United States Court of Appeals,
Second Circuit.
Christopher SPECHT, John Gibson, Michael Fagan, Sean Kelly, Mark Gruber, and
Sherry Weindorf, individually and on behalf of all others similarly situated,
Plaintiffs-Appellees,
v.
NETSCAPE COMMUNICATIONS CORPORATION and America Online, Inc., Defendants-
Appellants.
Docket Nos. 01-7870, 01-7872, 01-7860.
Argued: March 14, 2002.
Decided: Oct. 01, 2002.
Internet users and website operator brought
putative class actions against computer software producer, alleging that
"plug-in" software program, created to facilitate Internet use and
made available on producer's website for free downloading, invaded plaintiffs'
privacy by clandestinely transmitting personal information to the software
provider when plaintiffs employed the plug-in program to browse the Internet.
Defendants moved to compel arbitration and to stay court proceedings. The
United States District Court for the Southern District
of New York, 150
F.Supp.2d 585, Alvin
K. Hellerstein, J., denied motion. Defendants
appealed, and appeals were consolidated. The Court of Appeals, Sotomayor, Circuit Judge, held that: (1) users did not assent to
terms of software license, including arbitration clause; (2) claims relating to
plug-in program were not subject to arbitration agreement contained in license
terms governing use of separate browser software; and (3) legal doctrine
requiring nonsignatories to arbitration agreement to arbitrate when they have
received direct benefit under contract containing arbitration agreement did not
apply to require website owner to arbitrate.
Affirmed.
West Headnotes
[1] Alternative Dispute Resolution 
213(5)
(Formerly 33k23.25 Arbitration)
District
court's denial of motion to compel arbitration is reviewed de novo.
[2] Alternative Dispute Resolution 213(5)
(Formerly
33k23.25 Arbitration)
Determination
of whether parties have contractually bound themselves to arbitrate a dispute,
a determination involving interpretation of state law, is legal conclusion
subject to de novo review; however, findings upon which that conclusion is
based are factual and thus may not be overturned unless clearly erroneous.
[3] Alternative Dispute Resolution 213(5)
(Formerly 33k23.25 Arbitration)
District
court's determination of scope of arbitration agreement is reviewed de novo.
[4] Alternative Dispute Resolution 213(5)
(Formerly 33k23.25 Arbitration)
Whether
party may be compelled to arbitrate as result of direct benefits that he or she
allegedly received under contract entered into by others is issue of arbitrability that is reviewed de novo.
[5] Alternative Dispute Resolution 199
(Formerly 33k23.13 Arbitration)
Court may not
compel arbitration until it has resolved question of very existence of contract
embodying the arbitration clause.
[6] Alternative Dispute Resolution 112
(Formerly 33k1.1 Arbitration)
Arbitration
is matter of contract and party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit.
[7] Alternative Dispute Resolution 200
(Formerly 33k23.14 Arbitration)
Unless
parties clearly provide otherwise, question whether agreement creates duty for parties to arbitrate particular
grievance is issue for judicial determination.
[8] Federal Courts 403
(Formerly 33k2.2 Arbitration)
In
deciding whether parties agreed to arbitrate certain matter, court should
generally apply state-law principles to issue of contract formation.
[9] Federal Courts 612.1
Appellant
could not argue for first time on appeal that district court erred in deciding
question of contract formation as a matter of law.
[10] Federal Courts 611
Appellate
court will not consider issue raised for first time on appeal.
[11] Federal
Courts 698.1
District
court had ample record to decide question of reasonable notice and objective
manifestation of assent as a matter of law, including affidavits and extensive
deposition testimony by each named plaintiff, numerous declarations by counsel
and witnesses, dozens of exhibits, oral argument supplemented by
computer
demonstration and additional briefs following oral argument.
[12] Contracts 15
Under
California law, in order to be a contract, transaction requires manifestation
of agreement between the parties.
[13] Contracts 15
Under
California law, mutual manifestation of assent, whether by written or spoken
word or by conduct, is touchstone of contract.
[14] Sales 1(1)
Sale of
tangible goods over the Internet is governed by Article 2 of Uniform Commercial
Code (UCC). U.C.C.
§ 2-101 et
seq.
[15] Contracts 22(1)
Under
California law, offeree, regardless of apparent manifestation of his consent,
is not bound by inconspicuous contractual provisions of which he is unaware,
contained in document whose contractual nature is not obvious.
[16] Alternative Dispute Resolution 134(3)
(Formerly 33k6.2 Arbitration)
Under
California law, principle of knowing consent applies with particular force to
provisions for arbitration.
[17] Alternative Dispute Resolution 141
(Formerly 33k6.2 Arbitration)
Under
California law, if party wishes to bind in writing another to agreement to
arbitrate future disputes, such purpose should be accomplished in way that
each party
to arrangement will fully and clearly comprehend that agreement to arbitrate
exists and binds parties thereto.
[18] Contracts 22(1)
California
contract law measures assent by objective standard that takes into account both
what offeree said, wrote, or did and transactional context in which offeree
verbalized or acted.
[19] Alternative Dispute Resolution 141
(Formerly 33k6.2 Arbitration)
Under
California law, Internet users did not agree to be bound by software's license
terms, which included arbitration clause, by acting upon invitation to download software free from producer's webpage,
even though notice of existence of license terms was on next scrollable screen;
reasonably prudent Internet user would not have known or learned of existence
of license terms before responding to invitation to download free software. West's
Ann.Cal.Civ.Code § 1589.
[20] Notice 6
"Inquiry
notice" is actual notice of circumstances sufficient to put prudent man
upon inquiry.
[21] Contracts 93(2)
Under
California law, party cannot avoid terms of contract on ground that he or she
failed to read it before signing.
[22] Contracts 22(1)
Under California law, when writing does
not appear to be a contract and terms are not called to attention of recipient,
no contract is formed with respect to the undisclosed term.
[23] Alternative Dispute Resolution 213(5)
(Formerly 33k23.25 Arbitration)
Scope of
arbitration agreement is legal issue subject to de novo review.
[24] Alternative Dispute Resolution 139
(Formerly 33k7.1 Arbitration)
Any doubts
concerning scope of arbitrable issues should be resolved in favor of
arbitration.
[25] Alternative Dispute Resolution 137
(Formerly 33k7.1 Arbitration)
Although Federal Arbitration Act (FAA)
does not require parties to arbitrate when they have not agreed to do so,
arbitration is indicated unless it can be said with positive assurance that
arbitration clause is not susceptible to interpretation that covers asserted
dispute. 9
U.S.C.A. § 1
et seq.
[26] Alternative Dispute Resolution 210
(Formerly 33k23.10 Arbitration)
Where
scope of arbitration agreement is broad, there arises presumption of
arbitrability.
[27] Alternative Dispute Resolution 137
(Formerly 33k7 Arbitration)
In
determining whether particular claim falls within scope of arbitration
agreement, Court focuses on factual allegations in complaint rather than legal
causes of action asserted; if those allegations "touch matters"
covered by agreement, claims must be arbitrated.
[28]
Alternative Dispute Resolution 143
(Formerly 33k7.5 Arbitration)
Internet
users' assent to license terms governing use of Internet browser software,
which included arbitration clause, did not require them to arbitrate their
claims regarding separate plug-in program offered by software producer to
enhance functioning of the browser program; underlying dispute involved matters
collateral to license agreement, allegations did not touch matters covered by
agreement, agreement governed disputes concerning browser programs only, not
disputes concerning plug-in programs, and license terms included merger clause.
[29] Evidence 397(2)
Merger or
integration clauses are recognized by California courts as means of excluding
prior or contemporaneous parol evidence from scope of contract.
[30] Alternative Dispute Resolution 141
Under
California law, theory that owner of website visited by users of plug-in
software which enhanced functioning of separate browser program benefited
whenever visitors downloaded certain files made available on the website was
too speculative and tenuous to require owner, a nonsignatory to software
license containing arbitration agreement, to arbitrate his claim that producer
of the software electronically spied on his website when such users downloaded
software files from his site that he provided for setting up an account with a
separate service.
*20 Roger
W. Yoerges, Wilmer Cutler & Pickering,
Washington, DC (Patrick
J. Carome, Joseph
R. Profaizer, Darrin
A. Hostetler, Wilmer Cutler & Pickering,
Washington, DC, on the brief; David
C. Goldberg, America Online, Inc., Dulles, VA, of
counsel), for Defendants-Appellants.
Joshua
N. Rubin, Abbey Gardy, LLP, New York, N.Y. (Jill
S. Abrams,
Courtney E. Lynch, Richard
B. Margolies, Abbey Gardy, LLP, New York, NY, on
the brief; James
V. Bashian, Law Offices of James V. Bashian, New
York, NY; George
G. Mahfood, Leesfield, Leighton, Rubio &
Mahfood, Miami, FL, of counsel), for Plaintiffs-Appellees.
Before McLAUGHLIN, LEVAL, and SOTOMAYOR, Circuit Judges.
SOTOMAYOR, Circuit Judge.
This is an appeal from a judgment of the
Southern District of New York denying a motion by defendants-appellants
Netscape Communications Corporation and its corporate parent, America Online,
Inc. (collectively, "defendants" or "Netscape"), to compel
arbitration and to stay court proceedings.
