Soliman v. Subway Franchisee Advert. Fund Tr., Ltd. ( 2021 )

20-946
Soliman v. Subway Franchisee Advert. Fund Tr., Ltd.
United States Court of Appeals
for the Second Circuit
_____________________________________
August Term 2020
(Argued: November 12, 2020 Decided: June 8, 2021)
No. 20-946
_____________________________________
MARINA SOLIMAN,
ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED,
Plaintiff-Appellee,
— v. —
SUBWAY FRANCHISEE ADVERTISING FUND TRUST, LTD.,
Defendant-Appellant.
_____________________________________
Before: JACOBS, POOLER and BIANCO, Circuit Judges.
Defendant-Appellant Subway Franchisee Advertising Fund Trust, Ltd.
appeals from an order of the United States District Court for the District of
Connecticut (Meyer, J.), entered on March 5, 2020, denying Subway’s motion to
compel arbitration and stay the proceedings. Plaintiff-Appellee Marina Soliman
had filed a putative class action lawsuit alleging that a text message sent to her
smartphone by Subway after she opted out of a Subway promotional program
violated the Telephone Consumer Protection Act. In its motion to compel
arbitration, Subway argued that Soliman was bound by the promotional
program’s terms and conditions on Subway’s website (containing an arbitration
provision), which were generally referenced along with a web address for the
terms-and-conditions website on a print advertisement displayed in a Subway
store that Soliman visited, and that Soliman viewed that advertisement to obtain
a short code to enroll in the program by text on her phone. The district court
denied Subway’s motion and held, under California law, that Soliman was not
bound by the arbitration provision because, inter alia, Subway did not provide
reasonably conspicuous notice to Soliman that she was agreeing to the applicable
terms and conditions on the website. We agree. A combination of barriers relating
to the design and content of the print advertisement, as well as the accessibility
and language of the relevant website itself, leads us to conclude that the terms and
conditions were not reasonably conspicuous under the totality of the
circumstances and, thus, a reasonable consumer would not realize she was being
bound to such terms and conditions by sending a text message to Subway in order
to begin receiving promotional offers.
Accordingly, we AFFIRM the district court’s denial of Subway’s motion to
compel arbitration and REMAND the case for further proceedings consistent with
this opinion.
ADRIAN R. BACON, (Todd M.
Friedman, on the brief), Law Offices of
Todd M. Friedman, P.C., Woodland
Hills, CA; Brenden P. Leydon, Wocl &
Leydon, L.L.C., Stamford, CT (on the
brief), for Plaintiff-Appellee.
IAN C. BALLON (Lori Chang, Los
Angeles, CA; Brian T. Feeney,
Philadelphia, PA, on the brief),
Greenberg Traurig, LLP, Los Angeles,
CA, for Defendant-Appellant.
_____________________________________
2
JOSEPH F. BIANCO, Circuit Judge:
On April 9, 2016, after Plaintiff-Appellee Marina Soliman walked into a
Subway sandwich shop in California, an employee referred her to an in-store,
hard-copy advertisement. On the advertisement, Subway offered to send special
offers to Soliman if she texted a keyword to the provided short code. Soliman
complied, sent a text message to Subway, and Subway began responding,
including by sending her, via text message, a hyperlink to an electronic coupon.
Later, wanting to curtail further messages from Subway, Soliman alleges that she
requested by text that Subway stop sending her messages, but her request was
ignored. In response, she filed suit in the United States District Court for the
District of Connecticut against Subway Franchisee Advertising Fund Trust, Ltd.
(“Subway”), claiming a violation of the Telephone Consumer Protection Act
(“TCPA”). Subway then moved to compel arbitration, arguing that a contract was
formed because the printed in-store advertisement—the one from which Soliman
got the keyword and short code to text Subway and receive promotional offers—
included a reference to “[t]erms and conditions”(which were located on Subway’s
website) and provided the web address, also known as a uniform resource locator
(“URL”), for the relevant website. See App’x at 21. Those terms and conditions
3
required Soliman to settle this dispute in an arbitral forum. The district court
(Meyer, J.) denied the motion.
This appeal addresses whether, under California Law, a consumer was
bound to the terms and conditions contained on a company’s website, which were
generally referenced on a print advertisement as “[t]erms and conditions”
alongside the web address for the website containing the exact terms/conditions
(including an arbitration provision), because that consumer viewed the
advertisement on display in a store.
We affirm the district court’s denial of the motion to compel arbitration. We
conclude that under California law, Soliman is not bound by the arbitration clause
contained in the terms and conditions at issue. As a threshold matter, Subway
does not argue that Soliman actually saw the terms and conditions on the website.
