Fteja v. Facebook, Inc.
841 F. Supp. 2d 829, 2012 U.S. Dist. LEXIS 12991, 2012 WL 183896 (2012)
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Rule of Law:
A forum-selection clause contained within a website's terms of use, accessible via a hyperlink, is reasonably communicated and enforceable when a user must perform an affirmative action, such as clicking a 'Sign Up' button, and is provided clear notice that said action constitutes assent to those terms.
Facts:
- Mustafa Fteja, a resident of New York, created and actively used a personal account on the social networking website Facebook.com.
- To create his account, Fteja was required to click a 'Sign Up' button on Facebook's registration page.
- Immediately below the 'Sign Up' button, the following text was displayed: 'By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service.'
- The phrase 'Terms of Service' was a hyperlink that, if clicked, would take the user to a separate page containing the full text of Facebook's terms.
- These Terms of Service included a forum-selection clause requiring any user dispute to be resolved 'exclusively in a state or federal court located in Santa Clara County,' California.
- On September 24, 2010, Facebook disabled Fteja's account without providing a warning or a reason.
- Fteja believed his account was disabled due to discrimination based on his Muslim religion and his name, Mustafa.
- Fteja attempted to resolve the issue through the procedures outlined on Facebook's website, but his attempts were ignored.
Procedural Posture:
- Mustafa Fteja filed suit against Facebook, Inc. in the New York Supreme Court, New York County, which is a state trial court.
- Facebook removed the action to the United States District Court for the Southern District of New York, a federal trial court, on the basis of diversity of citizenship.
- Facebook then filed a motion to transfer the action to the U.S. District Court for the Northern District of California, arguing the forum-selection clause in its Terms of Use mandated the change in venue.
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Issue:
Does a forum-selection clause in a website's terms of use, presented to a user via a hyperlink next to a 'Sign Up' button, constitute a reasonably communicated and enforceable contractual agreement, even if the user does not actually click the link to read the terms?
Opinions:
Majority - Richard J. Holwell
Yes, the forum-selection clause constitutes a reasonably communicated and enforceable agreement. The court found that although Facebook's sign-up process does not perfectly fit the definition of a 'clickwrap' agreement (where terms are displayed on the screen) or a 'browsewrap' agreement (where use of the site constitutes assent), it is an enforceable hybrid. By placing a clear notice that clicking 'Sign Up' signifies agreement to the Terms of Service and providing a conspicuous hyperlink to those terms, Facebook provided reasonable communication. The court analogized this to traditional contract law, such as forum-selection clauses on the back of a cruise ticket, reasoning that a hyperlink is the 'twenty-first century equivalent of turning over the cruise ticket.' An active internet user is expected to understand that a hyperlink provides access to additional information, and the failure to actually read the terms does not absolve the user of their contractual obligations once they have manifested assent by clicking the button.
Analysis:
This decision is significant for internet contract law, providing strong support for the enforceability of 'hybrid' clickwrap/browsewrap agreements, which are now ubiquitous online. The court's willingness to adapt traditional contract formation principles from cases like Carnival Cruise Lines v. Shute to the digital context affirmed that the medium of contract presentation does not fundamentally alter the underlying legal principles of notice and assent. This case provides a clear roadmap for online businesses on how to structure their user registration process to ensure their terms of service are binding: require an affirmative act of assent and place clear notice of the terms' existence and location next to the action button. It reinforces the principle that users have a duty to read contracts, and claiming ignorance of hyperlinked terms is not a valid defense.