In order to resolve the central question of arbitrability presented
here, we must address issues of contract formation in cyberspace. Principally, we are asked to determine
whether plaintiffs-appellees ("plaintiffs"), by acting upon
defendants' invitation to download free software made available on defendants'
webpage, agreed to be bound by the software's license terms (which included the
arbitration clause at issue), even though plaintiffs could not have learned of
the existence of those terms unless, prior to executing the download, they had
scrolled down the webpage to a screen located below the download button. We agree with the district court that a
reasonably prudent Internet user in circumstances such as these would not have
known or learned of the existence of the license terms before responding to
defendants' invitation to download the free software, and that defendants
therefore did not provide reasonable notice of the license terms. In consequence, plaintiffs' bare act of
downloading the software did not
unambiguously manifest assent to the arbitration provision contained in the
license terms.
We also agree with the district court that
plaintiffs' claims relating to the software at issue--a "plug-in"
program entitled SmartDownload ("SmartDownload" or "the plug-in
program"), offered by Netscape to enhance the functioning of the separate
browser program called Netscape Communicator ("Communicator" or
"the browser program")--are not subject to an arbitration agreement
contained in the license terms governing the use of Communicator. Finally, we conclude that the district court
properly rejected defendants' argument that plaintiff website owner Christopher
Specht, though not a party to any Netscape license agreement, is nevertheless
required to arbitrate his claims concerning SmartDownload because he allegedly
benefited directly under SmartDownload's license agreement. Defendants' theory that Specht benefited whenever
visitors employing SmartDownload downloaded certain files made available on his
website is simply too tenuous and speculative to justify application of the
legal doctrine that requires a nonparty to an arbitration agreement to
arbitrate if he or she has received a direct benefit *21 under a
contract containing the arbitration agreement.
We therefore affirm the district court's
denial of defendants' motion to compel arbitration and to stay court
proceedings.
BACKGROUND
In three related putative class actions, [FN1] plaintiffs
alleged that, unknown to them, their use of SmartDownload transmitted to
defendants private information about plaintiffs' downloading of files from the
Internet, thereby effecting an electronic surveillance of their online
activities in violation of two federal statutes, the Electronic Communications
Privacy Act, 18
U.S.C. § § 2510 et seq., and the Computer Fraud and Abuse Act, 18
U.S.C. § 1030.
FN1. Although the
district court did not consolidate these three cases, it noted that its opinion
denying the motion to compel arbitration and to stay court proceedings
"appl[ied] equally to all three cases." Specht
v. Netscape Communications Corp.,
150 F.Supp.2d 585, 587 n. 1 (S.D.N.Y.2001). On August 10, 2001, this Court consolidated
the appeals.
Specifically, plaintiffs alleged that when
they first used Netscape's Communicator--a software program that permits
Internet browsing--the program created and stored on each of their computer
hard drives a small text file known as a "cookie" that functioned
"as a kind of electronic identification tag for future
communications" between their computers and Netscape. Plaintiffs further alleged that when they
installed SmartDownload--a separate software "plug-in" [FN2] that served to enhance Communicator's browsing capabilities--SmartDownload created and stored
on their computer hard drives another string of characters, known as a
"Key," which similarly functioned as an identification tag in future
communications with Netscape. According
to the complaints in this case, each time a computer user employed Communicator
to download a file from the Internet, SmartDownload "assume[d] from
Communicator the task of downloading" the file and transmitted to Netscape
the address of the file being downloaded together with the cookie created by
Communicator and the Key created by SmartDownload. These processes, plaintiffs claim,
constituted unlawful "eavesdropping" on users of Netscape's software
products as well as on Internet websites from which users employing
SmartDownload downloaded files.
FN2. Netscape's
website defines "plug-ins" as "software programs that extend the
capabilities of the Netscape Browser in a specific way--giving you, for
example, the ability to play audio samples or view video movies from within
your browser." (http://wp.netscape.com/plugins/) SmartDownload purportedly
made it easier for users of browser programs like Communicator to download
files from the Internet without losing their progress when they paused to
engage in some other task, or if their Internet connection was severed. See Specht,
150 F.Supp.2d at 587.
In
the time period relevant to this litigation, Netscape offered on its website
various software programs, including Communicator and SmartDownload, which
visitors to the site were invited to obtain free of charge. It is undisputed that five of the six named
plaintiffs--Michael Fagan, John Gibson, Mark Gruber, Sean Kelly, and Sherry
Weindorf--downloaded Communicator from the Netscape website. These plaintiffs acknowledge that when they
proceeded to initiate installation [FN3] of
Communicator, *22 they were automatically shown a scrollable text of
that program's license agreement and were not permitted to complete the
installation until they had clicked on a "Yes" button to indicate
that they accepted all the license terms. [FN4] If a user attempted to install Communicator
without clicking "Yes," the installation would be aborted. All five named user plaintiffs [FN5] expressly
agreed to Communicator's license terms by clicking "Yes." The
Communicator license agreement that these plaintiffs saw made no mention of
SmartDownload or other plug-in programs, and stated that "[t]hese terms
apply to Netscape Communicator and Netscape Navigator" [FN6] and that
"all disputes relating to this Agreement (excepting any dispute relating
to intellectual property rights)" are subject to "binding arbitration
in Santa Clara County, California."
FN3. There is a
difference between downloading and installing a software program. When a user downloads a program from the
Internet to his or her computer, the program
file is stored on the user's hard drive but typically is not operable until the
user installs or executes it, usually by double-clicking on the file and
causing the program to run.
FN4. This kind of
online software license agreement has come to be known as "clickwrap"
(by analogy to "shrinkwrap," used in the licensing of tangible forms
of software sold in packages) because it "presents the user with a message
on his or her computer screen, requiring that the user manifest his or her
assent to the terms of the license agreement by clicking on an icon. The product cannot be obtained or used
unless and until the icon is clicked."
Specht,
150 F.Supp.2d at 593-94 (footnote omitted). Just as breaking the shrinkwrap seal and
using the enclosed computer program after encountering notice of the existence
of governing license terms has been deemed by some courts to constitute assent
to those terms in the context of tangible software, see, e.g., ProCD,
Inc. v. Zeidenberg,
86 F.3d 1447, 1451 (7th Cir.1996), so clicking on
a webpage's clickwrap button after receiving notice of the existence of license
terms has been held by some courts to manifest an Internet user's assent to
terms governing the use of downloadable intangible software, see, e.g., Hotmail
Corp. v. Van$ Money Pie Inc.,
47 U.S.P.Q.2d 1020, 1025 (N.D.Cal.1998).
FN5. The term "user plaintiffs" here and elsewhere in
this opinion denotes those plaintiffs who are suing for harm they allegedly
incurred as computer users, in contrast to plaintiff Specht, who alleges that
he was harmed in his capacity as a website owner.
FN6. While Navigator
was Netscape's "stand-alone" Internet browser program during the
period in question, Communicator was a "software suite" that
comprised Navigator and other software products. All five named user plaintiffs stated in
affidavits that they had obtained upgraded versions of Communicator. Fagan, who, as noted below, allegedly did
not obtain the browser program in connection with downloading SmartDownload,
expressed some uncertainty during his deposition as to whether he had acquired
Communicator or Navigator. The identity
of Fagan's browser program is immaterial to this appeal, however, as
Communicator and Navigator shared the same license agreement.
Although Communicator could be obtained
independently of SmartDownload, all the named user plaintiffs, except Fagan,
downloaded and installed Communicator in connection with downloading
SmartDownload. [FN7] Each of these plaintiffs allegedly arrived at
a Netscape webpage [FN8] captioned "SmartDownload
Communicator" that urged them to "Download With Confidence Using
SmartDownload!" At or near the
bottom of the screen facing plaintiffs was the prompt "Start
Download" and a tinted button labeled "Download." By clicking on the button, plaintiffs
initiated the download of SmartDownload.
*23 Once that process was complete, SmartDownload, as its first
plug-in task, permitted plaintiffs to proceed with downloading and installing
Communicator, an operation that was accompanied by the clickwrap display of
Communicator's license terms described above.
FN7. Unlike the four
other user plaintiffs, Fagan chose the option of obtaining Netscape's browser
program without first downloading SmartDownload. As discussed below, Fagan allegedly obtained
SmartDownload from a separate "shareware" website unrelated to
Netscape.
FN8. For purposes of
this opinion, the term "webpage" or "page" is used to
designate a document that resides, usually with other webpages, on a single
Internet website and that contains information that is viewed on a computer
monitor by scrolling through the document.
To view a webpage in its entirety, a user typically must scroll through
multiple screens.
The signal difference between downloading
Communicator and downloading SmartDownload
was that no clickwrap presentation accompanied the latter operation. Instead, once plaintiffs Gibson, Gruber,
Kelly, and Weindorf had clicked on the "Download" button located at
or near the bottom of their screen, and the downloading of SmartDownload was
complete, these plaintiffs encountered no further information about the plug-in
program or the existence of license terms governing its use. [FN9] The sole reference to SmartDownload's license
terms on the "SmartDownload Communicator" webpage was located in text
that would have become visible to plaintiffs only if they had scrolled down to
the next screen.
FN9. Plaintiff Kelly,
a relatively sophisticated Internet user, testified that when he clicked to
download SmartDownload, he did not think that he was downloading a software
program at all, but rather that SmartDownload "was merely a piece of
download technology." He later
became aware that SmartDownload was residing as software on his hard drive when
he attempted to download electronic files from the Internet.
