Judge Fernand M. Olguin of the Central District of California denied a motion to compel arbitration, finding that the website’s terms were not sufficiently conspicuous and that the user had not clearly agreed to them.
The case involved a putative class action alleging violations of the California Invasion of Privacy Act (CIPA), stemming from the use of a homebuilder’s website chat feature. The defendant sought to compel arbitration based on an arbitration clause included in the website’s terms and conditions, which were accessible via a hyperlink on the site’s homepage and footer.
This case raises “a question of ever-increasing ubiquity in today’s e-commerce world: whether an internet user’s online activities bound her to certain terms and conditions.” Chabolla, 129 F.4th at 1151.
Under the Federal Arbitration Act (FAA), courts must determine whether a valid agreement to arbitrate exists and whether it covers the dispute at issue. For online agreements, courts apply traditional contract principles, requiring both notice of the terms and mutual assent. In the context of internet contracts, “browsewrap” agreements—where terms are available via hyperlink and users are deemed to accept them by using the site—are subject to heightened scrutiny.
“In the world of internet contracts, there are browsewrap, clickwrap, scrollwrap, and sign-in wrap agreements, each of which purport to bind users through different assent mechanisms.” Chabolla, 129 F.4th at 1154 (internal quotation marks omitted). Here, defendant concedes that this action involves a browsewrap agreement. (See Dkt. 12, Memo at 9) (“Lennar’s Terms constitute what federal courts have called a ‘browsewrap’ agreement … usually accessible through a hyperlink.”). “In a browsewrap, the user accepts a website’s terms of use merely by browsing the site, although those terms are not always immediately apparent on the screen.” Chabolla, 129 F.4th at 1154 (internal quotation marks omitted); see Berman, 30 F.4th at 856 (“At the other end of the spectrum are so-called ‘browsewrap’ agreements, in which a website offers terms that are disclosed only through a hyperlink and the user supposedly manifests assent to those terms simply by continuing to use the website.”). “Courts consistently decline to enforce browsewraps.” Chabolla, 129 F.4th at 1154; see Berman, 30 F.4th at 856 (“Courts are more reluctant to enforce browsewrap agreements because consumers are frequently left unaware that contractual terms were even offered, much less that continued use of the website will be deemed to manifest acceptance of those terms.”)…
“[T]here is no bright-line test for finding that a particular design element is adequate in every circumstance. We must instead consider how those design elements appear on the page.” Chabolla, 129 F.4th at 1156-57.
The court found that the website did not provide reasonably conspicuous notice of its terms and conditions. The “Terms & conditions” hyperlink appeared in white text on a black background, among other similar links, without any design elements (such as contrasting colors or underlining) to draw attention. The court emphasized that, absent a continuing relationship or transaction, users are not expected to search for fine print or hidden terms. As a result, the notice was deemed inadequate.
Even if the notice had been sufficient, the court held that the defendant failed to show that the plaintiff took any action—such as clicking a button or checking a box—to unambiguously manifest assent to the arbitration agreement. Mere use of the website, without explicit notice that such use constitutes acceptance, was not enough. The court noted that enforceability of browsewrap agreements requires clear evidence that users understood and agreed to be bound by the terms.
SILVIA GARCIA, individually & on behalf of all others similarly situated, Plaintiff, v. LENNAR CORPORATION d/b/a WWW.LENNAR.COM, Defendant., No. 23-10298 FMO (DFMX), 2025 WL 1544328 (C.D. Cal. Apr. 21, 2025).
