Doe v. Massage Envy Franchising, LLC ( 2022 )

Filed 12/29/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
JANE DOE,
Plaintiff and Respondent,
A161688
v.
MASSAGE ENVY FRANCHISING, (San Mateo County
LLC, Super. Ct. No. 19CIV00392E)
Defendant and Appellant.
Plaintiff Jane Doe alleges that she was sexually assaulted by a
massage therapist during a massage at a Massage Envy retail location in San
Rafael, California. She filed a lawsuit for damages against the Arizona-based
franchisor that licenses the “Massage Envy” brand name (Massage Envy
Franchising, LLC, or MEF), and the independently owned “Massage Envy”
branded franchise location in San Rafael where the assault allegedly
occurred.
MEF (the franchisor) moved to compel arbitration on the basis of a
“Terms of Use Agreement” presented to plaintiff when she checked in for a
massage she had booked at the San Rafael franchise location. The trial court
concluded that there was no agreement to arbitrate between plaintiff and
MEF, and denied the motion.
In this appeal from the trial court’s order, MEF argues that the “Terms
of Use Agreement,” which was available to plaintiff via hyperlink on the
electronic tablet she was given at the franchise location to check in for her
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massage, is a valid and enforceable “clickwrap” agreement of the sort that
courts routinely enforce. We disagree. In the circumstances here, plaintiff
did not have reasonable notice that she was entering into any agreement
with MEF, much less notice of the terms of the agreement. We shall affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying facts are undisputed.
Sometime before August 7, 2017, plaintiff entered into a “Wellness
Agreement” with an independently owned Massage Envy franchisee located
in San Rafael. The Wellness Agreement was in essence a membership that,
in exchange for a monthly fee, entitled plaintiff to one massage per month
and a reduced rate on any additional massages. The Wellness Agreement
continued month-to-month until cancellation by plaintiff. It did not mention
arbitration. Plaintiff was a “member” of San Rafael Massage Envy for
several years without incident.
A. Plaintiff Checks in for a Massage on August 7, 2017
On August 7, 2017, plaintiff had an appointment for a massage at San
Rafael Massage Envy. Before the start of her massage, a staff member
handed her an electronic tablet and asked her to quickly check in. The check-
in process, as we will describe, involved completing two electronic forms.
MEF acknowledges that as of August 7, 2017, it had no pre-existing
relationship with plaintiff. However, MEF asserts that the August 7 check-in
process involved use of an “In-Store Application” that MEF had developed for
its franchisees, including San Rafael, and that in the course of checking in for
her massage by means of the tablet, plaintiff executed a contract with MEF.
But no one at the San Rafael location told plaintiff that in using the tablet to
check in she would be using an “In-Store Application” that MEF had
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developed, or entering into a binding agreement with MEF, an entity with
which she had no relationship.
We describe in some detail the tablet screens that were presented to
plaintiff during the check in process.
The first screen plaintiff saw had a bright teal-blue header with a white
“ME” logo and three pale teal-blue headings across the top of the screen:
“Welcome,” “Massage,” and “My Consent.” This screen, entitled “Before We
Get Started” in bright purple, stated: “We want to make sure your account
information is tidy and up-to-date. Take a second to update anything and fill
in the missing fields!” The fields for plaintiff’s name, address, and contact
information were either pre-populated, or plaintiff filled them in.
Upon tapping a bright purple button labeled “Continue,” plaintiff saw
the next screen with the header “Welcome” in white with a white bar below
it. This screen was entitled “Welcome [plaintiff’s name]” shown in large,
bright purple letters. Below that, under the heading “Massage Envy & You,”
was the following: “We know that each body is unique and should be treated
as such. We allow you to customize your service to make sure you have the
safest and most relaxing session possible. Just tap on the button below to
begin your forms!” Directly below were icons for two forms: one called “My
Massage” and the other “General Consent.” And directly under that was a
bright purple button labeled, “View My Forms.” There is no reference to a
separate “Terms of Use Agreement,” let alone an arbitration agreement.