Had plaintiffs scrolled down instead of acting
on defendants' invitation to click on the "Download" button, they
would have encountered the following invitation: "Please review and agree to the terms of
the Netscape SmartDownload software license agreement before downloading
and using the software." Plaintiffs Gibson, Gruber, Kelly, and
Weindorf averred in their affidavits that they never saw this reference to the
SmartDownload license agreement when they clicked on the "Download"
button. They also testified during depositions
that they saw no reference to license terms when they clicked to download
SmartDownload, although under questioning by defendants' counsel, some
plaintiffs added that they could not "remember" or be
"sure" whether the screen shots of the SmartDownload page attached to
their affidavits reflected precisely what they had seen on their computer
screens when they downloaded SmartDownload. [FN10]
FN10. In the screen
shot of the SmartDownload webpage attached to Weindorf's affidavit, the
reference to license terms is partially visible, though almost illegible, at
the bottom of the screen. In the screen
shots attached to the affidavits of Gibson, Gruber, and Kelly, the reference to
license terms is not visible.
In sum, plaintiffs Gibson, Gruber, Kelly, and
Weindorf allege that the process of obtaining SmartDownload contrasted sharply
with that of obtaining Communicator.
Having selected SmartDownload, they were required neither to express
unambiguous assent to that program's license agreement nor even to view the
license terms or become aware of their existence before proceeding with the invited download of the free plug-in
program. Moreover, once these
plaintiffs had initiated the download, the existence of SmartDownload's license
terms was not mentioned while the software was running or at any later point in
plaintiffs' experience of the product.
Even for a user who, unlike plaintiffs, did
happen to scroll down past the download button, SmartDownload's license terms
would not have been immediately displayed in the manner of Communicator's
clickwrapped terms. Instead, if such a
user had seen the notice of SmartDownload's terms and then clicked on the
underlined invitation to review and agree to *24 the terms, a hypertext
link would have taken the user to a separate webpage entitled "License
& Support Agreements." The
first paragraph on this page read, in pertinent part:
The use of each Netscape software product is governed by a
license agreement. You must read and
agree to the license agreement terms BEFORE acquiring a product. Please click on the appropriate link below
to review the current license agreement for the product of interest to you
before acquisition. For products
available for download, you must read and agree to the license agreement terms
BEFORE you install the software. If you
do not agree to the license terms, do not download, install or use the
software.
Below this paragraph appeared a list of
license agreements, the first of which was "License Agreement for
Netscape Navigator and Netscape Communicator Product
Family (Netscape Navigator, Netscape Communicator and Netscape
SmartDownload)." If the user
clicked on that link, he or she would be taken to yet another webpage that
contained the full text of a license agreement that was identical in every
respect to the Communicator license agreement except that it stated that its
"terms apply to Netscape Communicator, Netscape Navigator, and Netscape
SmartDownload." The license
agreement granted the user a nonexclusive license to use and reproduce the
software, subject to certain terms:
BY CLICKING THE ACCEPTANCE BUTTON OR INSTALLING OR USING
NETSCAPE COMMUNICATOR, NETSCAPE NAVIGATOR, OR NETSCAPE SMARTDOWNLOAD SOFTWARE
(THE "PRODUCT"), THE INDIVIDUAL OR ENTITY LICENSING THE PRODUCT
("LICENSEE") IS CONSENTING TO BE BOUND BY AND IS BECOMING A PARTY TO
THIS AGREEMENT. IF LICENSEE DOES NOT
AGREE TO ALL OF THE TERMS OF THIS AGREEMENT, THE BUTTON INDICATING
NON-ACCEPTANCE MUST BE SELECTED, AND LICENSEE MUST NOT INSTALL OR USE THE
SOFTWARE.
Among the license terms was a provision
requiring virtually all disputes relating to the agreement to be submitted to
arbitration:
Unless otherwise agreed in writing, all disputes relating
to this Agreement (excepting any dispute relating to intellectual property
rights) shall be subject to final and binding arbitration in Santa Clara
County, California, under the auspices of JAMS/EndDispute, with the losing
party paying all costs of arbitration.
Unlike the four named user plaintiffs who
downloaded SmartDownload from the Netscape website, the fifth named plaintiff,
Michael Fagan, claims to have downloaded the plug-in program from a
"shareware" website operated by ZDNet, an entity unrelated to Netscape. Shareware sites are websites, maintained by
companies or individuals, that contain libraries of free, publicly available
software. The pages that a user would
have seen while downloading SmartDownload from ZDNet differed from those that
he or she would have encountered while downloading SmartDownload from the
Netscape website. Notably, instead of any kind of notice of the SmartDownload
license agreement, the ZDNet pages offered only a hypertext link to "more
information" about SmartDownload, which, if clicked on, took the user to a
Netscape webpage that, in turn, contained a link to the license agreement. Thus, a visitor to the ZDNet website could
have obtained SmartDownload, as Fagan avers he did, without ever seeing a reference
to that program's license terms, even if he or *25 she had scrolled
through all of ZDNet's webpages.
The sixth named plaintiff, Christopher Specht,
never obtained or used SmartDownload, but instead operated a website from which
visitors could download certain electronic files that permitted them to create
an account with an internet service provider called WhyWeb. Specht alleges that
every time a user who had previously installed SmartDownload visited his
website and downloaded WhyWeb-related files,
defendants intercepted this information. Defendants allege that Specht would
receive a representative's commission from WhyWeb every time a user who
obtained a WhyWeb file from his website subsequently subscribed to the WhyWeb
service. Thus, argue defendants,
because the "Netscape license agreement ... conferred on each user the
right to download and use both Communicator and SmartDownload software,"
Specht received a benefit under that license agreement in that SmartDownload
"assisted in obtaining the WhyWeb file and increased the likelihood of
success in the download process."
This benefit, defendants claim, was direct enough to require Specht to
arbitrate his claims pursuant to Netscape's license terms. Specht, however,
maintains that he never received any commissions based on the WhyWeb files
available on his website.
II. Proceedings Below
In the district court, defendants moved to
compel arbitration and to stay court proceedings pursuant to the Federal
Arbitration Act ("FAA"), 9
U.S.C. § 4,
arguing that the disputes reflected in the complaints, like any other dispute
relating to the SmartDownload license agreement, are subject to the arbitration
clause contained in that agreement.
Finding that Netscape's webpage, unlike typical examples of clickwrap,
neither adequately alerted users to the existence of SmartDownload's license
terms nor required users unambiguously to manifest assent to those terms as a
condition of downloading the product, the
court held that the user plaintiffs had not entered into the SmartDownload
license agreement. Specht,
150 F.Supp.2d at 595-96.
The district court also ruled that the
separate license agreement governing use of Communicator, even though the user
plaintiffs had assented to its terms, involved an independent transaction that
made no mention of SmartDownload and so did not bind plaintiffs to arbitrate
their claims relating to SmartDownload. Id.
at 596.
The court further concluded that Fagan could not be bound by the
SmartDownload license agreement, because the shareware site from which he
allegedly obtained the plug-in program provided even less notice of SmartDownload's
license terms than did Netscape's page. Id.
at 596-97. Finally, the court ruled that Specht
was not bound by the SmartDownload arbitration agreement as a noncontracting
beneficiary, because he (1) had no preexisting relationship with any of the
parties, (2) was not an agent of any party, and (3) received no direct benefit
from users' downloading of files from his site, even if those users did employ
SmartDownload to enhance their downloading.
Id.
at 597-98.
Defendants took this timely appeal pursuant to
9
U.S.C. § 16,
and the district court stayed all proceedings in the underlying cases pending
resolution of the appeal. This Court
has jurisdiction pursuant to § 16(a)(1)(B), as
this is an appeal from an order denying defendants' motion to compel
arbitration under the FAA. Mediterranean
Shipping Co. S.A. Geneva v. POL-Atlantic,
229 F.3d 397, 402 (2d Cir.2000).
*26 DISCUSSION
I. Standard of Review and Applicable Law
[1][2] A district court's denial of a motion to compel
arbitration is reviewed de novo. Collins
& Aikman Prods. Co. v. Bldg. Sys., Inc.,
58 F.3d 16, 19 (2d Cir.1995). The determination of whether parties have
contractually bound themselves to arbitrate a dispute--a determination involving
interpretation of state law--is a legal conclusion also subject to de novo
review. Chelsea
Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., Ltd.,
189 F.3d 289, 295 (2d Cir.1999); see also Shann
v. Dunk,
84 F.3d 73, 77 (2d Cir.1996) ("The central
issue--whether, based on the factual findings, a binding contract existed--is a
question of law that we review de novo."). The findings upon which that conclusion is
based, however, are factual and thus may not be overturned unless clearly
erroneous. Chelsea
Square Textiles,
189 F.3d at 295.
[3][4] If a court finds that the parties agreed to arbitrate, it
should then consider whether the dispute falls within the scope of the
arbitration agreement. Genesco,
Inc. v. T. Kakiuchi & Co., Ltd.,
815 F.2d 840, 844 (2d Cir.1987). A district court's determination of the
scope of an arbitration agreement is reviewed de novo. Oldroyd
v. Elmira Sav. Bank, FSB,
134 F.3d 72, 76 (2d Cir.1998). In addition, whether a party may be compelled to arbitrate as a result of direct
benefits that he or she allegedly received under a contract entered into by
others is an issue of arbitrability that is reviewed de novo. Cf. Smith/Enron
Cogeneration Ltd. P'ship, Inc. v. Smith Cogeneration Int'l, Inc.,
198 F.3d 88, 95 (2d Cir.1999) ("[W]hether an
entity is a party to the arbitration agreement ... is included within the
broader issue of whether the parties agreed to arbitrate.").
