Ticketmaster and Hidden Notice

A notice is supposed to be, well, noticeable.  A hidden notice is an oxymoron.  Unfortunately, the law of digital contracts seems to be a law of oxymorons.  Another such oxymoronic case, Hansen v. Ticketmaster Entertainment, Inc., was decided this week by a federal court that allowed Ticketmaster to use its Terms of Use (TOU) to shunt a pandemic-related contract dispute to arbitration. The plaintiff, Derek Hansen, purchased two Rage Against the Machine concert tickets in February 2020 and filed a class action against Ticketmaster and Live Entertainment, claiming that it retroactively changed its refund policy in response to the coronavirus pandemic. Ticketmaster filed a motion to compel arbitration claiming that Hansen agreed to its TOU at three distinct points:  account creation, account sign-in, and at ticket purchase.  The court considered only the sign-in page for the purposes of the motion. 

In order to purchase his tickets, Hansen had to sign in to his account.  Hansen argued that he did not have actual knowledge of the arbitration agreement and that constructive knowledge could not be reasonably inferred.  Judge Edward Chen of the Northern District of California, disagreed, referencing an earlier case, Lee v. Ticketmaster L.L.C., No. 18-cv-05987 (N.D. Cal.), which was subsequently affirmed by the Ninth Circuit.

The first page of the TOU contained two bolded headers.  The second bolded header stated the following:

NOTICE REGARDING ARBITRATION AND CLASS ACTION WAIVER:

These terms contain an arbitration agreement and class action waiver, whereby you agree that any dispute or claim relating in any way to your use of the Site, or to products or services sold, distributed, issued, or serviced by us or through us will be resolved by binding, individual arbitration, rather than in court, and you waive your right to participate in a class action lawsuit or class-wide arbitration. We explain this agreement and waiver, along with some limited exceptions, in Section 17, below.

In concluding that there was “sufficient notice for constructive assent,” Judge Chen cited the following factors:

-a “relatively uncluttered” sign-in page

– express language of agreement right above the “Sign in” button

– phrase “Terms of Use” in contrasting blue font

This is yet another case involving digital contract formation decided by a federal judge applying state law.  IMHO it may send the wrong message to businesses regarding best practices when it comes to drafting and presenting TOU. As I noted in this year’s annual survey of digital contracts for the ABA’s Business Lawyer, courts have become increasingly more attuned to the realities of online contracting and are examining the specific layout of websites from the standpoint of the user in assessing contractual assent, including website flow, notice of specific terms, and whether notice is presented multiple times. Although Hansen may have had notice that terms of use exist, he did not have notice of the specific terms requiring mandatory arbitration at the time he clicked “Accept.”  Although the arbitration clause was conspicuous on the TOU page, it was only conspicuous if he clicked on the hyperlink to the TOU.  That, as blog readers know, was unlikely to happen. It would have been far better for Ticketmaster to put notice of the mandatory arbitration and class action waiver immediately adjacent to the “Sign in” button, and not hidden on a different page accessible only by clicking.