Although Soliman could still be bound by the terms and conditions if she were on
inquiry notice of them, we hold that she was not on such notice. More specifically,
Subway has failed to demonstrate that such terms and conditions would be clear
and conspicuous to a reasonable person in Soliman’s position for the following
reasons: (1) Subway failed to provide evidence regarding the size of the
advertisement at issue, or the print size contained within that advertisement;
4
(2) the reference to “[t]erms and conditions” was buried on the advertisement in a
paragraph that was printed in significantly smaller font relative to the other text
on the advertisement, and the reference itself was surrounded by a substantial
amount of unrelated information; (3) the advertisement only vaguely referenced
“[t]erms and conditions,” and did not state that a consumer would be agreeing to
those terms if she sent a text message to Subway’s short code, nor did it otherwise
direct the consumer to such terms; (4) access to the terms and conditions on the
Subway website required Soliman to type in the URL text provided on the hard-
copy print advertisement into an internet browser on her cell phone or some other
device with internet browsing capabilities; and (5) once linked to the Subway
website, the heading stated that it contained “terms of use for this website,” thus
potentially suggesting to a reasonable person (searching for conditions of the
promotional offer) that the website did not contain any terms or conditions beyond
those relevant to the use of the website. This combination of barriers leads us to
conclude that the terms and conditions in this case were not reasonably
conspicuous under the totality of the circumstances and, thus, a reasonable person
would not realize she was being bound to such terms and conditions by texting
Subway in order to begin receiving promotional offers.
5
Accordingly, we AFFIRM the district court’s denial of Subway’s motion to
compel arbitration and REMAND the case for further proceedings consistent with
this opinion.
I. BACKGROUND
The following facts are undisputed by the parties for purposes of Subway’s
motion to compel arbitration.
In 2016, Subway ran a “call to action” marketing campaign which gave
consumers the opportunity to receive Subway Short Message Service (“SMS”)
Offers by texting a keyword to a short code. App’x at 44. In April of that year,
Soliman went into a Subway sandwich shop in California. After going into the
restaurant, “an employee pointed out a promotion where [she] could receive a free
sub sandwich if [she] texted Subway to a specific number.” App’x at 85. The
promotion was a “call to action,” hard-copy advertisement, which the parties
agree had the following visual format 1:
1In a declaration submitted to the district court, Soliman states that she was referred by
a Subway employee to a “promotion,” but that she is not sure she ever saw the specific
hard-copy advertisement that Subway submitted to the district court. App’x at 85.
However, during oral argument, the parties confirmed that they agree that Soliman saw
either the print advertisement displayed in this opinion or a substantially similar version,
and have raised no objection to our reliance on this advertisement in the record for the
purposes of this appeal. Further, we note that, although the image of the hard-copy
6
App’x at 21. The bottom right-hand side of the advertisement contained a block
of black text that is significantly smaller than the rest of the text on the
advertisement, which read:
Limited Time Only. Message and data rates may apply.
Max10msgs/mo-Msgs may be autodialed from SUBWAY
Restaurants. Consent not required to buy goods/svcs. Terms and
conditions at subway.com/subwayroot/TermsOfUse.aspx and
Privacy Policy at subway.com/subwayroot/PrivacyPolicy-FWH.aspx.
For help, text HELP to 782929. To opt-out, text STOP to 782929. Valid
at participating restaurants. Additional changes for extra and deluxe.
Plus tax. May not be combined with other offers, coupons or discount
advertisement displayed in this opinion states that consumers should send the keyword
“OFFERS” via text message to Subway’s short code to accept the promotional offer, the
record reflects the parties’ agreement that Soliman in fact sent the word “Subway” when
accepting the offer. See App’x at 40, 85; see also Appellee’s Br. at 4-5. In any event, this
ambiguity in the record is immaterial to our analysis of the advertisement and the legal
issues in this case.
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cards. SUBWAY® is a Registered Trademark of Subway IP Inc. © 2016
Subway IP Inc. submul 26184[.]
App’x at 21. The parties did not submit any evidence regarding the actual size of
the entire advertisement, nor did they provide the various font sizes of the print
contained therein.
Soliman took advantage of the offer by texting “Subway” to the short code
provided on the advertisement. Soliman quickly received a response, which
prompted her to text her zip code and noted that a response would be considered
consent to receive Subway offers. Soliman complied almost immediately. She
then received another message, “Thanks for joining the LA area SOCALOFFERS
SUBWAY Text Club! Help? Txt HELP, Stop? Txt STOP or 8447887525 Msg&data
rates may apply.” App’x at 41. Next, within approximately one minute, she
received a hyperlink to an electronic coupon via text on her phone for a “free 6
inch Classic sub” (with the purchase of a 30-ounce drink). App’x at 41. From the
consumer’s perspective, this two-step procedure took a total of less than three
minutes to complete, all while Soliman was in the store.