[5][6][7] The FAA provides that a "written provision in any ...
contract evidencing a transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction ... shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract." [FN11] 9
U.S.C. § 2.
It is well settled that a court may not compel arbitration until it has
resolved "the question of the very existence" of the contract
embodying the arbitration clause. Interocean
Shipping Co. v. Nat'l Shipping & Trading Corp.,
462 F.2d 673, 676 (2d Cir.1972). "[A]rbitration is a matter of contract
and a party cannot be required to submit to arbitration any dispute which he
has not agreed so to submit." AT
& T
Techs., Inc. v. Communications Workers of Am.,
475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quotation marks omitted). Unless the parties clearly
provide otherwise, "the question of arbitrability-- whether *27
a[n] ... agreement creates a duty for the parties to arbitrate the particular
grievance--is undeniably an issue for judicial determination." Id.
at 649, 106 S.Ct. 1415.
FN11. The parties do
not dispute, nor could they, that the software license agreement at issue
"involv[ed] commerce" within the meaning of 9
U.S.C. § 2,
see Allied-Bruce
Terminix Cos., Inc. v. Dobson,
513 U.S. 265, 273-74, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (construing the broad phrase "involving
commerce" to be the functional equivalent of "affecting
commerce"), or that the agreement is a "written provision"
despite being provided to users in a downloadable electronic form. The latter point has been settled by the
Electronic Signatures in Global and National Commerce Act ("E-Sign
Act"), Pub.L.
No. 106-229, 114 Stat. 464 (2000) (codified at 15
U.S.C. § § 7001 et seq.), which provides that "a signature,
contract, or other record relating to such transaction may not be denied legal
effect, validity, or enforceability solely because it is in electronic
form." Id.
§ 7001(a)(1); see also Cal.
Civ.Code § 1633.7(b) ("A contract may not be denied legal effect or
enforceability solely because an electronic record was used in its
formation.").
[8] The district court properly concluded that in deciding
whether parties agreed to arbitrate a certain matter, a court should generally
apply state-law principles to the issue of contract formation. Mehler
v. Terminix Int'l Co.,
205 F.3d 44, 48 (2d Cir.2000); see also Perry
v. Thomas,
482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) ("[S]tate law, whether of legislative or judicial
origin, is applicable [to the determination of whether the parties agreed to
arbitrate] if that law arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally."). Therefore,
state law governs the question of whether the parties in the present case
entered into an agreement to arbitrate disputes relating to the SmartDownload
license agreement. The district court
further held that California law governs the question of contract formation
here; the parties do not appeal that
determination.
II. Whether This Court Should Remand for a
Trial on Contract Formation
Defendants argue on appeal that the district
court erred in deciding the question of contract formation as a matter of
law. A central issue in dispute,
according to defendants, is whether the user plaintiffs actually saw the notice
of SmartDownload's license terms when they downloaded the plug-in program. Although plaintiffs in their affidavits and
depositions generally swore that they never saw the notice of terms on
Netscape's webpage, defendants point to deposition testimony in which some
plaintiffs, under repeated questioning by defendants' counsel, responded that
they could not "remember" or be entirely "sure" whether the
link to SmartDownload's license terms was visible on their computer screens. Defendants argue that on some computers, depending on the configuration of the monitor
and browser, SmartDownload's license link "appears on the first screen,
without any need for the user to scroll at all." Thus, according to defendants, "a trial
on the factual issues that Defendants raised about each and every Plaintiffs' [sic
] downloading experience" is required on remand to remedy the district
court's "error" in denying defendants' motion as a matter of law.
[9][10] Section
4 of the FAA provides, in relevant part, that
"[i]f the making of the arbitration agreement ... be in issue, the court
shall proceed summarily to the trial thereof." 9
U.S.C. § 4.
We conclude for two reasons, however, that defendants are not entitled to a
remand for a full trial. First, during
oral argument in the district court on the arbitrability of the five user
plaintiffs' claims, defendants' counsel repeatedly insisted that the district
court could decide "as a matter of law based on the uncontroverted facts
in this case" whether "a reasonably prudent person could or should
have known of the [license] terms by which acceptance would be signified." "I don't want you to try the
facts," defendants' counsel told the court. "I think that the evidence in this case
upon which this court can make a determination [of whether a contract existed]
as a matter of law is uncontroverted." [FN12] Accordingly, *28 the district court
decided the issue of reasonable notice and objective manifestation of assent as
a matter of law. "[I]t is a
well-established general rule that an appellate court will not consider an issue raised for the first time on
appeal." Greene
v. United States,
13 F.3d 577, 586 (2d Cir.1994); see also Gurary
v. Winehouse,
190 F.3d 37, 44 (2d Cir.1999) ("Having
failed to make the present argument to the district court, plaintiff will not
be heard to advance it here.").
Nor would it cause injustice in this case for us to decline to accept
defendants' invitation to consider an issue that defendants did not advance
below.
FN12. Later, when
Judge Hellerstein suggested that it was "an issue of fact ... to be
tried" whether plaintiff Fagan downloaded SmartDownload from Netscape's
webpage or from the ZDNet shareware site, defendants' counsel stated: "I am not sure there is an issue of
fact. It is sort of a summary judgment
kind of standard." Still later,
counsel remarked: "I think we
established that there really is no genuine issue that Mr. Fagan got his smart
download [sic ] [by visiting the Netscape webpage from which he] fairly
had notice that there was a license agreement." Defendants' position that there was "no
genuine issue" regarding reasonable notice of the existence of the license
terms is consistent with this Circuit's standard for determining whether a
trial is required on the issue of the making of an arbitration agreement. See Doctor's
Assocs., Inc. v. Distajo,
107 F.3d 126, 129-30 (2d Cir.1997) ("As when
opposing a motion for summary judgment under Fed.R.Civ.P.
56, the party requesting a jury trial must submit evidentiary facts showing
that there is a dispute of fact to be tried." (quotation marks
omitted)); Doctor's
Assocs., Inc. v. Stuart,
85 F.3d 975, 983-84 (2d Cir.1996) ("To
warrant a trial under 9
U.S.C. § 4,
the issue raised must be 'genuine.' " (quotation marks omitted)).
[11] Second, after conducting weeks of discovery on defendants'
motion to compel arbitration, the parties placed before the district court an
ample record consisting of affidavits and extensive deposition testimony by
each named plaintiff; numerous declarations
by counsel and witnesses for the parties;
dozens of exhibits, including computer screen shots and other visual
evidence concerning the user plaintiffs' experience of the Netscape webpage;
oral argument supplemented by a computer demonstration; and additional briefs following oral argument. This well-developed record contrasts sharply
with the meager records that on occasion have caused this Court to remand for
trial on the issue of contract formation pursuant to 9
U.S.C. § 4.
See, e.g., Interbras
Cayman Co. v. Orient Victory Shipping Co., S.A.,
663 F.2d 4, 5 (2d Cir.1981) (record consisted of
affidavits and other papers); Interocean
Shipping,
462 F.2d at 676 (record consisted of pleadings,
affidavits, and documentary attachments).
We are satisfied that the unusually full record before the district
court in this case constituted "a hearing where evidence is received."
Interocean
Shipping,
462 F.2d at 677.
Moreover, upon the record assembled, a fact-finder could not reasonably
find that defendants prevailed in showing that any of the user plaintiffs had
entered into an agreement on defendants' license terms.
In sum, we conclude that the district court
properly decided the question of reasonable notice and objective manifestation
of assent as a matter of law on the record before it, and we decline
defendants' request to remand for a full trial on that question.
III. Whether the User Plaintiffs Had
Reasonable Notice of and Manifested Assent to the SmartDownload License
Agreement
[12][13][14][15] Whether governed by the common law or by Article 2 of the Uniform Commercial Code
("UCC"), a transaction, in order to be a contract, requires a
manifestation of agreement between the parties.
See Windsor
Mills, Inc. v. Collins & Aikman Corp.,
25 Cal.App.3d 987, 991, 101 Cal.Rptr. 347, 350 (1972) ("[C]onsent to, or acceptance of, the arbitration
provision [is] necessary to create an agreement to arbitrate."); see also Cal.
Com.Code § 2204(1) ("A contract for sale of goods may be made in any
manner sufficient to show agreement, including conduct by both parties which
recognizes the existence of such *29 a contract."). [FN13] Mutual
manifestation of assent, whether by written or spoken word or by conduct, is the
touchstone of contract. Binder
v. Aetna Life Ins. Co.,
75 Cal.App.4th 832,
848, 89 Cal.Rptr.2d 540, 551 (1999); cf.
