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Litigation | MONDAY, JULY 17, 2017 | S11
the arbitration provision because he or she did not see it. In those situations, the com- pany will need to argue that the consumer had constructive notice.
In examining whether a consumer had constructive notice, a court will consider the following non-exhaustive factors:
• When the arbitration provision was provided to the consumer (i.e., before or after the purchase);
• Whether the arbitration provision could be found on the outside and/or inside of the product’s packaging;
• Whether there was any conspicuous language on the packaging or product website alerting the consumer to the existence of the arbitration provision;
• Whether there was any conspicuous language on the packaging or product website instructing the consumer to read certain documentation (containing the arbitration provision) prior to using the product;
• Whether a consumer would reasonably assume that the documentation contain- ing the arbitration provision includes contract terms;
• Where within the product’s documents the arbitration provision is located;
• Whether the arbitration provision was easy to find within the documentation (i.e., whether it was listed in the table of contents or index);
• Whether the arbitration provision is conspicuous such that it stands out from the surrounding language in the docu- ment (i.e., whether it was written in bold, italicized, capitalized, or larger font or appears under a heading); and
• Whether the terms of the arbitration provision are written in plain and under- standable language (i.e., whether the pro- vision properly informs the consumer that the dispute will not be decided by a judge or jury, what claims are covered by the agreement, and what the process entails).
None of these factors alone is dispositive as to whether constructive notice exists. For example, although it would bolster the argument if the company provided notice on the outside of the product’s packaging, the company is not required to do so for a court to find adequate notice. See, e.g., Sch- nabel v. Trilegiant, 697 F.3d 110, 125 (2d Cir. 2012) (“Whether or not there is notice to the consumer on the outside of the packaging that terms await him or her on the inside, courts have found such licenses to become enforceable contracts upon the customer’s purchase and receipt of the package and the failure to return the product after reading,
or at least having a realistic opportunity to read, the terms and conditions of the con- tract included with the product.”); see also ProCD v. Zeidenberg, 86 F.3d 1447, 1450-51 (7th Cir. 1996). Similarly, at least in some jurisdictions, courts will find notice even where the arbitration provision appears in a lengthy booklet and is not listed in the
Notice can take two forms:
actual notice and constructive notice. In most cases, the consumer will claim to lack actual notice of the arbitration provision because he or she did not see it. In those situations, the company will need to argue that the consumer had con- structive notice.
booklet’s table of contents or index. See McNamara v. Samsung Telecomms. Am., No. 14 C 1676, 2014 WL 5543955, at *1-2 (N.D. Ill. Nov. 3, 2014). In short, the key will be to demonstrate that a reasonable consumer would have been able to readily locate, identify, and understand the arbitration provision.
Did the Consumer Agree to Arbitration?
Not only must the consumer be given notice of the arbitration provision, the consumer must have accepted its terms. A consumer can either affirmatively or passively agree to arbitrate.
First, a consumer may specifically agree to arbitration by signing an agreement at the point of sale or, in the case of online applications and some consumer electronics, clicking an icon consenting to certain terms and condi- tions that include an arbitration clause. Such “clickwrap” agreements are routinely enforced because the consumer is presented with the terms and has the opportunity to expressly and unambiguously manifest his or her assent prior to gaining access to the product. See Register. com v. Verio, 356 F.3d 393, 429 (2d Cir. 2004).
Second, and most commonly with consumer products, consumers may manifest assent sim- ply by purchasing and keeping the product. Unless there is notice of the arbitration provi- sion on the product’s packaging, consumers will not receive notice of the arbitration provi- sion until after they purchase the product and find its terms and conditions inside. Provided they had adequate notice of the arbitration provision, courts will uphold the agreement as formed. See, e.g., Schnabel, 697 F.3d at 122; Hill, 105 F.3d at 1150. In addition, some courts will enforce arbitration provisions where con- sumers were provided with a specific right to opt out of arbitration but did not do so. See, e.g., Higgs v. Auto Warranty Corp. of Am., 134 Fed. Appx. 828, 831-32 (6th Cir. » Page S14