9th Circuit: No Arbitration in TCPA Suit Based on Browse-Wrap “Agreement”

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit recently upheld a lower court order refusing to compel arbitration of a TCPA putative class action, ruling that the “browse-wrap” terms and conditions on a defendant’s websites did not call enough attention to the presence of contractual terms and conditions, including the arbitration clause.

Plaintiffs filed a putative class action suit on behalf of consumers who received unwanted calls or text messages from some of the defendants during a telemarketing campaign, alleging that the calls or text messages were made in violation of the Telephone Consumer Protection Act (TCPA).  Defendants moved to compel arbitration, arguing that visitors on their websites agreed to the terms and conditions requiring arbitration by clicking on “continue” buttons.  

Distinguishing between clickwrap agreements (which are generally enforceable) and browse-wrap agreements (which have a more stringent test for enforceability), the court of appeals held that because the websites did not adequately call users’ attention to the existence of the terms and conditions when they were clicking on the “continue” buttons, no valid agreement to arbitrate was formed under applicable state law.