Restatement
(Second) of Contracts § 19(2) (1981) ("The conduct of a party is not effective as a
manifestation of his assent unless he intends to engage in the conduct and
knows or has reason to know that the other party may infer from his conduct
that he assents."). Although an
onlooker observing the disputed transactions in this case would have seen each
of the user plaintiffs click on the SmartDownload "Download" button, see
Cedars
Sinai Med. Ctr. v. Mid-West Nat'l Life Ins. Co.,
118 F.Supp.2d 1002, 1008 (C.D.Cal.2000) ("In
California, a party's intent to contract is judged objectively, by the party's
outward manifestation of consent."), a consumer's clicking on a download
button does not communicate assent to contractual terms if the offer did not
make clear to the consumer that clicking on the download button would signify
assent*30 to those terms, see Windsor
Mills,
25 Cal.App.3d at 992, 101 Cal.Rptr. at 351
("[W]hen the offeree does not know that a proposal has been made to him
this objective standard does not apply."). California's common law is clear that
"an offeree, regardless of apparent manifestation of his consent, is not
bound by inconspicuous contractual provisions of which he is unaware, contained
in a document whose contractual nature is not obvious." Id.;
see also Marin
Storage & Trucking, Inc. v. Benco Contracting & Eng'g, Inc.,
89 Cal.App.4th 1042, 1049, 107 Cal.Rptr.2d 645, 651 (2001) (same).
FN13. The district court concluded that the SmartDownload
transactions here should be governed by "California law as it relates to
the sale of goods, including the Uniform Commercial Code in effect in
California." Specht,
150 F.Supp.2d at 591. It is not obvious, however, that UCC Article
2 ("sales of goods") applies to the licensing of software that is
downloadable from the Internet. Cf. Advent
Sys. Ltd. v. Unisys Corp.,
925 F.2d 670, 675 (3d Cir.1991) ("The
increasing frequency of computer products as subjects of commercial litigation
has led to controversy over whether software is a 'good' or intellectual
property. The [UCC] does not specifically mention software."); Lorin Brennan, Why Article 2 Cannot Apply
to Software Transactions, PLI Patents, Copyrights, Trademarks, &
Literary Property Course Handbook Series (Feb.- Mar.2001) (demonstrating the
trend in case law away from application of UCC provisions to software sales and
licensing and toward application of intellectual property principles). There is no doubt that a sale of tangible
goods over the Internet is governed by Article 2 of the UCC. See, e.g., Butler
v. Beer Across Am.,
83 F.Supp.2d 1261, 1263-64 & n. 6 (N.D.Ala.2000) (applying Article 2 to an Internet sale of bottles of beer). Some courts have also applied Article 2,
occasionally with misgivings, to sales of off-the-shelf software in tangible,
packaged formats. See, e.g., ProCD,
86 F.3d at 1450 ("[W]e treat the [database] licenses as ordinary contracts accompanying the
sale of products, and therefore as governed by the common law of contracts and
the Uniform Commercial Code. Whether there are legal differences between
'contracts' and 'licenses' (which may matter under the copyright doctrine of
first sale) is a subject for another day."); I.Lan
Sys., Inc. v. Nextpoint Networks, Inc.,
183 F.Supp.2d 328, 332 (D.Mass.2002) (stating, in
the context of a dispute between business parties, that "Article 2
technically does not, and certainly will not in the future, govern software
licenses, but for the time being, the Court will assume that it does").
Downloadable software, however, is scarcely a
"tangible" good, and, in part because software may be obtained,
copied, or transferred effortlessly at the stroke of a computer key, licensing
of such Internet products has assumed a vast importance in recent years. Recognizing that "a body of law based
on images of the sale of manufactured goods ill fits licenses and other
transactions in computer information," the National Conference of
Commissioners on Uniform State Laws has promulgated the Uniform Computer Information
Transactions Act ("UCITA"), a code resembling UCC Article 2 in many
respects but drafted to reflect emergent practices in the sale and licensing of
computer information. UCITA, prefatory
note (rev. ed. Aug.23, 2001) (available at www.ucitaonline.com/ucita.html). UCITA-- originally intended as a new Article
2B to supplement Articles 2 and 2A of the
UCC but later proposed as an independent code--has been adopted by two states,
Maryland and Virginia. See Md.Code
Ann. Com. Law § § 22-101 et seq.; Va.Code
Ann. § § 59.1-501.1 et seq.
We need not decide today whether UCC Article 2 applies to
Internet transactions in downloadable products. The district court's analysis and the
parties' arguments on appeal show that, for present purposes, there is no
essential difference between UCC Article 2 and the common law of
contracts. We therefore apply the
common law, with exceptions as noted.
[16][17][18] Arbitration agreements are no exception to the requirement
of manifestation of assent. "This
principle of knowing consent applies with particular force to provisions for
arbitration." Windsor
Mills,
101 Cal.Rptr. at 351. Clarity and conspicuousness of arbitration
terms are important in securing informed assent. "If a party wishes to bind in writing
another to an agreement to arbitrate future disputes, such purpose should be
accomplished in a way that each party to the arrangement will fully and clearly
comprehend that the agreement to arbitrate exists and binds the parties
thereto." Commercial
Factors Corp. v. Kurtzman Bros.,
131 Cal.App.2d 133, 134-35, 280 P.2d 146, 147-48 (1955) (internal quotation marks omitted). Thus, California contract law measures
assent by an objective standard that takes into account both what the offeree
said, wrote, or did and the transactional
context in which the offeree verbalized or acted.
A. The Reasonably Prudent Offeree of
Downloadable Software
[19][20][21][22] Defendants argue that plaintiffs must be held to a
standard of reasonable prudence and that, because notice of the existence of
SmartDownload license terms was on the next scrollable screen, plaintiffs were
on "inquiry notice" of those terms. [FN14] We disagree with
the proposition that a reasonably prudent offeree in plaintiffs' position would
necessarily have known or learned of the existence of the SmartDownload license
agreement prior to acting, so that plaintiffs may be held to have assented to
that agreement with constructive notice of its terms. See Cal.
Civ.Code § 1589 ("A voluntary acceptance of the benefit of a
transaction is equivalent to a consent to all the obligations arising from it,
so far as the facts are known, or ought to be known, to the person accepting."). It is true that "[a] party cannot avoid
the terms of a contract on the ground that he or she failed to read it before
signing." Marin
Storage & Trucking,
89 Cal.App.4th at 1049, 107 Cal.Rptr.2d at 651. But courts are quick to add: "An exception to this general rule
exists when the writing does not appear to be a contract and the terms are not
called to the attention of the recipient.
In such a case, no contract is formed with respect to the undisclosed
term." Id.; cf. Cory
v. Golden State Bank,
95 Cal.App.3d 360, 364, 157 Cal.Rptr. 538, 541 (1979) ("[T]he provision in question is effectively hidden
from the view of money order purchasers
until after the transactions are completed.... Under these circumstances, it
must be concluded that the Bank's money order purchasers are not chargeable
with either actual or constructive notice of the service charge provision, and
therefore cannot be deemed to have consented to the provision as part of their
transaction with the Bank.").
FN14. "Inquiry
notice" is "actual notice of circumstances sufficient to put a
prudent man upon inquiry." Cal.
State Auto. Ass'n Inter-Ins. Bureau v. Barrett Garages, Inc.,
257 Cal.App.2d 71, 64 Cal.Rptr. 699, 703 (Cal.Ct.App.1967) (internal quotation marks omitted).
*31 Most of the cases cited by
defendants in support of their inquiry-notice argument are drawn from the world
of paper contracting. See, e.g., Taussig
v. Bode & Haslett,
134 Cal. 260, 66 P. 259 (1901) (where party had
opportunity to read leakage disclaimer printed on warehouse receipt, he had
duty to do so); In
re First Capital Life Ins. Co.,
34 Cal.App.4th 1283, 1288, 40 Cal.Rptr.2d 816, 820 (1995) (purchase of insurance policy after opportunity to read
and understand policy terms creates binding agreement); King
v. Larsen Realty, Inc.,
121 Cal.App.3d 349, 356, 175 Cal.Rptr. 226, 231 (1981) (where realtors' board manual specifying that party was
required to arbitrate was "readily available," party was "on
notice" that he was agreeing to
mandatory arbitration); Cal.
State Auto. Ass'n Inter-Ins. Bureau v. Barrett Garages, Inc.,
257 Cal.App.2d 71, 76, 64 Cal.Rptr. 699, 703 (1967)
(recipient of airport parking claim check was bound by terms printed on claim
check, because a "ordinarily prudent" person would have been alerted
to the terms); Larrus
v. First Nat'l Bank,
122 Cal.App.2d 884, 888, 266 P.2d 143, 147 (1954)
("clearly printed" statement on bank card stating that depositor
agreed to bank's regulations provided sufficient notice to create agreement,
where party had opportunity to view statement and to ask for full text of
regulations, but did not do so); see
also Hux
v. Butler,
339 F.2d 696, 700 (6th Cir.1964) (constructive
notice found where "slightest inquiry" would have disclosed relevant
facts to offeree); Walker
v. Carnival Cruise Lines,
63 F.Supp.2d 1083, 1089 (N.D.Cal.1999) (under
California and federal law, "conspicuous notice" directing the
attention of parties to existence of contract terms renders terms binding)
(quotation marks omitted); Shacket
v. Roger Smith Aircraft Sales, Inc.,
651 F.Supp. 675, 691 (N.D.Ill.1986) (constructive
notice found where "minimal investigation" would have revealed facts
to offeree).
As the foregoing cases suggest, receipt 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.
"Every person who has actual notice of circumstances sufficient to put a prudent man
upon inquiry as to a particular fact, has constructive notice of the fact
itself in all cases in which, by prosecuting such inquiry, he might have
learned such fact." Cal.
Civ.Code § 19. These principles apply equally
to the emergent world of online product delivery, pop-up screens, hyperlinked
pages, clickwrap licensing, scrollable documents, and urgent admonitions to
"Download Now!". What plaintiffs saw when they were being invited by
defendants to download this fast, free plug-in called SmartDownload was a
screen containing praise for the product and, at the very bottom of the screen,
a "Download" button.