After tapping the “View My Forms” button, plaintiff was presented
with a series of screens with the word “Massage” in white in the heading
above the title “My Massage,” in large bright purple letters. On these
“Massage” screens, plaintiff was instructed to “tap your areas of stress and
pain,” indicate whether she was “comfortable receiving therapeutic massage”
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on various depicted areas of her body, identify her “Daily Activities,” answer
questions about her “Lifestyle,” and complete a scroll-down form (apparently
five screens long) called “My Health History.”
At the end of the health history, plaintiff tapped a check-box indicating
she was 18 or older, and then, upon tapping a bright purple button labeled
“Continue,” she was presented with a screen with the words “My Consent” in
white in the heading and the title “My Consent” in large bright purple letters.
This corresponded to the second of the two “my form” icons shown on an
earlier screen.. Under the title was a scroll-down document (in a small black
font, single-spaced on a white background, apparently about five screens
long) entitled “General Consent,” which began, “Please read and review in
full to sign below.” There followed a bold-face heading, “Assumption of Risk,
Release, Waiver of Liability, and Indemnification,” and a paragraph that
began, “By signing below, you understand, acknowledge, agree . . . that the
information provided by you on this Wellness Chart may be shared with and
utilized by any Message Envy location for the purpose of providing you
services at any Massage Envy location you choose. . . .” The second
paragraph of the General Consent stated, again, “Please read and review in
full to sign below.” The third paragraph stated, “The words ‘you’ and ‘your’
mean the Member listed above (and the Buyer signing below with respect to
payment). The words we, our, and us refer to NIKHIL, Inc., d/b/a Massage
Envy San Rafael, an independently owned and operated Massage Envy®
Franchise. The information provided to us by you in this application shall be
collectively referred to as your ‘Wellness Chart.’ ” Additional paragraphs
followed.
What stands out about the “General Consent” is that it was an
agreement between plaintiff and San Rafael Massage Envy, identified as an
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“independently owned and operated Massage Envy® franchise.” In other
words, where plaintiff had gone for her massage. Also notable is that the
General Consent did not define or identify MEF, though it did mention
“MEF” as an entity that was not providing plaintiff with massage services or
employing therapists or estheticians, and that was being released from
liability.
Near the end of the General Consent form and in what appears to be
the same size and font used in the text of the General Consent, plaintiff was
presented with a line of text that read, “I agree and assent to the Terms of
Use Agreement,” next to a check-box. Below that, and still within the scroll-
down General Consent form, was a blank signature line and date line, and
below that a bright purple button labeled “Continue.”
The words “Terms of Use Agreement” were apparently in gray (lighter
than the black text of the General Consent and lighter than the preceding
words, “I agree and assent to the”). The words “Terms of Use Agreement,”
underlined in light purple, were a hyperlink that, if clicked, would have
displayed a scroll-box that allows the user to read a document that is actually
entitled “Terms and Conditions.” This was the only hyperlink presented to
plaintiff in the course of her check-in.
Under pressure from staff to complete the forms and check in quickly,
plaintiff did not realize that there was a hyperlink to the Terms and
Conditions. Plaintiff checked the box stating she agreed and assented, but
she was not prompted or required to click on that hyperlink, and she did not.
Plaintiff signed her name on the signature line on the tablet, tapped the
bright purple “Continue” button, and was shown a screen thanking her by
name and informing her that her therapist would be with her shortly.
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In contrast with the General Consent form, Plaintiff was not required
to scroll through the Terms and Conditions, and she did not see the Terms
and Conditions when she checked in on August 7. If she had clicked on the
hyperlink, she would have seen an agreement which, when printed in its
entirety on standard size paper with standard margins, runs to 10 single-
spaced pages. In the Terms and Conditions, just below the title was a
paragraph in boldface capitals stating, “Important Notice: This terms of use
agreement (“Agreement”) contains a binding arbitration provision and a class
action waiver. Please read it carefully because it affects your legal rights as
detailed in the binding individual arbitration section below.” The arbitration
provision occupied three full pages of single-spaced text, starting on page four
of the Terms and Conditions.
B. The Lawsuit
Plaintiff alleges that in the summer of 2017 she was sexually assaulted
by a massage therapist during a massage at the San Rafael Massage Envy
location. She alleges that she reported the assault, but no investigation was
made, and that this was in keeping with an alleged cover-up of a widespread
problem of women being sexually assaulted by massage therapists at
Massage Envy franchise locations.
