Sellers v. JustAnswer LLC

Sellers v. JustAnswer LLC

Opinion

DO, J.—

INTRODUCTION

JustAnswer LLC (JustAnswer) appeals from an order denying its petition to compel arbitration. Tina Sellers and Erin O‘Grady (together, Plaintiffs) used the JustAnswer website to submit a single question to an “expert” for what they believed would be a one-time fee of $5, and JustAnswer automatically enrolled them in a costlier monthly membership. After discovering additional charges to their credit cards, Plaintiffs filed a class action lawsuit against JustAnswer, alleging it routinely enrolled online consumers like them in automatic renewal membership programs without providing “clear and conspicuous” disclosures and obtaining their “affirmative consent” as mandated by the Automatic Renewal Law (Bus. & Prof. Code,¹ § 17600 et seq.; the ARL). (§ 17602, subd. (a)(1) & (2).)

 [*453] 

Seeking to avoid the class action litigation, JustAnswer filed a petition to compel individual [**2]  arbitration. JustAnswer claimed Plaintiffs agreed to their “Terms of Service,” which included a class action waiver and a binding arbitration clause, when they entered their payment information on the website and clicked a button that read, “Start my trial.” The following textual notice appeared in very small print further down the page below the “Start my trial” button: “By clicking ‘Start my trial’ you indicate that you agree to the terms of service and are 13+ years old.” The underlined “terms of service” was a hyperlink² to a separate webpage that displayed the 26-page-long terms of service. Plaintiffs asserted they were not bound by the arbitration provision because the textual notice was not sufficiently conspicuous to establish they had constructive notice of the terms of service. The trial court found Plaintiffs had not agreed to binding arbitration “[b]ased on the inconspicuous language” in JustAnswer's notice and denied its petition to compel arbitration.

In a case of first impression under California law, we consider whether and under what circumstances a “sign-in wrap” agreement—the manner in which JustAnswer sought to impose contractual terms on consumers over the internet—is [**3]  valid and enforceable. As we shall explain, the full context of any transaction is critical to determining whether any particular notice is sufficient to put a consumer on inquiry notice of contractual terms contained on a separate, hyperlinked page. Here, the transaction involved a $5 “trial” that automatically enrolled allegedly unwitting consumers in a more expensive recurring monthly membership. This is precisely the type of transaction from which the Legislature intended to protect consumers when it enacted the ARL. (§§ 17600, 17602.) And since the Legislature has specifically addressed the issue of consumers being unwittingly entered into automatically recurring memberships, we consider the notice requirements the Legislature has imposed in such transactions when evaluating the sufficiency of JustAnswer's textual notice.

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