Defendants argue that under the principles set forth in the cases cited
above, a "fair and prudent person using ordinary care" would have
been on inquiry notice of SmartDownload's license terms. Shacket,
651 F.Supp. at 690.
We are not persuaded that a reasonably prudent
offeree in these circumstances would have known of the existence of license
terms. Plaintiffs were responding to an
offer that did not carry an immediately visible notice of the existence of
license terms or require unambiguous manifestation of assent to those
terms. Thus, plaintiffs' "apparent
manifestation of ... consent" was to terms "contained in a document
whose contractual nature [was] not obvious." Windsor
Mills,
25 Cal.App.3d at 992, 101 Cal.Rptr. at 351. Moreover, the fact that, given the position
of the scroll bar on their computer screens, plaintiffs *32 may have
been aware that an unexplored portion of the Netscape
webpage remained below the download button does not mean that they reasonably
should have concluded that this portion contained a notice of license
terms. In their deposition testimony,
plaintiffs variously stated that they used the scroll bar "[o]nly if there
is something that I feel I need to see that is on--that is off the page,"
or that the elevated position of the scroll bar suggested the presence of
"mere[ ] formalities, standard lower banner links" or "that the
page is bigger than what I can see."
Plaintiffs testified, and defendants did not refute, that plaintiffs
were in fact unaware that defendants intended to attach license terms to the
use of SmartDownload.
We conclude 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. [FN15] The SmartDownload
webpage screen was "printed in such a manner that it tended to conceal the
fact that it was an express acceptance of [Netscape's] rules and
regulations." Larrus,
266 P.2d at 147.
Internet users may have, as defendants put it, "as much time as
they need[ ]" to scroll through multiple screens on a webpage, but there
is no reason to assume that viewers will scroll down to subsequent screens
simply because screens are there. 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. In the next two
sections, we discuss case law and other legal authorities that have addressed
the circumstances of computer sales, software licensing, and online
transacting. Those authorities tend
strongly to support our conclusion that plaintiffs did not manifest assent to
SmartDownload's license terms.
FN15. We do not
address the district court's alternative holding that notice was further
vitiated by the fact that the reference to SmartDownload's license terms, even
if scrolled to, was couched in precatory terms ("a mild request")
rather than mandatory ones. Specht,
150 F.Supp.2d at 596.
B. Shrinkwrap Licensing and Related Practices
Defendants cite certain well-known cases
involving shrinkwrap licensing and related commercial practices in support of
their contention that plaintiffs became bound by the SmartDownload license
terms by virtue of inquiry notice. For example, in Hill
v. Gateway 2000, Inc.,
105 F.3d 1147 (7th Cir.1997), the Seventh Circuit
held that where a purchaser had ordered a computer over the telephone, received
the order in a shipped box containing the computer along with printed contract
terms, and did not return the computer within the thirty days required by the terms, the purchaser was
bound by the contract. Id.
at 1148-49.
In ProCD, Inc. v. Zeidenberg, the same court held that where an
individual purchased software in a box containing license terms which were
displayed on the computer screen every time the user executed the software
program, the user had sufficient opportunity to review the terms and to return
the software, and so was contractually bound after retaining the product. ProCD,
86 F.3d at 1452;
cf. Moore
v. Microsoft Corp.,
293 A.D.2d 587, 587, 741 N.Y.S.2d 91, 92 (2d Dep't 2002) (software user was bound by license agreement where terms
were prominently displayed on computer screen before software could *33
be installed and where user was required to indicate assent by clicking "I
agree"); Brower
v. Gateway 2000, Inc.,
246 A.D.2d 246, 251, 676 N.Y.S.2d 569, 572 (1st Dep't 1998) (buyer assented to arbitration clause shipped inside box
with computer and software by retaining items beyond date specified by license
terms); M.A.
Mortenson Co. v. Timberline Software Corp.,
93 Wash.App. 819, 970 P.2d 803, 809 (1999) (buyer
manifested assent to software license terms by installing and using software), aff'd,
140
Wash.2d 568, 998 P.2d 305 (2000); see also I.Lan
Sys.,
183 F.Supp.2d at 338 (business entity
"explicitly accepted the clickwrap license agreement [contained in
purchased software] when it clicked on the box stating 'I agree' ").
These cases do not help defendants. To the extent that they hold that the purchaser of a computer or tangible software is
contractually bound after failing to object to printed license terms provided
with the product, Hill and Brower do not differ markedly from the
cases involving traditional paper contracting discussed in the previous
section. Insofar as the purchaser in ProCD
was confronted with conspicuous, mandatory license terms every time he ran the
software on his computer, that case actually undermines defendants' contention
that downloading in the absence of conspicuous terms is an act that binds
plaintiffs to those terms. In Mortenson,
the full text of license terms was printed on each sealed diskette envelope
inside the software box, printed again on the inside cover of the user manual,
and notice of the terms appeared on the computer screen every time the
purchaser executed the program. Mortenson,
970 P.2d at 806.
In sum, the foregoing cases are clearly distinguishable from the facts
of the present action.
C. Online Transactions
Cases in which courts have found contracts
arising from Internet use do not assist defendants, because in those
circumstances there was much clearer notice than in the present case that a
user's act would manifest assent to contract terms. [FN16] See, e.g., Hotmail
Corp. v. Van$ Money Pie Inc.,
47 U.S.P.Q.2d 1020, 1025 (N.D.Cal.1998) (granting
preliminary injunction based in part on breach of "Terms of Service"
agreement, to which defendants had assented);
America
Online, Inc. v. Booker,
781 So.2d 423, 425 (Fla.Dist.Ct.App.2001) (upholding forum selection clause in "freely
negotiated agreement" contained in online terms of service); Caspi
v. Microsoft Network, L.L.C.,
323 N.J.Super. 118, 732 A.2d 528, 530, 532-33 (N.J.Super.Ct.App.Div.1999) (upholding forum selection clause where subscribers to
online software were required to review license terms in scrollable window and
to click "I Agree" or "I Don't Agree"); Barnett
v. Network Solutions, Inc.,
38 S.W.3d 200, 203-04 (Tex.App.2001) (upholding
forum selection clause in online contract for registering Internet domain names
that required users to scroll through terms before accepting or rejecting
them); cf. Pollstar
v. Gigmania, Ltd.,
170 F.Supp.2d 974, 981-82 (E.D.Cal.2000)
(expressing *34 concern that notice of license terms had appeared in
small, gray text on a gray background on a linked webpage, but concluding that
it was too early in the case to order dismissal). [FN17]
FN16. Defendants
place great importance on Register.com,
Inc. v. Verio, Inc.,
126 F.Supp.2d 238 (S.D.N.Y.2000), which held that
a user of the Internet domain-name database, Register.com, had "manifested
its assent to be bound" by the database's terms of use when it
electronically submitted queries to the database. Id.
at 248.
But Verio is not helpful to defendants. There, the plaintiff's terms of use of its
information were well known to the defendant, which took the information daily with full awareness that it was using the
information in a manner prohibited by the terms of the plaintiff's offer. The case is not closely analogous to ours.
FN17. Although the
parties here do not refer to it, California's consumer fraud statute, Cal.
Bus. & Prof.Code § 17538, is one of the few state statutes to regulate online
transactions in goods or services. The
statute provides that in disclosing information regarding return and refund
policies and other vital consumer information, online vendors must legibly
display the information either:
(i) [on] the first screen displayed when the vendor's
electronic site is accessed, (ii) on the screen on which goods or services are
first offered, (iii) on the screen on which a buyer may place the order for
goods or services, (iv) on the screen on which the buyer may enter payment
information, such as a credit card account number, or (v) for nonbrowser-based
technologies, in a manner that gives the user a reasonable opportunity to
review that information.
Id.
§ 17538(d)(2)(A). The statute's
clear purpose is to ensure that consumers engaging in online transactions have
relevant information before they can be bound.
Although consumer fraud as such is not alleged in the present action,
and § 17538 protects
only California residents, we note that the
statute is consistent with the principle of conspicuous notice of the existence
of contract terms that is also found in California's common law of contracts.
In addition, the model code, UCITA, discussed above,
generally recognizes the importance of conspicuous notice and unambiguous
manifestation of assent in online sales and licensing of computer
information. For example, § 112, which addresses manifestation of assent,
provides that a user's opportunity to review online contract terms exists if a
"record" (or electronic writing) of the contract terms is "made
available in a manner that ought to call it to the attention of a reasonable
person and permit review." UCITA,
§ 112(e)(1)
(rev. ed. Aug.23, 2001) (available at www.ucitaonline.com/ucita.html). Section
112 also provides, in pertinent part, that
"[a] person manifests assent to a record or term if the person, acting
with knowledge of, or after having an opportunity to review the record or term
or a copy of it ... intentionally engages in conduct or makes statements with
reason to know that the other party or its electronic agent may infer from the
conduct or statement that the person assents to the record or term." Id.
§ 112(a)(2). In the case of a "mass-market
license," a party adopts the terms of the license only by manifesting
assent "before or during the party's initial performance or use of or
access to the information." Id.
§ 209(a). UCITA
§ 211 sets
forth a number of guidelines for "internet-type" transactions
involving the supply of information or software. For example, a licensor should make standard
terms "available for review" prior to delivery or obligation to pay
(1) by "displaying prominently and in close proximity to a description of
the computer information, or to instructions or steps for acquiring it, the
standard terms or a reference to an electronic location from which they can be
readily obtained," or (2) by "disclosing the availability of the
standard terms in a prominent place on the site from which the computer
information is offered and promptly furnishing a copy of the standard terms on
request before the transfer of the computer information." Id.
§ 211(1)(A-B). The commentary to § 211 adds: "The intent of the close proximity
standard is that the terms or the reference to them would be called to the
attention of an ordinary reasonable person." Id.
