Vernon v. Qwest Communications International, Inc.
925 F. Supp. 2d 1185 (2013)
Rule of Law:
A consumer's repeated exposure to notices about a subscriber agreement's terms and conditions, including an arbitration clause, and their continued use of the service, constitutes valid assent to be bound by those terms, even if the full text is only available via a website link. A company's right to unilaterally modify such an agreement does not render it illusory so long as the right is not unfettered and requires some form of notice to the consumer.
Facts:
- Plaintiffs enrolled in Qwest's 'Price for Life' program, a minimum two-year internet service contract with a guaranteed discounted rate.
- The program was subject to a Subscriber Agreement, which contained a clause requiring all disputes to be resolved by arbitration and waiving the right to bring class-action claims.
- Customers who signed up by phone were told by a voice recording that their service was governed by the Subscriber Agreement, located at a specific Qwest website.
- Customers who signed up online had to click a box to agree to the terms and conditions, which explicitly mentioned the Subscriber Agreement, its website location, and the arbitration clause.
- Upon installing the service with a 'Quickconnect Install CD,' a window appeared notifying users that the service was subject to the Subscriber Agreement, mentioning the arbitration clause, and stating that clicking 'I accept' acknowledged agreement to the terms 'even if you don’t read them.'
- Qwest sent all customers a welcome letter that again directed them to the Subscriber Agreement on Qwest's website, highlighted the arbitration clause, and stated that continued use of the service constituted acceptance of any changes.
- The Subscriber Agreement permitted Qwest to modify its terms upon posting changes to its website or providing written notice.
- The plaintiffs terminated their service within the first two years and were subsequently charged a $200 early cancellation fee.
Procedural Posture:
- Plaintiffs filed a purported class-action lawsuit against Qwest in the U.S. District Court for the Western District of Washington (a federal trial court).
- The case was transferred to the U.S. District Court for the District of Colorado.
- Defendants filed a motion to compel arbitration, which was stayed pending the U.S. Supreme Court's decision in AT&T Mobility, LLC v. Concepcion.
- Following the Supreme Court's decision, defendants filed a renewed motion to compel arbitration.
- A United States Magistrate Judge granted the defendants' motion to compel arbitration and stayed the court proceedings.
- Plaintiffs filed an objection to the Magistrate Judge's order, bringing the matter before the District Judge for de novo review.
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Issue:
Does a subscriber's continued use of a service constitute binding assent to an arbitration clause within a subscriber agreement when the subscriber was repeatedly notified of the agreement's terms, which were accessible via a website, and the company retained a right to modify the agreement upon providing notice?
Opinions:
Majority - R. Brooke Jackson
Yes, the subscriber's continued use of the service constitutes binding assent to the arbitration clause. The court found that although plaintiffs did not receive a physical copy and had to access the agreement online, the terms were made reasonably conspicuous through repeated notifications at every stage of the transaction—enrollment, installation, and in a welcome letter. These notices created a valid 'clickwrap' agreement, and the plaintiffs' failure to read the terms they assented to does not invalidate their consent. Furthermore, the arbitration agreement is not illusory because Qwest’s right to modify the terms was not 'unfettered'; it was conditioned on providing notice, either by posting on its website or, for material changes, by providing 30 days' notice. This notice requirement distinguishes the case from precedents where modification rights were absolute, thereby saving the promise from being illusory. Finally, the agreement was not unconscionable, as plaintiffs had adequate notice and opportunity to review the terms, and the arbitration costs were not exorbitant.
Analysis:
This decision reinforces the enforceability of electronic 'clickwrap' and 'browsewrap' agreements, placing a significant burden on consumers to read terms they agree to, even if they are only accessible via hyperlink. The ruling demonstrates a judicial reluctance, following the Supreme Court's decision in AT&T Mobility v. Concepcion, to invalidate arbitration clauses on grounds of unconscionability or an illusory promise. The court's interpretation that even a minimal notice requirement (such as a website posting) is sufficient to prevent a modification clause from being 'unfettered' sets a low bar for companies and makes it more difficult for consumers to challenge such agreements in the future.
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