11th Circuit Enforces “Clickwrap” Arbitration Agreement Which Allows Arbitrator to Decide Threshold Enforceability Questions

The U.S. Court of Appeals for the Eleventh Circuit ruled that an arbitration agreement which a plaintiff agreed to while signing up for an online service was enforceable, including a provision which delegated authority to decide threshold arbitrability issues to the arbitrator.

In the underlying suit (brought in federal court in Florida), the plaintiff alleged violations of the Fair Credit Reporting Act against a consumer reporting agency (CRA) which allegedly reported inaccurate information in the plaintiff’s credit report.  Separately, the plaintiff had signed up several years earlier with the CRA for an unrelated online credit report monitoring service.  As part of the enrollment process for that service, the plaintiff was required to agree to a Terms of Use Agreement (the “Agreement”).  The full Agreement was not directly displayed on the screen during the sign-up process, though a link to the Agreement was provided near the place where the plaintiff was required to click to accept the Agreement.  This format of an agreement is often called a “clickwrap” agreement. 

Among other things, the Agreement included a broad arbitration clause covering “all disputes and claims” between the plaintiff and CRA, regardless of whether they related to the online credit report monitoring service.  Additionally, the Agreement stated that the arbitrator was to decide any issues related to the scope and enforceability of the arbitration agreement, including whether either party had waived the right to arbitrate.

The district court denied a motion by the CRA to compel arbitration, but the Eleventh Circuit reversed on appeal.  The Eleventh Circuit stated that whether an arbitration provision in a “clickwrap” agreement is enforceable depends on whether the agreement is a valid contract under state contract law.  Florida law provided that a “clickwrap” agreement can be binding if the relevant terms were reasonably presented and if the user took clear, affirmative steps to accept them.  Here, the CRA submitted a declaration from an employee on how the online enrollment process worked, and images of the webpage which the plaintiff would have seen and clicked on to accept the Agreement.  Since the plaintiff did not provide any rebuttal evidence about the signup process or the contents of the relevant webpages, and did not affirmatively deny enrolling, the CRA’s evidence was sufficient to show that the plaintiff had assented to the Agreement.

Separately, the plaintiff claimed that the CRA had waived the right to arbitrate by participating in the court case for about three months before moving to compel arbitration, including answering the complaint, participating in a case management conference, and serving various disclosures on the plaintiff.  The Eleventh Circuit found that courts typically decide threshold arbitrability questions, but that the parties can also agree to delegate such matters to the arbitrator.  Here, the Court found that the arbitration provision in the Agreement expressly stated that the arbitrator was required to decide whether the CRA waived arbitration by its participation in the lawsuit.

The Eleventh Circuit remanded the case with instructions for the district court to grant the CRA’s motion to compel arbitration.