Plaintiff sued MEF and the San Rafael Massage Envy location for
damages based on causes of action including sexual battery and fraud. MEF
moved to compel arbitration on the ground that plaintiff assented to the
“Terms and Conditions,” including its arbitration provision, by checking the
box next to the statement “I agree and assent to the Terms of Use
Agreement.” The trial court concluded there was no agreement to arbitrate
between plaintiff and MEF and denied MEF’s motion. The trial court
alternatively denied the motion based on its determination that the claims
6
asserted against MEF were not within the scope of the arbitration provision
in the Terms and Conditions, and that such a determination was properly
made by the court.
MEF timely appealed.1
DISCUSSION
A. Applicable Law
Although there is a strong public policy favoring arbitration, the policy
has no application to parties who have not agreed to arbitrate their disputes.
(Ramos v. Westlake Services, LLC (2015) 242 Cal.App.4th 674, 685 (Ramos);
see also Bono v. David (2007) 147 Cal.App.4th 1055, 1063 (Bono) [“ ‘ “ ‘there
is no policy compelling persons to accept arbitration of controversies which
they have not agreed to arbitrate’ ” ’ ”].) As the party seeking to compel
arbitration, MEF has the burden to prove the existence of a valid arbitration
agreement by a preponderance of the evidence. (Rosenthal v. Great Western
Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)
We apply California contract law in deciding whether parties have
entered a binding agreement to arbitrate.2 (Ramos, supra, 242 Cal.App.4th
at p. 685.) Under California law, a contract will not exist without the mutual
consent of the parties (Civ. Code, §§ 1550, 1565), which requires that the
parties “all agree upon the same thing in the same sense.” (Id. § 1580.)
“ ‘ “The existence of mutual consent is determined by objective rather than
subjective criteria, the test being what the outward manifestations of consent
1 The owner of the franchise location is not a party to this appeal.
2 Plaintiff argues that California law applies to the question whether
there is a valid agreement to arbitrate. MEF notes that the Terms of Use
Agreement contains an Arizona choice-of-law provision, but analyzes the
contract formation issue under California law.
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would lead a reasonable person to believe. [Citation.] Accordingly, the
primary focus in determining the existence of mutual consent is upon the acts
of the parties involved.” ’ ” (Monster Energy Co. v. Schechter (2019) 7 Cal.5th
781, 789.) What matters is “the reasonable meaning of the words and acts of
the parties,” and not “their unexpressed intentions or understanding.”
(1 Witkin, Summary of Cal. Law (11th ed. 2022) Contracts, § 116.)
It has long been the law in California that “an offeree, regardless of
apparent manifestation of his consent, is not bound by inconspicuous
contractual provisions of which he was unaware, contained in a document
whose contractual nature is not obvious.” (Windsor Mills, Inc. v. Collins &
Aikman Corp. (1972) 25 Cal.App.3d 987, 993.) This principle “applies with
particular force to provisions for arbitration.” (Ibid.)
Where paper contracts are concerned, “the outward manifestation of
assent to the same thing by both parties is often readily established by the
offeree’s receipt of the physical contract.” (Sellers v. JustAnswer LLC (2021)
73 Cal.App.5th 444, 461.) But when transactions occur electronically, as
here, “the consumer is not typically provided a physical copy of the
contractual terms. In that context, and in the absence of actual notice, a
manifestation of assent may be inferred from the consumer’s actions . . .
including, for example, checking boxes and clicking buttons—but any such
action must indicate the parties’ assent to the same thing which occurs only
when . . . the contractual terms were presented to the consumer in a manner
that made it apparent the consumer was assenting to those very terms when
checking a box or clicking on a button.” (Ibid.) When a contract is presented
to a consumer on a computer screen, “the full context of any transaction is
critical to determining whether any particular notice is sufficient to put a
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consumer on inquiry notice of contractual terms contained on a separate
hyperlinked page.” (Id. at p. 454, italics added.)
