Duick v. Toyota Motor Sales
198 Cal. App. 4th 1316 (2011) (2011)
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Rule of Law:
A contract, including any arbitration clause within it, is void for fraud in the inception and thus unenforceable if a party is deceptively led to believe the agreement is of a wholly different character, depriving them of a reasonable opportunity to know the essential terms and nature of the contract.
Facts:
- Toyota Motor Sales, U.S.A., Inc. (Toyota) and its ad agency Saatchi & Saatchi North America, Inc. (Saatchi) launched an internet advertising campaign for the Toyota Matrix called 'Your Other You.'
- As part of the campaign, a person could designate another individual, such as Amber Duick, to receive an unsolicited email inviting them to take a 'Personality Evaluation.'
- To participate, Duick was directed to a webpage with 'Personality Evaluation Terms and Conditions' and was required to click a box indicating she had read and agreed to them.
- The terms stated she would participate in a '5 day digital experience' and receive emails, but did not disclose that this experience was a prank designed to be unsettling.
- After allegedly agreeing, Duick began receiving disturbing emails from a fictional character, 'Sebastian Bowler,' who claimed he was a fugitive coming to her home with his pit bull.
- The emails from Bowler referenced Duick's previous home address, described his efforts to evade law enforcement, and included photos and videos of his supposed journey.
- Duick also received an email from a fictional motel manager billing her for property damage allegedly caused by Bowler.
- A final email revealed that the entire sequence of events was a prank as part of the Toyota Matrix advertising campaign.
Procedural Posture:
- Amber Duick filed a lawsuit against Toyota Motor Sales, U.S.A., Inc. and Saatchi & Saatchi North America, Inc. in the trial court.
- After defendants demurred, Duick filed a first amended complaint.
- Defendants filed a motion to compel arbitration, citing the provision in the 'Your Other You' terms and conditions.
- The trial court denied the defendants' motion to compel arbitration.
- Defendants, as appellants, appealed the trial court's denial to the California Court of Appeal, an intermediate appellate court.
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Issue:
Is an online clickwrap agreement, including its arbitration clause, void due to fraud in the inception when its title and vague terms misrepresent the fundamental nature of the transaction as a 'personality evaluation' while concealing that it is actually consent to be the target of an elaborate and unsettling prank?
Opinions:
Majority - Rothschild, J.
Yes. The contract is void due to fraud in the inception because the promisor was deceived as to the nature of the act and did not know what she was signing. Unlike fraud in the inducement, where a party knows what they are signing but are tricked into it, fraud in the inception means there was never mutual assent, rendering the contract void from the beginning. By titling the experience a 'Personality Evaluation,' defendants misrepresented the essential character of the contract. A reasonable person in Duick's position would believe they were agreeing to a personality test, not to becoming the target of a disturbing prank. The vague terms like 'interactive experience' were insufficient to alert her to the true nature of the agreement. Because defendants deprived Duick of a reasonable opportunity to know the character of the proposed contract, the entire agreement is void, making its arbitration provision unenforceable.
Analysis:
This case applies the traditional contract defense of fraud in the inception to the modern context of online clickwrap agreements. It establishes that a user's click of an 'I agree' button does not create a valid contract if the surrounding context and terms fundamentally misrepresent the nature of the agreement. The decision serves as a significant precedent for cases involving deceptive online marketing, clarifying that vague language cannot cure a material misrepresentation about a contract's core purpose. It reinforces the principle that mutual assent requires a true meeting of the minds on the essential character of the agreement, a standard that applies equally in digital and traditional contracting.
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