August 29, 2014

Tenth Circuit: Clickwrap Agreements That Gave Notice of Terms and Meaningful Opportunity to Assent Enforceable

The Tenth Circuit issued its opinion in Hancock v. AT&T on Tuesday, December 11, 2012.

Plaintiffs filed a class action complaint on July 30, 2010, in the U.S. District Court for the Western District of Oklahoma. They asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961, et seq., as well as various claims under state law. Plaintiffs are individuals who purchased U-verse in either Florida or Oklahoma. U-verse is the brand name for a telecommunications service that includes digital television (TV), voice-over Internet protocol (Voice), and high-speed Internet (Internet). Plaintiffs sued a number of defendants, including AT&T Operations, Inc., Southwestern Bell Telephone Company, and BellSouth Telecommunications (collectively Defendants). Southwestern Bell and BellSouth are AT&T regional affiliates who install and provide U-verse services for customers in Oklahoma and Florida, and AT&T is ultimately responsible for U-verse in those areas.

The district court dismissed Plaintiffs’ claims based on forum selection and arbitration clauses in the U-verse terms of service. The TV/Voice terms of service dictated a forum of courts in a Texas county and the Internet had a forced arbitration clause. Defendants use “clickwrap” agreements as part of their standard practice for customer acceptance of the TV/Voice and Internet terms. Clickwrap is a commonly used term for agreements requiring a computer user to “consent to any terms or conditions by clicking on a dialog box on the screen in order to proceed with [a] . . . transaction.” According to Defendants’ standard practice, TV/Voice customers were given printed copies of terms of service before agreeing to those terms on a technician’s computer prior to installation. Internet customers agreed online.

Plaintiffs argued that no contract was formed because “Defendants’ clickwrap agreements do not give customers notice of and a meaningful opportunity to assent to the U-verse terms of service.” The Tenth Circuit disagreed and found the clickwrap agreements to be of the type that are routinely upheld and found them valid and enforceable under Oklahoma and Florida law.

Plaintiffs also argued that the district court failed to draw reasonable inferences and resolve factual disputes in their favor as required when deciding a motion to dismiss for improper venue under F.R.C.P. 12(b)(3). The Tenth Circuit found that Plaintiffs failed to sufficiently rebut AT&T’s FRE 406 declarations so the court’s failure to hold an evidentiary hearing was not an abuse of discretion. Despite the fact that no declarations were provided from employees of the Bell companies who actually provided the terms of service to the customers, the court held that “the AT&T declarants demonstrated personal knowledge of the standard practice designed for regional affiliates, as well as personal knowledge that U-verse customers such as Plaintiffs generally accept terms of service through the standard practice. This was enough to raise an inference that the standard practice was followed when Plaintiffs obtained U-verse service and shifted the burden to Plaintiffs to raise a genuine factual dispute.” The Tenth Circuit affirmed the dismissal of Plaintiffs’ claims.

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