Hancock v. American Telephone & Telegraph, Inc.
701 F.3d 1248 (2012)
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Rule of Law:
Clickwrap agreements are valid and enforceable when they provide reasonably conspicuous notice of the terms of service and the user unambiguously manifests assent by taking an affirmative step, such as clicking an 'I Agree' or 'I Acknowledge' button.
Facts:
- Gayen Hancock, David Cross, Montez Mutzig, and James Bollinger purchased AT&T's U-verse service, which bundles digital television (TV), voice-over-internet (Voice), and high-speed internet.
- The terms of service for TV/Voice services contained a forum selection clause requiring any litigation to take place in Bexar County, Texas.
- The terms of service for Internet service contained a separate clause requiring all disputes to be resolved through mandatory arbitration.
- To accept the TV/Voice terms, a technician would present the customer with a 'Welcome Kit' containing the printed terms and then require the customer to click an 'I Acknowledge' button on a laptop form before installation could proceed.
- To activate the Internet service, customers were required to complete an online registration process where the terms were displayed in a scrolling text box, and they had to click an 'I Agree' button to continue.
- Plaintiff Mutzig, who signed up before the arbitration clause was added to the Internet terms, was later notified via email that the terms had changed and that his continued use of the service signified agreement to the new terms, including the arbitration clause.
- The plaintiffs experienced what they described as defects and deficiencies with their U-verse service.
Procedural Posture:
- Gayen Hancock and other plaintiffs filed a class action complaint against AT&T and its affiliates in the U.S. District Court for the Western District of Oklahoma.
- Defendants AT&T and Southwestern Bell filed a motion to dismiss the TV/Voice claims for improper venue under Fed. R. Civ. P. 12(b)(3), citing the forum selection clause.
- Defendants also filed a motion to dismiss the Internet-related claims and compel arbitration, citing the arbitration clause.
- In response, the plaintiffs submitted an affidavit from plaintiff Gayen Hancock averring that he never clicked to accept any terms of service.
- The district court granted the defendants' motions, dismissing the TV/Voice claims without prejudice and dismissing the Internet claims with prejudice while compelling arbitration.
- The plaintiffs (appellants) appealed the district court's orders of dismissal to the U.S. Court of Appeals for the Tenth Circuit.
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Issue:
Are forum selection and arbitration clauses contained within clickwrap agreements enforceable against customers who must affirmatively click a button to manifest assent to the terms of service, even if they later claim they did not knowingly consent?
Opinions:
Majority - Matheson, Circuit Judge.
Yes, such clauses are enforceable. A clickwrap agreement forms a binding contract when customers are given sufficient notice of its terms and affirmatively manifest their assent. Here, the standard practice for both the TV/Voice and Internet services did not conceal the terms. For TV/Voice, customers were given a printed copy and had to click 'I Acknowledge' before installation. For Internet, customers were presented with the terms in a scrolling box and had to click 'I Agree' to activate the service. This process provides reasonably conspicuous notice and requires an unambiguous manifestation of assent, making the agreements, including the forum selection and arbitration clauses, valid and enforceable under basic contract law principles.
Analysis:
This decision reinforces the legal validity of 'clickwrap' agreements, a cornerstone of modern e-commerce and service provision. The court's ruling confirms that an affirmative click to agree or acknowledge is legally equivalent to a written signature, binding the consumer to the terms presented. The case also highlights the difficulty plaintiffs face in challenging such agreements by simply claiming lack of knowledge or consent, especially when confronted with a company's evidence of its standard operating procedures. This outcome strengthens the enforceability of standard form contracts for online and technology services, making it more challenging for consumers to avoid clauses like forum selection and mandatory arbitration.
