agreement's terms).
. Qwest notes that another portion of Section 4 of the agreement states that certain changes to the agreement become effective "upon 30 days notice to you.” However, the changes encompassed by that provision are those that "directly result!] in a material and adverse economic impact to you.” Notwithstanding footnote 1 in Qwest's response brief, it is by no means clear that, if Qwest elected to change any of the terms of the arbitration agreement, it would necessarily consider those changes to pose a "material and adverse economic impact” to its users, such that express notice and delayed implementation of those changes would apply.
. The parties have not addressed the question of whether the class action waiver found in Section 17(b) of the Subscriber Agreement falls outside of Dumais, such that it remains enforceable, nor the extent to which that issue informs Mr. Grosvenor’s intention of pursuing this case as a class action. Thus, the Court does not consider those issues at this time.