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In ordering parties to arbitrate a dispute over internet surcharges, a federal district court in New York held that the internet user agreed to arbitrate by clicking an “Accept” button and signaling his acceptance of an agreement containing an arbitration clause. The Court concluded that the consumer agreed to a fair and enforceable arbitration agreement and can pursue all his legal rights and remedies in arbitration.
In Bar-Ayal v. Time Warner Cable Inc., No. 03 CV 9905(KMW), 2006 WL 2990032 (S.D.N.Y. Oct. 16, 2006), Bar-Ayal brought a putative class action against Time Warner, seeking a refund of surcharges imposed for use of Time Warner’s Road Runner internet service.
Time Warner filed a motion to compel arbitration based on an arbitration clause in the customer agreement. In opposing the motion, Bar-Ayal argued that (1) he did not “knowingly” agree to arbitration, (2) the dispute did not fall within the scope of the arbitration agreement, and (3) the arbitration agreement was unconscionable and therefore unenforceable.
Bar-Ayal argued that he did not knowingly agree to arbitration because he was not put on “clear notice” of the arbitration agreement. The Court rejected this argument based on the rule that a person who assents to an agreement without reading it is nevertheless bound by the terms of the agreement. Specifically, the Court found that while installing the Road Runner software, Bar-Ayal assented to the customer agreement, including its arbitration clause, by clicking an “Accept” button signaling his acceptance of the terms of the customer agreement.
During installation of the software, the customer agreement would have appeared on Bar-Ayal’s computer monitor in a scrollable window. While reading the agreement would require scrolling through several screens, the Court observed, “it is not significantly more arduous to scroll down to read an agreement on a computer screen than to turn the pages of a printed agreement.”
The Court gave no consideration to Bar-Ayal’s argument that the dispute did not fall within the scope of the arbitration clause because there was “clear and unmistakable evidence” that the parties intended for the arbitrator to resolve issues of arbitrability. Namely, the arbitration clause, which was printed in all caps, stated that “the arbitrability of disputes shall be determined by the arbitrator.”
Finally, Bar-Ayal argued that the arbitration clause was unconscionable, based primarily on a one-year limitations period and the impossibility of bringing a class action. The Court rejected this argument by citing New York case law allowing class action waivers and a one-year limitations period.
The term “clickwrap agreement” is often used to describe user agreements that are displayed on a computer monitor and must be accepted before the underlying transaction can proceed. When offering an arbitration agreement in electronic form, a party should require an express and clear-cut manifestation of assent. See Specht v. Netscape Communications Corp., 150 F.Supp.2d 585, 595 (S.D.N.Y. 2001) (denying enforcement of an arbitration agreement because “downloading is hardly an unambiguous indication of assent”).
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