Several months and at least one text message later, Soliman alleges that she
sought to cease further communications from Subway. In particular, she alleges
that, on December 1, 2016, she texted the word “STOP” to the provided number,
8
and received a response stating, “[y]ou have been unsubscribed from all programs
on 782929 and will no longer receive any text alerts.” 2 App’x at 3. On December
5, 2016, however, Subway texted Soliman again, stating that she had a “weekly . . .
offer. . . waiting” for her. App’x at 84.
Soliman subsequently filed suit in the United States District Court for the
District of Connecticut, alleging that Subway’s text message, after her direction
that such texts cease, violated the TCPA. Subway then moved to compel
arbitration and stay the federal proceedings. It argued that the in-store
advertisement referenced “[t]erms and conditions” and gave a URL where those
terms could be reviewed. App’x at 21. That URL is the web address for a Subway
website that contained a numbered list of terms and conditions underneath a
heading that reads, “PLEASE CAREFULLY REVIEW THESE TERMS OF USE FOR
THIS WEBSITE.” App’x at 34. Within those terms and conditions was, at the time,
a paragraph numbered fourteen and entitled “Choice of Law & Dispute
Resolution,” which contained a provision requiring arbitration of “[a]ny
controversy or claim arising out of or relating to” an alleged breach of those terms.
App’x at 37-38. Thus, Subway argued to the district court, and now argues to this
2 Subway states that it has no record of receiving that text from Soliman.
9
Court, that Soliman reached a contractual agreement with Subway and is therefore
bound to arbitrate her claim.
On March 5, 2020, the district court denied Subway’s motion to compel
arbitration. Soliman v. Subway Franchisee Advert. Fund Tr. Ltd., 442 F. Supp. 3d 519,
528 (D. Conn. 2020). First, it held that the arbitration clause was not “reasonably
conspicuous” because “a reasonably prudent consumer would not have had
inquiry notice of the arbitration clause on Subway’s website.” Id. at 527. Second,
the court held that Soliman did not “unambiguously manifest” intent to be bound
by the arbitration clause by sending a text to the short code. Id. at 527-28. Because
the court determined that there was no agreement to arbitrate, it declined to
consider “the parties’ additional arguments about the scope of the arbitration
agreement or whether the arbitration agreement was unconscionable.” Id.This appeal followed. 3
3Subway timely appealed the district court’s order pursuant to 9 U.S.C. § 16(a)(1)(C),
which permits an interlocutory appeal from the denial of a motion to compel arbitration.
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II. DISCUSSION
A. Standard of Review
“We review de novo the denial of a motion to compel arbitration.” Meyer v.
Uber Techs., Inc., 868 F.3d 66, 72 (2d Cir. 2017). Whether the parties have bound
themselves to arbitrate—that is, whether a contract was formed—is also subject to
de novo review. Id. at 72-73. The district court’s factual findings are reviewed for
clear error. Id. at 73. “Where the undisputed facts in the record require the matter
of arbitrability to be decided against one side or the other as a matter of law, we
may rule on the basis of that legal issue and avoid the need for further court
proceedings.” Starke v. SquareTrade, Inc., 913 F.3d 279, 288 (2d Cir. 2019) (internal
quotation marks omitted).
Courts deciding motions to compel arbitration “apply a ‘standard similar to
that applicable for a motion for summary judgment.’” Nicosia v. Amazon.com, Inc.,
834 F.3d 220, 229 (2d Cir. 2016) (quoting Bensadoun v. Jobe–Riat, 316 F.3d 171, 175
(2d Cir. 2003)). On a motion for summary judgment, the court “consider[s] all
relevant, admissible evidence submitted by the parties and contained in pleadings,
depositions, answers to interrogatories, and admissions on file, together with . . .
affidavits.” Chambers v. Time Warner, Inc., 282 F.3d 147, 155 (2d Cir. 2002) (second
11
alteration in original) (internal quotation marks omitted). In deciding such a
motion, we “draw[ ] all reasonable inferences in favor of the non-moving party.”
See Meyer, 868 F.3d at 74.
B. Legal Framework
The Federal Arbitration Act (“FAA”) dictates that “[a] written provision in
. . . a contract . . . to settle by arbitration a controversy thereafter arising out of such
contract . . . shall be valid, irrevocable, and enforceable.” 9 U.S.C. § 2. The
Supreme Court has “described this provision as reflecting . . . a liberal federal
policy favoring arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339
(2011) (internal quotation marks omitted). Importantly, the FAA “places
arbitration agreements ‘upon the same footing as other contracts.’” Schnabel v.
Trilegiant Corp., 697 F.3d 110, 118 (2d Cir. 2012) (quoting Scherk v. Alberto–Culver
Co., 417 U.S. 506, 511 (1974)). However, the FAA is not a substitute for contractual
assent, and we will not enforce arbitration unless and until it is determined that
an agreement exists. Meyer, 868 F.3d at 73. Whether an agreement to arbitrate
exists between the parties is governed by state contract law. Nicosia, 834 F.3d at
229. Here, the parties agree that California law applies to the question of contract
formation.