§ 211 cmt.
3. The commentary also approves of prominent hypertext links that draw
attention to the existence of a standard agreement and allow users to view the
terms of the license. Id.
We hasten to point out that UCITA, which has been enacted
into law only in Maryland and Virginia, does not govern the parties'
transactions in the present case, but we nevertheless find that UCITA's
provisions offer insight into the evolving online "circumstances"
that defendants argue placed plaintiffs on
inquiry notice of the existence of the SmartDownload license terms. UCITA has been controversial as a result of
the perceived breadth of some of its provisions. Compare Margaret Jane Radin, Humans
Computers, and Binding Commitment,
75 Ind. L.J. 1125, 1141 (2000) (arguing that
"UCITA's definition of manifestation of assent stretches the ordinary
concept of consent"), with Joseph H. Sommer, Against
Cyberlaw,
15 Berkeley Tech. L.J. 1145, 1187 (2000)
("There are no new legal developments [in UCITA's assent provisions]. The revolution--if any-- occurred with
[Karl] Llewellyn's old Article 2, which abandoned most formalisms of contract
formation, and sought a contract wherever it could be found."). Nonetheless, UCITA's notice and assent
provisions seem to be consistent with well-established principles governing
contract formation and enforcement. See
Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form
Contracting in the Electronic Age,
77 N.Y.U. L.Rev. 429, 491 (2002) ("[W]e
contend that UCITA maintains the contextual, balanced approach to standard
terms that can be found in the paper world.").
*35 After reviewing the California
common law and other relevant legal authority, we conclude that under the
circumstances here, plaintiffs' downloading of SmartDownload did not constitute
acceptance of defendants' license terms.
Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent
to those terms by consumers are essential if electronic bargaining is to have
integrity and credibility. We hold that
a reasonably prudent offeree in plaintiffs' position would not have known or
learned, prior to acting on the invitation to download, of the reference to
SmartDownload's license terms hidden below the "Download" button on
the next screen. We affirm the district
court's conclusion that the user plaintiffs, including Fagan, are not bound by
the arbitration clause contained in those terms. [FN18]
FN18. Because we
conclude that the Netscape webpage did not provide reasonable notice of the
existence of SmartDownload's license terms, it is irrelevant to our decision
whether plaintiff Fagan obtained SmartDownload from that webpage, as defendants
contend, or from a shareware website that provided less or no notice of that
program's license terms, as Fagan maintains.
In either case, Fagan could not be bound by the SmartDownload license
agreement. Further, because we find
that the California common law disposes of the issue of notice and assent, we
do not address plaintiffs' arguments based on California's Commercial Code
§ 2207, the UCC Article 2 provision
governing the "battle of the forms."
Moreover, having determined that the parties did not enter into the
SmartDownload license agreement, we do not reach plaintiffs' alternative
arguments concerning unconscionability.
IV. Whether Plaintiffs' Assent to
Communicator's License Agreement Requires Them To Arbitrate Their Claims
Regarding SmartDownload
Plaintiffs do not dispute that they assented
to the license terms governing Netscape's Communicator. The parties disagree, however, over the
scope of that license's arbitration clause.
Defendants contend that the scope is broad enough to encompass
plaintiffs' claims regarding SmartDownload, even if plaintiffs did not
separately assent to SmartDownload's license terms and even though
Communicator's license terms did not expressly mention SmartDownload. Thus,
defendants argue, plaintiffs must arbitrate.
[23][24][25] The scope of an arbitration agreement is a legal issue
that we review de novo. Oldroyd,
134 F.3d at 76.
"[A]ny doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration." Genesco,
815 F.2d at 847 (quotation marks omitted). Although "the FAA does not require
parties to arbitrate when they have not agreed to do so," Volt
Info. Sciences, Inc. v. Bd. of Trs. of Leland Stanford Junior Univ.,
489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989), arbitration is indicated unless it can be said "with
positive assurance" that an arbitration clause is not susceptible to an
interpretation that covers the asserted dispute. Thomas
James Assocs., Inc. v. Jameson,
102 F.3d 60, 65 (2d Cir.1996) (quotation marks omitted).
[26][27] The Communicator license agreement, which required
arbitration of "all disputes relating to this Agreement (excepting any
dispute relating to intellectual *36 property rights)," [FN19] must be
classified as "broad." Coregis
Ins. Co. v. Am. Health Found.,
241 F.3d 123, 128-29 (2d Cir.2001). Where the scope of an arbitration agreement
is broad,
FN19. A question not
raised by the parties is whether this dispute involves "intellectual
property rights." Certainly,
Netscape's intellectual property ("IP") rights would not seem to be
implicated, even though Netscape may in some sense employ its IP--in the form
of computer software--to plant cookies and, as plaintiffs allege, harvest
users' personal information. But do
plaintiffs have IP rights in their personal information? Certain cases have recognized, mostly under
a trespass-to-chattels theory, that computer and database owners enjoy
possessory interests in their computer equipment, bandwidth, and server
capacity, but these interests are analyzed in terms of traditional personal
property, not IP. See, e.g., Verio,
126 F.Supp.2d at 249-53; eBay,
Inc. v. Bidder's Edge, Inc.,
100 F.Supp.2d 1058, 1069-72 (N.D.Cal.2000). Moreover, plaintiffs' personal information,
stored in cookies, is the sort of factual data that are expressly excluded from
federal copyright protection. See Nihon
Keizai Shimbun, Inc. v. Comline Bus. Data, Inc.,
166 F.3d 65, 70 (2d. Cir.1999) ("That copyright does not extend to facts is a 'most
fundamental axiom of copyright law.' ") (quoting Feist
Publ'ns, Inc. v. Rural Tel. Serv. Co.,
499 U.S. 340, 344, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). Thus, copyrights
are not implicated here. Nor are trade
secrets, good will, or other valuable intangibles. In consequence, plaintiffs' claims would not
appear to be shielded from arbitration on the ground that this is a
"dispute relating to intellectual property rights." This is not an
issue that we decide today, however.
there arises a presumption of arbitrability; if, however, the dispute is in respect of a
matter that, on its face, is clearly collateral to the contract, then a court
should test the presumption by reviewing the allegations underlying the dispute
and by asking whether the claim alleged implicates issues of contract
construction or the parties' rights and obligations under it.... [C]laims that
present no question involving construction of the contract, and no questions in
respect of the parties' rights and obligations under it, are beyond the scope
of the arbitration agreement.
Collins
& Aikman,
58 F.3d at 23.
In determining whether a particular claim falls within the scope of the
parties' arbitration agreement, this Court "focus[es] on the factual
allegations in the complaint rather than the legal causes of action asserted." Genesco,
815 F.2d at 846.
If those allegations "touch matters" covered by the Netscape
license agreement, plaintiffs' claims must be arbitrated. Id.
[28][29] To begin with, we find that the underlying dispute in this
case--whether defendants violated plaintiffs' rights under the Electronic
Communications Privacy Act and the Computer Fraud and Abuse Act--involves
matters that are clearly collateral to the Communicator license agreement.
While the SmartDownload license agreement expressly applied "to Netscape
Communicator, Netscape Navigator, and Netscape SmartDownload," the
Communicator license agreement expressly applied only "to Netscape Communicator
and Netscape Navigator." Thus, on
its face, the Communicator license agreement governed disputes concerning
Netscape's browser programs only, not disputes concerning a plug-in program
like SmartDownload. Moreover,
Communicator's license terms included a merger or integration clause stating
that "[t]his Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof." SmartDownload's license terms contained the
same clause. Such provisions are recognized by California courts as a means of
excluding prior or contemporaneous parol evidence from the scope of a
contract. See *37Franklin
v. USX Corp.,
87 Cal.App. 4th 615, 105 Cal.Rptr.2d 11, 15 (2001).
Although the presence of merger clauses
is not dispositive here, we note that defendants' express desire to limit the
reach of the respective license agreements,
combined with the absence of reference to SmartDownload in the Communicator
license agreement, suggests that a dispute regarding defendants' allegedly
unlawful use of SmartDownload is clearly collateral to the Communicator license
agreement.
This conclusion is reinforced by the other
terms of the Communicator license agreement, which include a provision
describing the non-exclusive nature of the grant and permission to reproduce
the software for personal and internal business purposes; restrictions on modification, decompilation,
redistribution or other sale or transfer, and removal or alteration of
trademarks or other intellectual property;
provisions for the licensor's right to terminate and its proprietary
rights; a complete disclaimer of
warranties ("as is") and an entire-risk clause; a limitation of liability clause for
consequential and other damages, together with a liquidated damages term; clauses regarding encryption and export; a disclaimer of warranties for high risk
activities; and a miscellaneous paragraph that contains merger, choice-of-law,
arbitration, and severability clauses, non-waiver and non-assignment
provisions, a force majeure term, and a clause providing for
reimbursement of the prevailing party in any dispute. Apart from the potential generic
applicability of the warranty and liability disclaimers, a dispute concerning
alleged electronic eavesdropping via transmissions from a separate plug-in
program would not appear to fall within Communicator's license terms. We conclude, therefore, that this dispute concerns matters that, on
their face, are clearly collateral to the Communicator license agreement.
