‘Sign-in Wraps’ Face the Judicial Microscope in New YorkApril 21, 2015
There are, generally speaking, four different kinds of online contracts that businesses use to obtain consent via the Internet from consumers: browsewrap, clickwrap, scrollwrap, and sign-in wrap agreements. Browsewrap exists where an online host dictates that assent is given merely by using the site. Clickwrap refers to the assent process by which a user must click “I agree,” but not necessarily view the contract to which he or she is assenting. Scrollwrap requires users to physically scroll through an Internet agreement and click on a separate “I agree” button in order to assent to the terms and conditions of the host website. Sign-in wrap couples assent to the terms of a website with signing up for use of the site’s services.
Although much has been written about these kinds of online agreements, including in this column,1 disputes over their enforceability continue to arise. Now, Senior U.S. District Judge Jack B. Weinstein of the Eastern District of New York has joined the fray. Earlier this month, in Berkson v. Gogo,2 Weinstein examined a sign-in wrap agreement used by Gogo, which provides passengers with Wi-Fi access on many domestic airlines, and—after declaring that it was a “questionable form of Internet contracting”—ruled that it was not enforceable.
Companies that sell over the Internet should pay careful attention to this ruling. In many instances, it may require changes to their contracting procedures and even their websites.
Gogo arose on Feb. 25, 2014, when Adam Berkson filed a class action complaint in the U.S. District Court for the Eastern District of New York against Gogo LLC and Gogo Inc., which provide passengers with Wi-Fi access on many domestic airlines. Berkson alleged that the companies improperly increased their sales and profits by misleading customers into purchasing a service that charged a customer’s credit card, on an automatically-renewing continuing monthly basis, without adequate notice or consent.
In particular, Berkson, a New York resident, asserted that on Sept. 25, 2012, he paid $34.95 to subscribe to Gogo’s in-flight Wi-Fi on a Delta Airlines flight from New York to Indianapolis. According to Berkson, his credit card was billed $34.95 on Sept. 25, 2012, Oct. 25, 2012, Nov. 26, 2012, and Dec. 25, 2012 and the billings stopped only after he complained to Gogo at or around “late December 2012.”
Berkson said that he had never received a monthly bill or other communication notifying him that he had signed up for automatic renewal of Gogo’s in-flight Wi-Fi, and that he was not aware of the charges being made to his credit card. He said that when he contacted Gogo to request a refund for the time periods he was charged for the service but did not use it, the company refused his request.
For his part, Berkson asserted that the terms and conditions had been “hidden,” that he never had seen them, and that he never had agreed to them.
Berkson’s Sign-in Wrap
The Court’s Decision
The court denied Gogo’s motions, finding the sign-in wrap unenforceable with respect to Berkson because Gogo had not demonstrated that a reasonable person in Berkson’s position would have known what he or she was assenting to.
2. Berkson v. Gogo, No. 14-CV-1199 (E.D.N.Y. April 9, 2015).
3. The choice of law provision stated:
Governing Law and Venue. This Agreement shall be governed by the laws of the State of Illinois, without giving effect to any conflict of laws principles that may provide the application of the law of another jurisdiction. The parties agree that any claim or dispute one party has against the other party arising under or relating to this Agreement (including claims in contract, tort, strict liability, statutory liability, or other claims) must be resolved exclusively by a court of competent jurisdiction, federal or state, located in Chicago, Illinois, and no other court. Each party agrees to submit to the personal jurisdiction of such courts and to accept service of process from them (emphasis in original).
4. See, e.g., Fteja v. Facebook, 841 F. Supp. 2d 829 (S.D.N.Y. 2012) (applying both New York and California law).
5. Cf. Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248 (10th Cir. 2012) (holding Internet agreement valid under Florida and Oklahoma law where process gave customer opportunity to review Internet terms in scrolling text box; customer had to click an “I Agree” button to manifest assent to Internet terms in order to continue with registration process and activation of Internet service).
Reprinted with permission from the April 21, 2015 issue of the New York Law Journal. All rights reserved.