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C. Application
At issue here is whether Subway has shown that Soliman is bound by the
arbitration provision located within the terms and conditions on Subway’s
website. Bridge Fund Cap. Corp. v. Fastbucks Franchise Corp., 622 F.3d 996, 1005 (9th
Cir. 2010) (noting that under California law the burden of proving a contract exists
is with the party seeking enforcement). Although it is undisputed that Soliman
never actually saw the terms and conditions on the website, including the
arbitration clause therein, Subway argues that the advertisement put her on
reasonable notice of those terms such that she should be bound by them.
Under California law, the basis of a lawfully formed contract is “a
manifestation of mutual assent.” See Binder v. Aetna Life Ins. Co., 89 Cal. Rptr. 2d
540, 551 (Cal. Ct. App. 1999). We have held that, even where the offeree does not
have actual notice of the contract terms, she will still be bound by such terms if a
“reasonably prudent” person would be on inquiry notice of those terms and she
unambiguously manifested assent to those terms. Meyer, 868 F.3d at 74-75
(applying California law); accord Starke, 913 F.3d at 289 (applying New York law).4
4The Starke case applied New York law. See 913 F.3d at 288. However, we have held that
“New York and California apply substantially similar rules for determining whether the
parties have mutually assented to a contract term.” Meyer, 868 F.3d at 74 (internal
13
Inquiry notice is “actual notice of circumstances sufficient to put a prudent
[person] upon inquiry.” Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 30 n.14 (2d
Cir. 2002) (internal quotation marks omitted). A person is on inquiry notice of
terms if they are presented in a clear and conspicuous manner. See id. at 30; Starke,
913 F.3d at 289. Accordingly, here, we must first determine if the Subway terms
of use—and, by extension, the arbitration provision contained therein—were
reasonably clear and conspicuous such that a reasonable person in Soliman’s shoes
would have been on inquiry notice of them. Meyer, 868 F.3d at 74-75.
Reasonable conspicuousness turns on the “design and content of the
relevant interface.” Starke, 913 F.3d at 289 (analyzing this issue “[i]n the context of
web-based contracts”). Subway analogizes the facts here to prior cases in which
this Court and others have upheld certain web-based contracts, even in the
absence of express consent, where the terms and conditions are conspicuously
hyperlinked on the website accessed by the user (sometimes referred to as
“browsewrap agreements”). Soliman counters that those cases are factually
distinguishable because, among other things, this case did not involve hyperlinked
quotation marks omitted). Accordingly, our precedent applying New York law in similar
cases provides helpful guidance.
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terms and conditions in a text message to Soliman, but rather would have required
Soliman to see the inconspicuous reference to terms and conditions on a print
advertisement and then type the URL into her internet browser to access Subway’s
terms and conditions for the promotion.
We have emphasized that “[c]lassification of web-based contracts alone . . .
does not resolve the notice inquiry,” and “[i]nsofar as it turns on the
reasonableness of notice, the enforceability of a web-based agreement is clearly a
fact-intensive inquiry.” Meyer, 868 F.3d at 76. Thus, regardless of the precise
nature of a web-based contract, the ultimate question concerning inquiry notice on
a motion to compel arbitration remains the same—namely, whether “the notice of
the arbitration provision was reasonably conspicuous and manifestation of assent
unambiguous as a matter of law.” Id. As set forth below, under the facts of this
particular case, we conclude that Subway has failed to demonstrate that the
arbitration provision would have been conspicuous to a reasonably prudent
consumer for several reasons.
First, neither Soliman nor Subway provided evidence in the district court
showing the size of the advertisement that Soliman saw in the Subway store. Thus,
it is entirely possible that it was not a poster on a store window, door, or wall, but
15
rather may have been (as suggested at oral argument) a tri-fold, cardboard sign
sitting on a store counter. Obviously, the size of the advertisement, including the
print contained therein, is a critical factor in determining whether there was clear
and conspicuous notice to Soliman. At this stage, the burden is on Subway to show
reasonable conspicuousness. See Meyer, 868 F.3d at 74 (noting that, when
“deciding motions to compel,” we will “draw[] all reasonable inferences in favor
of the non-moving party”); accord Arnaud v. Doctor’s Assocs. Inc., 821 F. App’x 54,
57 (2d Cir. 2020) (“Since Subway has not provided facts demonstrating Arnaud’s
knowledge of the terms and conditions, Arnaud needed to do no more to
substantiate his factual allegations at this stage.”). Therefore, in light of this
evidentiary gap in the record, we presume that this factor regarding the size of the
print favors Soliman’s position.