Having determined this much, we next must test
the presumption of arbitrability by asking whether plaintiffs' allegations
implicate or touch on issues of contract construction or the parties' rights
and obligations under the contract. Collins
& Aikman,
58 F.3d at 23;
Genesco,
815 F.2d at 846.
That is, even though the parties' dispute concerns matters clearly
collateral to the Communicator license terms, we must determine whether
plaintiffs by their particular allegations have brought the dispute within the
license terms. Defendants argue that
plaintiffs' complaints "literally bristled with allegations that
Communicator and SmartDownload operated in conjunction with one another to
eavesdrop on Plaintiffs' Internet communications." We disagree. Plaintiffs' allegations nowhere collapse or
blur the distinction between Communicator and SmartDownload, but instead
consistently separate the two software programs and assert that SmartDownload
alone is responsible for unlawful eavesdropping. Plaintiffs begin by alleging that
"SmartDownload facilitates the transfer of large files over the Internet
by permitting a transfer to be resumed if it is interrupted." Plaintiffs
then explain that "[o]nce SmartDownload is downloaded and running on a Web
user's computer, it automatically connects to Netscape's file servers and
downloads the installation program for Communicator." Plaintiffs add that defendants also encourage visitors to Netscape's website
"to download and install SmartDownload even if they are not installing or
upgrading Communicator."
Plaintiffs go on to point out that installing
Communicator "automatically creates and stores on the Web user's computer
a small text file known as a 'cookie.' " There follow two paragraphs
essentially alleging that cookies were originally intended to perform such
innocuous tasks as providing "temporary identification for purposes such
as electronic commerce," and that the *38 Netscape cookie performs
this original identifying, and entirely lawful, function. Separate paragraphs then describe the
"Key" or "UserID" that SmartDownload allegedly
independently places on user's computers, and point out that "SmartDownload
assumes from Communicator the task of downloading various files. Communicator itself could and would perform
these downloading tasks if SmartDownload were not installed." "Thereafter," the complaints
continue,
each time a Web user downloads any file from any site on
the Internet using SmartDownload, SmartDownload automatically transmits to
defendants the name and Internet address of the file and the Web site from
which it is being sent. Within the same transmission, SmartDownload also
includes the contents of the Netscape cookie previously created by Communicator
and the "Key" previously created by SmartDownload.
In the course of their description of the
installation and downloading process, plaintiffs keep SmartDownload separate
from Communicator and clearly indicate that
it is SmartDownload that performed the allegedly unlawful eavesdropping and
made use of the otherwise innocuous Communicator cookie as well as its own
"Key" and "UserID" to transmit plaintiffs' information to
Netscape. The complaints refer to
"SmartDownload's spying" and explain that "Defendants are using
SmartDownload to eavesdrop." Plaintiffs'
allegations consistently distinguish and isolate the functions of SmartDownload
in such a way as to make it clear that it is through SmartDownload, not
Communicator, that defendants committed the abuses that are the subject of the
complaints.
After careful review of these allegations, we
conclude that plaintiffs' claims "present no question involving
construction of the [Communicator license agreement], and no questions in
respect of the parties' rights and obligations under it." Collins
& Aikman,
58 F.3d at 23.
It follows that the claims of the five user plaintiffs are beyond the
scope of the arbitration clause contained in the Communicator license
agreement. Because those claims are not
arbitrable under that agreement or under the SmartDownload license agreement,
to which plaintiffs never assented, we affirm the district court's holding that
the five user plaintiffs may not be compelled to arbitrate their claims.
V. Whether Plaintiff Specht Can Be Required
To Arbitrate as a Nonparty Beneficiary
[30] Plaintiff Specht operated a website that he claims
defendants electronically spied on every time users employing SmartDownload to
enhance their browser software downloaded, from
his site, software files that he provided for setting up an account with a
separate service called WhyWeb. Defendants counter that Specht received a
"direct benefit" under the "Netscape license agreement,"
which they say authorized consumers to use SmartDownload and Communicator to
obtain Specht's files. Defendants
contend that if a user who obtained a file from Specht's site subsequently
subscribed to WhyWeb's service, Specht would receive a commission from WhyWeb. Thus, according to defendants, if users
employing SmartDownload accessed his site and obtained WhyWeb files, Specht
would receive a direct benefit "because the software assisted in obtaining
a WhyWeb file and increased the likelihood of success in the download
process." Specht, however, claims that he received no commissions from
providing WhyWeb software.
We note at the outset that defendants do not
argue, as indeed they could not, that Specht benefited from SmartDownload
license agreements entered into by the named user plaintiffs or the putative
class *39 that they represent. A
contract theory of third-party benefits requires a predicate contract, and we
have already determined that the user plaintiffs did not assent to the
SmartDownload license agreement. We are
thus asked, in effect, to imagine a class of users who, having obtained
SmartDownload and/or Communicator after properly assenting to license terms,
visited Specht's website by means of Communicator or a non-Netscape browser
enhanced by SmartDownload and, while there,
downloaded WhyWeb files which they proceeded to use to subscribe to WhyWeb, in
turn triggering a commission fee from WhyWeb for Specht.
Even accepting arguendo this strained
and roundabout hypothesis, we must reject defendants' legal conclusion. Typically, whether a contract benefits or
accords rights to a third party (most often, the right to enforce the contract)
depends significantly on the intention of the original contracting
parties. See Sessions
Payroll Mgmt., Inc. v. Noble Constr. Co, Inc.,
84 Cal.App.4th 671, 680, 101 Cal.Rptr.2d 127, 133 (2000) (explaining that a third-party beneficiary may enforce a
contract made expressly for its benefit and has the burden of proving that the
contracting parties actually promised the performance). Clearly, Netscape and these unknown visitors
to Specht's website did not expressly confer or intend to confer any
contractual benefits on Specht or website operators generally (other than
defendants). Defendants therefore take
a different tack, arguing that they need only show that Specht received some
direct benefit, knowingly or not, under a Netscape license agreement.
To support this claim, defendants cite American
Bureau of Shipping v. Tencara Shipyard S.P.A.,
170 F.3d 349 (2d Cir.1999). But the benefit at issue in American
Bureau of Shipping was much more direct than that described by
defendants. There, a ship
classification society, which had issued an interim certification of
classification (ICC) for a racing yacht that later
suffered hull damage allegedly resulting from defective design, sought to
compel the yacht's builder, owners, and insurers to arbitrate pursuant to
arbitration clauses contained in the ICC and other contracts. The owners never signed any arbitration
agreement, but this Court noted that a nonsignatory could be "estopped
from denying its obligation to arbitrate when it receives a 'direct benefit'
from a contract containing an arbitration clause." Id.
at 353 (citing Thomson-CSF,
S.A. v. Am. Arbitration Ass'n,
64 F.3d 773, 778-79 (2d Cir.1995)). [FN20] The Court held that
the yacht owners had received the following direct benefits under the relevant
contracts: (1) significantly lower
insurance rates on the yacht; (2) the
ability to sail under the French flag;
and possibly (3) the ability to register the yacht. Id.;
cf. Deloitte
Noraudit A/S v. Deloitte Haskins & Sells, U.S.,
9 F.3d 1060 (2d Cir.1993) (holding that a
nonsignatory to an arbitration agreement was bound to arbitrate because it
knowingly received direct benefits, which included the right to use a trade
name, under the relevant contract).
FN20. Cf. County
of Contra Costa v. Kaiser Found. Health
Plan, Inc.,
47 Cal.App.4th 237, 54 Cal.Rptr.2d 628, 631 (1996)(noting
that California cases binding nonsignatories to arbitrate their claims fall
into two categories: (1) where a benefit
was conferred on the nonsignatory as a result
of a contract; and (2) where a
preexisting relationship existed between the nonsignatory and one of the
parties to the arbitration agreement).
Even if defendants' theory of Specht's
SmartDownload-enhanced potential for earning commissions were more convincing,
such an abstract advantage is not remotely as tangible and definite as the
benefits that have led this Court to compel nonsignatories to arbitrate. Nor does the intricate, Rube Goldberg-like
chain of *40 events postulated by defendants constitute a
"direct" benefit in the sense contemplated by American Bureau of
Shipping and Deloitte Noraudit.
Because we conclude that Specht was not a direct beneficiary under
SmartDownload's license agreement or any other Netscape agreement, we affirm
the district court's refusal to compel arbitration of his claims. [FN21]
FN21. Plaintiffs
argue in the alternative that their claims are inarbitrable because the
Electronic Communications Privacy Act and the Computer Fraud and Abuse Act
reflect a congressional intent to preclude arbitration of claims arising under
those statutes. In view of our
disposition of this case, we need not address that argument.
For the foregoing reasons, we affirm the
district court's denial of defendants' motion to compel arbitration and to stay
court proceedings.
•Christopher SPECHT, John
Gibson, Michael Fagan, Sean Kelly, Mark Gruber, and Sherry Weindorf,
individually and on behalf of all others similarly situated,
Plaintiffs-Appellees, v. NETSCAPE COMMUNICATIONS CORPORATION and America
Online, Inc., Defendants-Appellants., 2001 WL 34372772 (Appellate Brief) (C.A.2 October 12, 2001), Brief for
Defendants-Appellants
•Christopher SPECHT, John
Gibson, Michael Fagan, Sean Kelly, Mark Gruber, and Sherry Weindorf,
individually and on behalf of all others similarly situated,
Plaintiffs-Appellees, v. NETSCAPE COMMUNICATIONS CORPORATION and America
Online, Inc., Defendants-Appellants., 2002 WL 32344312 (Appellate Brief) (C.A.2 January 15, 2002), Reply Brief
for Defendants-Appellants
306 F.3d 17, 48 UCC Rep.Serv.2d 761
END OF
DOCUMENT