Where the facts are not in dispute and the trial court has denied a
petition to compel arbitration based on its determination that there is no
agreement to arbitrate, our review is de novo. (Bono, supra, 147 Cal.App.4th
at pp. 1061-1062.)
B. Analysis
The question before us is whether plaintiff entered into an agreement
with MEF to arbitrate her claims. Our answer is no.
First, when plaintiff checked in for her massage at San Rafael Massage
Envy on the day in question, she had no reason to believe that the check-in
process or her massage involved MEF. She had a pre-existing contractual
relationship (the “Wellness Agreement”) with the San Rafael location, to
which MEF was not a party.3 The check-in process on August 7 began with a
screen acknowledging the relationship she had with San Rafael Massage
Envy: “We want to make sure your account information is tidy and up-to-
date.” And consistent with that contractual relationship, the two forms (“My
Forms”) that were presented to plaintiff on the tablet were about her
relationship with the San Rafael location. The “My Massage” form specified
the nature of the massage she agreed to receive from the San Rafael massage
therapist. And the “My Consent” form, specifically the General Consent, was
consent for services she was about to receive from the San Rafael location,
not from MEF. Nothing about the process suggested that checking in for the
massage involved entering a new, and continuing, relationship with MEF.
3 MEF represents that the Wellness Agreement states that MEF is a
franchisor and not a party to the Wellness Agreement or responsible for the
acts of the franchised location. It is not part of the record.
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Second, plaintiff had no reason to believe that the terms of “My
Consent” involved anything other than the “assumption of risk, release,
waiver of liability, and indemnification.” When she was presented with the
check-box next to “I agree and assent to the Terms of Use Agreement,” she
had just finished scrolling through the General Consent, a contract with
repeated instructions to read and review it in full and to sign it, as well as
repeated statements that she was agreeing, consenting to, acknowledging,
and accepting the terms of the “Assumption of Risk, Release, Waiver of
Liability, and Indemnification.” Everything about the check-box next to the
words “I agree and assent to the Terms of Use Agreement” made it appear to
be simply a part of the General Consent. The check-box lies within the body
of the General Consent, just below a paragraph stating that plaintiff
“acknowledge[s] and agree[s] that [her] consent to this assumption of risk,
release, waiver of liability and indemnification is given in exchange for our
rending of services . . .” and just above the signature line. Because of the
placement of the check-box and in the context of the screens plaintiff had just
reviewed, clicking the check-box appeared to be part of the process of
reviewing, signing, and agreeing to the General Consent between her and the
San Rafael Massage Envy location, rather than as an indication of assent to
an entirely different contract with an entirely different entity.
In short, we have no difficulty concluding that the contractual terms of
the Terms and Conditions—including the arbitration provision—were not
presented to plaintiff “in a manner that made it apparent [she] was assenting
to those very terms when . . . clicking on a button” next to the sentence “I
agree and assent to the Terms of Use Agreement.” (Sellers, supra, 73
Cal.App.5th at p. 461.) To the contrary, the entire check-in experience made
it appear that by clicking that button and then signing her name plaintiff
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was agreeing to the General Consent, a contract to which she and San Rafael
Massage Envy were the parties. In these circumstances, she did not enter
any agreement with MEF.
MEF contends that plaintiff executed an enforceable agreement with
MEF to arbitrate because the “Terms of Use Agreement” is an enforceable
“clickwrap” agreement “ ‘in which website users are required to click on an “I
agree” box after being presented with a list of terms and conditions of use.’ ”
(Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 862, quoting
Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1175-1176.)
Sellers, supra, 73 Cal.App.5th at page 463, defines a “clickwrap” agreement
as “ ‘one in which an internet user accepts a website’s terms of use by clicking
on an “I agree” or “I accept” button, with a link to the agreement readily
available.’ ” Sellers explains that clickwrap agreements were developed as
consumers began downloading software from websites, as opposed to buying
actual packages that contained the software on disks. Because “there was no
way for providers to include a physical copy of the contractual terms [with a
download,] providers would ask customers to agree to the terms, displayed
somewhere on their website, by clicking on an ‘ “I accept” ’ or ‘ “I agree” ’
button.” (Ibid.) “In most instances, the contractual terms were not actually
displayed on the same screen as the ‘ “I accept” ’ button, but were instead
provided via a hyperlink that, when clicked, took the user to a separate page
displaying the full set of terms.” (Ibid.)