Second, the reference to the URL for the website containing Subway’s terms
and conditions was not conspicuous in the context of the entire advertisement;
instead, it was buried within a fine-print paragraph with over eighty other words,
was not set off in any way within that paragraph (by color, emphasis, etc.), and
was in a font that (regardless of its unknown actual size) was significantly smaller
than the rest of the text on the page. Thus, based upon this record, we disagree
16
with Subway’s bold contention that “any ‘reasonably prudent consumer’ who saw
the Subway® ad and followed its directions to text a keyword to short code 782929
to receive text-based deals (as appellee did here) would have also undoubtedly
seen the adjacent notice informing consumers of the terms and conditions stated
on the ad and made available on the Subway® website at the specified
URL/webpage location.” Appellant’s Br. at 8. We have significant doubt, looking
at the small-print disclaimer box in the context of the advertisement as a whole, as
to whether a reasonable consumer would have noticed the reference to terms and
conditions at all.
Subway suggests that conspicuousness is established here because the
disclosure of the URL leading to the terms and conditions appeared in “plain
view” on the Subway advertisement and in “close proximity” to the short code
(and that the difference in font size made it even more noticeable). Appellant’s Br.
at 18 n.3. However, we have emphasized, in the context of hyperlinks on
webpages, that “[p]roximity to the top of a webpage does not necessarily make
something more likely to be read in the context of an elaborate webpage design.”
Nicosia, 834 F.3d at 237; see also Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1179
(9th Cir. 2014) (“[E]ven close proximity of the hyperlink to relevant buttons users
17
must click on—without more—is insufficient to give rise to constructive notice.”).
The same is true for a print-based advertisement containing a URL that the
consumer can type into an internet browser to access the terms and conditions of
a promotional offer: proximity of the URL to the information regarding the offer,
although important, is not dispositive. Instead, proximity must be analyzed in
light of the website or advertisement design as a whole, including additional
factors (such as font size and the display of other information on the advertisement
in and around the notice provision regarding the terms and conditions) that might
impact the conspicuousness of such notice. See, e.g., Nguyen, 763 F.3d at 1177
(“[T]he conspicuousness and placement of the ‘Terms of Use’ hyperlink, other
notices given to users of the terms of use, and the website’s general design all
contribute to whether a reasonably prudent user would have inquiry notice of a
browsewrap agreement.”).
Similarly, although Subway asserts that reference to the URL was made
more noticeable because of the use of a different font size and color than the rest
of the advertisement, that argument ignores consideration of whether the differing
font size is too small to be conspicuous and/or whether the surrounding
information in different colors and fonts “generally obscure[s] the message.”
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Nicosia, 834 F.3d at 237 (finding no inquiry notice as a matter of law as to terms
and conditions on a webpage where “[t]he message itself—‘By placing your order,
you agree to Amazon.com’s . . . conditions of use’—[was] not bold, capitalized, or
conspicuous in light of the whole webpage”); see generally Specht, 306 F.3d at 32(“[W]here consumers are urged to download free software at the immediate click
of a button, a reference to the existence of license terms on a submerged screen is
not sufficient to place consumers on inquiry or constructive notice of those terms.
The [Company’s] webpage screen was printed in such a manner that it tended to
conceal the fact that it was an express acceptance of [the Company’s] rules and
regulations.” (footnote and internal quotation marks omitted)). Here, we agree
with the district court that the “small-print disclaimer in the advertisement” was
“dwarfed by the surrounding colorful text and imagery and . . . reference[d] terms
and conditions only at the end of the second line,” such that it would not be
conspicuous to a reasonably prudent consumer. Soliman, 442 F. Supp. 3d at 524.
Third, our concern about the lack of inquiry notice is further heightened in
this case by the fact that neither the advertisement’s larger-font text (promoting
Subway’s offer) nor the fine-print disclaimer state that a consumer who opts to
participate in the promotion by texting the short code is also agreeing to be bound
19
by Subway’s terms and conditions. Instead, the ad obscurely references, “[t]erms
and conditions at subway.com/subwayroot/TermsOfUse.aspx.” App’x at 21.
Although it is axiomatic that no express agreement (such as clicking on a
box indicating “I agree,” which is often referred to as a “clickwrap agreement”) is
necessary to establish reasonable conspicuousness under the law, we have
emphasized the importance of clearly signaling to the consumer in some fashion
that, by continuing with the transaction or by using a website, she will be agreeing
to the terms contained in an accompanying hyperlink. See Starke, 913 F.3d at 293
(finding terms and conditions were not clear and conspicuous where the email at
issue “in no way signal[ed] to [plaintiff] that he should click on the link, and it
[did] not advise him that he would be deemed to agree to the contract terms in the
document to be found by clicking that link”); see also Starkey v. G Adventures, Inc.,
796 F.3d 193, 197 (2d Cir. 2015) (although noting it was “a somewhat close call,”
concluding that terms and conditions containing a forum selection clause were
reasonably communicated when, among other things, plaintiff “received three
separate emails stating that all . . . passengers must agree to the Booking Terms
and Conditions” and “a capitalized, bolded heading ‘TERMS AND
CONDITIONS’ heralded one of th[o]se statements”); Nguyen, 763 F.3d at 1178 n.1
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(“[W]here courts have relied on the proximity of the hyperlink to enforce a
browsewrap agreement, the websites at issue have also included something more
to capture the user’s attention and secure her assent.”).
