The Court of Appeals for the Sixth Circuit has overturned a lower court’s ruling that refused to bind a consumer to the arbitration provisions of an affiliate who referred business to the defendant after the consumer clicked to agree to the terms of service provided in an online form.The appellate court held that the consumer’s repeated clicks on an online mortgage referral website constituted valid acceptance of the website’s terms of use, including a broad arbitration provision that extended to affiliated companies.
The background: The plaintiff used an online mortgage comparison and referral website multiple times while exploring refinancing options. Each visit required the user to enter personal information and click prominent buttons labeled “Calculate” or “Calculate your FREE results.” Beneath those buttons, the website disclosed in smaller font that by clicking, users agreed to the site’s terms of use, which were accessible via hyperlink and included a mandatory arbitration clause covering disputes with the website and its affiliates.
- After submitting his information, the plaintiff was referred to the defendant, a mortgage lender affiliate. He ultimately did not refinance. More than a year later, he alleged that the defendant placed repeated unwanted calls to his phone, including calls made to a number listed on the Do Not Call registry.
- The plaintiff filed a putative class action alleging violations of the Telephone Consumer Protection Act. The defendant moved to compel arbitration based on the terms accepted through the referral website.
- The district court denied the motion, concluding that the plaintiff’s clicks did not create an enforceable arbitration agreement.
The ruling: The Sixth Circuit disagreed, holding that the website provided reasonably conspicuous notice that clicking the buttons would constitute acceptance of the terms of use. Applying California contract law, the court emphasized that online agreements can be formed through conduct when users are clearly informed that clicking a button signals assent.
- The panel noted that the disclosure appeared directly below the action buttons, used contrasting hyperlinks, and appeared on uncluttered pages. While acknowledging that the font size was small, the court found it comparable to other online agreements courts have upheld.
- The court also rejected arguments that the arbitration clause lacked procedural detail or that the passage of time between the website visit and the alleged calls invalidated the agreement. Questions about scope and arbitrability, the court said, were themselves delegated to the arbitrator.