But the transaction in which plaintiff purportedly agreed to the MEF’s
“Terms of Use Agreement” is nothing like the typical transactions in which
clickwrap agreements are used, as reflected in the description above. For one
thing, there is no evidence before us that plaintiff was using a website to
check in for her massage, or, if she was using a website, that she was so
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informed. She did not use an internet browser to navigate to a website or
make an online purchase. As far as she knew, she was not involved in a
transaction of any sort with MEF. Instead, she went to a physical location in
San Rafael, where she was already a member, and where she had an
appointment for a massage under her monthly membership contract. When
she arrived, she was handed a tablet to check in for that massage.
According to MEF, its “Terms of Use Agreement” is enforceable as a
clickwrap agreement because plaintiff was on constructive notice of its terms:
she was presented with the contract by means of a “conspicuous hyperlink”
and manifested her assent by clicking the check-box. We disagree that the
hyperlink was conspicuous. The hyperlink was, in fact, inconspicuous. It
was placed in a sentence next to a check-box within the General Consent
document without any instruction to read and review a new document, and
therefore appeared to refer to the terms that had already been presented over
the course of several screens. Plaintiff had been twice instructed to read and
review the General Consent, but there was no instruction to read and review
any new document. The sentence containing the hyperlink to the Terms of
Use Agreement was not presented in boldface, even though boldface was used
to highlight portions of the General Consent document. And the hyperlink
was not presented by means of a bright purple button, like the “Continue”
buttons, nor was plaintiff presented with other hyperlinks in the course of
her check-in process, which might have suggested she should take some
further steps before clicking on the button marked with a check to indicate
her agreement.
And there was nothing special about the check-box, either: it looks just
like the other check-boxes that plaintiff had encountered earlier during the
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check-in process while she was filling out her health history. None of those
check-boxes were associated with hyperlinked text.
Nor did the check-in process call any attention to the existence of a
third form or document for plaintiff to review, beyond the two identified
forms: My Massage and General Consent. The “Terms of Use Agreement”
was never called out or identified, until it was referenced in an inconspicuous
hyperlink at the end of the General Consent form right above the signature
line. Plaintiff was not presented with language during the check-in process
stating that if she did not wish to be bound by the Terms and Conditions she
could not check in for her massage. (See Net2Phone, Inc. v Superior Court
(2003) 109 Cal.App.4th 583, 586 (Net2Phone) [enforcing forum selection
provision in hyperlinked contract where website informs user that to access
the site user must agree to be bound by terms of use, and states, “ ‘[i]f you do
not wish to be bound by these Terms of Use, you may not access or use’ ” the
site, materials, or services].) Plaintiff was not advised that before she could
check in for her massage, she had to read the Terms and Conditions. (See
Applebaum v. Lyft, Inc. (S.D.N.Y. 2017) 263 F.Supp.3d 454, 469-470 [granting
petition to compel arbitration where customer assented to contract terms by
clicking “ ‘I accept’ ” after reviewing screen stating “ ‘Before you can proceed
you must read & accept the latest Terms of Service,’ ” and where “Terms of
Service were set out on the screen to be scrolled through”].)
As we have explained, in its context, the statement that plaintiff was
agreeing to terms of use appeared to refer to the terms that had already been
presented to her over the course of several screens, and clicking the check-box
appeared to be just an extra confirmation of her agreement before she signed
the General Consent document. Having reviewed the General Consent, as
instructed, plaintiff had no reason to look for any other agreement to review,
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and she was not on notice that clicking the check-box implicated any terms
and conditions beyond those she had just reviewed. Particularly not any
agreement with MEF, in view of the fact that the “General Consent” is clear
that the agreement is only between plaintiff and the San Rafael location. As
the Court of Appeal observed in Sellers, “ ‘ “consumers cannot be expected to
ferret out hyperlinks to terms and conditions to which they have no reason to
suspect they will be bound.” ’ ” (Sellers, supra, 73 Cal.App.5th at p. 476.)