Subway suggests that our decision in Meyer somehow modified our prior
precedent on this important issue, such that (according to Subway) pre-Meyer
cases carry little weight to the extent they emphasized the need to place the user
on notice that utilizing a website or smartphone application constituted agreement
to terms and conditions referenced in an accompanying hyperlink. Meyer did no
such thing. Instead, Meyer reiterated our well-settled view that, regardless of the
medium, we must look at both the design of the screen (or, in this case, print
advertisement) and the particular language used in relation to the hyperlinked or
otherwise-referenced terms and conditions. See 868 F.3d at 78 (“Turning to the
interface at issue in this case, we conclude that the design of the screen and language
used render the notice provided reasonable as a matter of California law.”
(emphasis added)); accord Starke, 913 F.3d at 289 (“In the context of web-based
contracts, we look to the design and content of the relevant interface to determine if
the contract terms were presented to the offeree in [a] way that would put her on
inquiry notice of such terms.” (emphasis added)).
21
Subway also cites Meyer for the proposition that “[a]s long as the
hyperlinked text was itself reasonably conspicuous . . . a reasonably prudent
smartphone user would have constructive notice of the terms,” 868 F.3d at 79, and
suggests that the analysis is all about proximity. However, that limited quotation
to Meyer overlooks the immediately preceding sentence of the Court’s analysis
where, in finding the notice at issue sufficiently conspicuous, we relied upon the
language on an uncluttered payment screen that expressly warned, “By creating
an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY,”
and included hyperlinks to the Terms of Service and Privacy Policy. Id. at 78-79.
We viewed that language as a “clear prompt directing users to read the Terms and
Conditions and signaling that their acceptance of the benefit of registration would
be subject to contractual terms.” Id. at 79. Later in the analysis, we reiterated that,
although no express assent to the terms and conditions was contained on the
payment screen (or required under the law to form a contract), the text “expressly
warned the user that by creating an . . . account, the user was agreeing to be bound
by the linked terms.” Id. at 80 (emphasis added).
The importance of signaling that a consumer is about to agree to something
is even more pronounced in the context of a promotional offer for a coupon,
22
because a reasonable consumer could easily conclude that any vague reference to
“[t]erms and conditions” (assuming the consumer noticed the reference at all)
simply contained details about where and how the coupon could be used, as
opposed to the consumer understanding that she was affirmatively agreeing to
anything (much less to arbitration of any disputes). In other words, the notice in
Subway’s advertisement does not even advise the consumer that, by texting the
keyword to Subway, they are agreeing to any terms or conditions contained on the
Subway website referenced by the URL. See, e.g., Arnaud, 821 F. App’x at 56
(holding there was no inquiry notice where, among other things, the Subway
website “did not provide language informing the user that by clicking ‘I'M IN’ the
user was agreeing to anything other than the receipt of a coupon”). The absence
of such language, or at least some other signal to the terms and conditions, further
undermined the conspicuousness of the notice in this case.
As the California Court of Appeal similarly explained in Long v. Provide
Commerce, Inc., in connection with hyperlinks on websites:
In our view, the problem with merely displaying a hyperlink in a
prominent or conspicuous place is that, without notifying consumers
that the linked page contains binding contractual terms, the phrase
“terms of use” may have no meaning or a different meaning to a large
segment of the Internet-using public. In other words, a conspicuous
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“terms of use” hyperlink may not be enough to alert a reasonably
prudent Internet consumer to click the hyperlink.
200 Cal. Rptr. 3d 117, 126-27 (Cal. Ct. App. 2016).
Thus, the instant situation is in stark contrast to Greenberg v. Doctors
Associates, Inc., which also involved a Subway promotional campaign and a
motion to compel arbitration as to plaintiff’s claim for receiving text messages in
violation of the TCPA. 338 F. Supp. 3d 1280, 1281 (S.D. Fla. 2018). There, the court
held that the plaintiff was on notice as to the terms and conditions related to the
promotional offer because he admitted in the complaint that the offer stated, “By
clicking ‘Sign me up’ you agree to receive email promotions and other general
email messages from [S]ubway Group. In addition you agree to the Subway
Group Privacy Statement and Terms of Use.” Id. at 1282 (quoting the complaint).
It is unclear why Subway did not use similar language here either in the print
advertisement or in its subsequent text communications with consumers
responding to the advertisement. 5
5Although Subway refers to the fact that Soliman “received her coupon after completing
a double opt-in process to confirm her consent to receive promotional texts,” Appellant’s
Br. at 2, the text message sent by Subway (after Soliman’s initial text) that allowed
Soliman to complete the two-step enrollment process simply prompted her to text her zip
code and noted to her that a response would be considered consent to receive Subway
offers, but provided no hyperlink, nor did it make any reference, to the terms and
conditions.
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Fourth, in analyzing the totality of the circumstances, we also must consider
that the URL for the website containing the terms of use was in a hard-copy format
on a sign, rather than a clickable hyperlink on an internet-capable device. To be
sure, it is well settled that a contract may direct a person to review relevant terms
located in a different place. See, e.g., Specht, 306 F.3d at 31 (“[R]eceipt of a physical
document containing contract terms or notice thereof is frequently deemed, in the
world of paper transactions, a sufficient circumstance to place the offeree on
inquiry notice of those terms.”).
However, we may (and should) consider the level of difficulty in accessing
the incorporated terms in our analysis of clarity and conspicuousness. When a
person is invited to click on a conspicuous hyperlink, Meyer, 868 F.3d at 75, they
may do so with ease. By contrast, when a consumer must type in a thirty-seven-
character URL to their cellphone or computer, it is more difficult to navigate to the
terms of use in order to confirm whether an ambiguous reference to “[t]erms and
conditions” in the print advertisement applies to the proposed transaction. See
App’x at 21. In making this observation, we do not suggest that a hard-copy
medium cannot incorporate enforceable contractual terms via a printed URL in a
manner that satisfies the reasonably conspicuous standard. As we have noted,
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“[w]hile new commerce on the Internet has exposed courts to many new
situations, it has not fundamentally changed the principles of contract.”
Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004). Instead, we simply
note the somewhat obvious reality that companies relying on the mixed-media
incorporation of contractual terms involving a combination of a print
advertisement, text messaging, and a website (rather than a purely paper or purely
web-based medium) must take into account the practical obstacles in each
situation relating to the conspicuousness of the notice, as well as access to the
terms and conditions, that may be created by the various modes of communication
being utilized. See Specht, 306 F.3d at 32 (“When products are ‘free’ and users are
invited to download them in the absence of reasonably conspicuous notice that
they are about to bind themselves to contract terms, the transactional
circumstances cannot be fully analogized to those in the paper world of arm’s-
length bargaining.”). Accordingly, in this case, the hard-copy format of the URL
created yet another barrier to reasonable clear and conspicuous notice of the terms
of use in combination with the other obstacles previously identified.
Finally, if a user were to copy the URL from the advertisement into their
phone or computer’s internet browser, they would be taken to a page that reads,
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“PLEASE CAREFULLY REVIEW THESE TERMS OF USE FOR THIS WEBSITE.”
App’x at 34 (emphasis added). Accordingly, even if Soliman had accessed the
Subway website, it would have been entirely reasonable for her to believe—based
on the bland reference to “[t]erms and conditions” on the print advertisement and
the website’s heading noting that the terms were “for this website”—that the terms
of use on the website applied only to website users, and not to promotion
participants. By making this observation, we certainly do not suggest that the
website heading would need to specifically reference the promotional offer to
provide sufficient inquiry notice to a reasonable consumer; rather, we simply note
that the heading should not be so narrow that it could create confusion in the mind
of a reasonable consumer as to whether the terms of the promotion would even be
contained on that website.
In short, taking the facts together as a whole, we conclude that the terms and
conditions in this case were not reasonably conspicuous and, thus, a reasonable
consumer would not realize she was agreeing to be bound to such terms and
conditions by texting Subway in order to begin receiving promotional offers.
Although Subway argues that such a conclusion would run contrary to prior
decisions under analogous circumstances, we disagree. As noted supra, Subway
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relies heavily upon our decision in Meyer, where we applied California law and
concluded that a user had agreed to contract terms contained in documents
provided only by a hyperlink on Uber’s smartphone application. 868 F.3d at 78-
80. However, the factual circumstances in Meyer, including the clear and
conspicuous manner in which the notice regarding the terms and conditions were
displayed on the smartphone application at issue, are very distant from the
circumstances here. Specifically, in Meyer, the user saw a single screen on their
phone with a “REGISTER” button, below which appeared the following text: “By
creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY
POLICY,” and included hyperlinks to documents titled “Terms of Service” and
“Privacy Policy.” Id. at 71, 76. That page was displayed in the following manner:
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Id. at 82 add. B.