“This is particularly true when the transaction is one in which the typical
consumer would not expect to enter into an ongoing contractual
relationship . . . . [A] consumer that does not expect to be bound by
contractual terms is less likely to be looking for them.” (Ibid.) Plaintiff here
had no reason to expect that checking in for her massage at the San Rafael
Massage Envy would involve her entering into any ongoing contractual
relationship of any sort with MEF, an entity that was a stranger to her. This
is not a case like B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th
931. There, the consumer had accessed an online platform to interact with
other players in a videogame, which he spent about 50 hours playing over the
course of about two years. (Id. at pp. 950-951.) Circumstances like that,
unlike the circumstances here, “ ‘involve a consumer signing up for an
ongoing account and thus, it is reasonable to expect that the typical consumer
in that type of transaction contemplates entering into a continuing, forward-
looking relationship’ governed by terms and conditions.” (Id. at p. 951,
quoting Sellers, supra, 73 Cal.App.5th at p. 471 and adding italics.)
In arguing that the arbitration clause in the Terms and Conditions is
enforceable, MEF relies on cases where courts applied California law and
enforced clickwrap agreements. These cases are not persuasive because the
contexts in which they arose are unlike the case before us. Plaintiff here was
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not downloading software from a website, unlike the customers in Net2Phone,
supra, 109 Cal.App.4th at p. 586.) She was not downloading an application to
her phone or computer, or seeking to register for a new online service or set
up a new account. (See Peter v. DoorDash, Inc. (N.D. Cal. 2020) 445
F.Supp.3d 580, 582, 587 [enforceable agreement to arbitrate formed when
consumers signed up for DoorDash accounts by entering information on a
sign-up screen and tapping a button above the statement “By tapping Sign
Up . . . , you agree to our Terms and Conditions and Privacy Statement”
containing hyperlink to Terms and Conditions]; Meyer v. Uber Technologies,
Inc. (2d Cir. 2017) 868 F.3d 66, 70-71, 80 [enforceable agreement to arbitrate
formed when consumer downloaded application, provided information
(including payment information) to register for a service and clicked button
marked “ ‘REGISTER’ ” displayed above text advising that by creating an
account consumer was agreeing to terms of service and privacy policy];
Bassett v. Electronic Arts, Inc. (E.D.N.Y. 2015) 93 F.Supp.3d 95, 101-102
[enforceable agreement to arbitrate formed when customer clicked button
indicating acceptance to Terms of Service and Privacy Policy “in order to
create an account and register for” an online service]; Swift v. Zynga Game
Network, Inc. (N.D. Cal. 2011) 805 F.Supp.2d 904, 910, 912 [enforceable
agreement to arbitrate formed when customer clicked “’ I Accept’ ” button,
indicating acceptance of hyperlinked terms of service agreement, in order to
log on to play an online game].) When she checked in for her massage,
plaintiff already had an account with the San Rafael location, as the initial
check-in screen confirmed, and she was not informed that she was signing up
for a new service with MEF or setting up an account with MEF.
Because we conclude there was no contract, and therefore no binding
agreement to arbitrate, between plaintiff and MEF, we need not reach the
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parties’ other arguments on appeal regarding unconscionability, the
arbitrability of plaintiff’s claims against MEF, and the forum in which
arbitrability should be decided.
DISPOSITION
The order denying Massage Envy’s motion to compel arbitration is
affirmed. Respondent shall recover her costs on appeal.
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_________________________
Miller. J.
WE CONCUR:
_________________________
Stewart, P.J.
_________________________
Richman, J.
A161688, Doe v. Massage Envy Franchising, LLC
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Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Marie S. Weiner
Sacks Ricketts & Case, Luanne Sacks, Michele D. Floyd; Greines, Martin,
Stein & Richland, Laurie J. Hepler, Jeffrey B. Gurrola, for Defendant and
Appellant
Law Offices of Valerie T. McGinty, Valerie T. McGinty; Thompsom Law
Offices, Robert W. Thompson, Kristen A. Vierhaus; Laffey, Bucci & Kent,
Brian T. Kent, Stewart Ryan, for Plaintiff and Respondent
A161688, Doe v. Massage Envy Franchising, LLC
18