In holding that the user had agreed to the hyperlinked terms and conditions,
we relied on multiple factors that showed the arbitration agreement was clear and
conspicuous: the payment screen was uncluttered, with relatively few fields and
only one external link, id. at 78; the text including hyperlinks to the relevant
documents appeared directly below the registration button, id.; the user did not
need to scroll to see the links to the relevant documents, id.; the text including
hyperlinks to the relevant documents was “temporally coupled” with the
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registration button, id.; and, as discussed above, the language “[b]y creating an
Uber account, you agree” was a “clear prompt directing users to read the Terms
and Conditions and signaling that their acceptance of the benefit of registration
would be subject to contractual terms,” id. at 78-79. Moreover, we noted that once
the user clicked the hyperlink and accessed the terms of service, “the section
heading (‘Dispute Resolution’) and the sentence waiving the user’s right to a jury
trial on relevant claims are both bolded.” Id. at 79. Accordingly, we held that,
“[a]lthough the contract terms are lengthy and must be reached by a hyperlink,
the instructions are clear and reasonably conspicuous,” such that a reasonably
prudent user would be on inquiry notice of the terms of service. Id.
Here, for all the reasons previously discussed, the Subway advertisement
and its accompanying reference to the URL for the website containing the terms
and conditions are devoid of the indicia of clarity that satisfied the reasonable
conspicuousness standard in Meyer. Instead, to the extent we can analogize the
circumstances here to the purely web-based scenarios that have been analyzed in
prior cases, the circumstances in the instant case more closely resemble those in
which courts have found cluttered websites with a hyperlink to terms and
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conditions to be insufficiently conspicuous to provide inquiry or constructive
notice to the consumer.
For example, in Nicosia, we considered the sufficiency of notice about certain
terms of use on Amazon.com. 834 F.3d at 238. There, we noted: the hyperlink to
the conditions of use “[wa]s not bold, capitalized, or conspicuous in light of the
whole webpage,” id. at 237; the webpage was cluttered with links (which appeared
in several different colors, fonts, and locations) as well as other advertisements
and promotions, id.; and the page included a substantial amount of other
information, such as the customer’s address, credit card information, shipping
option, and purchase summary, id. Thus, we held that reasonable minds could
differ over whether the website provided objectively reasonable notice of the terms
and conditions, such that a reasonable website user was on inquiry notice of them.
Id. at 237-38; see also Starke, 913 F.3d at 293-94 (distinguishing Meyer and noting,
among other things, that “the interface here is cluttered with diverse text,
displayed in multiple colors, sizes and fonts, and features various buttons and
promotional advertisements that distract the reader from the relevant hyperlink”
and the offer email “in no way signals to [the plaintiff] that he should click on the
link, and it does not advise him that he would be deemed to agree to the contract
31
terms in the document to be found by clicking that link”); Specht, 306 F.3d at 32(concluding, under California law, that “in circumstances such as these, where
consumers are urged to download free software at the immediate click of a button,
a reference to the existence of license terms on a submerged screen is not sufficient
to place consumers on inquiry or constructive notice of those terms”).
As in Nicosia, we hold under the totality of the circumstances here—
including the lack of evidence regarding the size of the advertisement, the buried
and vague nature of the reference to the terms and conditions in the
advertisement, the mixed-media nature of the communication, and the limiting
language in the heading on the terms and conditions website once accessed—that
Soliman was not on inquiry notice of the terms and conditions on Subway’s
website and therefore is not bound to arbitrate her claim in this case. 6
We emphasize here, as we did in Meyer, that “there are infinite ways to
design a website or smartphone application, and not all interfaces fit neatly into
[particular] categories.” 868 F.3d at 75. Therefore, as with purely web-based
6Because we conclude that the terms and conditions were not reasonably conspicuous,
we need not reach the district court’s additional holding that Soliman did not manifest
assent. Similarly, because we find that the district court properly denied Subway’s
motion to compel arbitration, we need not address Soliman’s other arguments regarding
scope and unconscionability as it relates to the arbitration provision.
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contracts, we impose no particular features that must be present to satisfy the
reasonably conspicuous standard in the context of a mixed-media communication
with a consumer such as the case here, involving the use of a “call to action” print
advertisement with the consumer and containing a reference to terms and
conditions that requires the consumer to then respond by utilizing text messaging
on a cellphone. The panoply of technological variations available to companies in
the internet/smartphone age, as it relates to the form and content of
communication interfaces with consumers, makes any bright-line rule for
reasonable conspicuousness in this arena extremely difficult to discern, and we do
not attempt to do so here. Instead, each situation will continue to require careful
examination on a case-by-case basis under the applicable legal standard.
III. CONCLUSION
For the reasons set forth above, we AFFIRM the district court’s denial of
Subway’s motion to compel arbitration and REMAND the case for further
proceedings consistent with this opinion.
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