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Anand v. Heath

United States District Court, N.D. Illinois, Eastern Division

June 28, 2019

NARANTUYA ANAND, individually and on behalf of others similarly situated, Plaintiff,
v.
JOHN C. HEATH, ATTORNEY AT LAW PLLC DBA LEXINGTON LAW FIRM; PROGREXION MARKETING INC.; FLUENT, INC.; AND REWARD ZONE USA, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN J. THARP, JR. UNITED STATES DISTRICT JUDGE.

         Plaintiff Narantuya Anand brought a putative class action complaint alleging that she received unsolicited telemarketing calls to her cellular phone in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. Two of the defendants, Fluent Inc. (“Fluent”) and Reward Zone USA LLC (“Reward Zone”) (collectively, “the defendants”), moved to compel arbitration, arguing that Anand agreed to arbitrate her claims when she registered on www.retailproductzone.com. Anand responds that she did not affirmatively manifest her assent to an arbitration agreement on that website. The defendants' motion to compel arbitration is denied because they have failed to show that Anand assented to the terms and conditions when navigating through the website.

         BACKGROUND

         In June 2017, Anand registered on the website www.retailproductzone.com and completed a survey on that website to receive a free gift card. The website is owned and operated by Reward Zone, which is a wholly-owned subsidiary of Fluent. Defendant John C. Heath, Attorney at Law PLLC, d/b/a Lexington Law Firm ("Lexington") hired defendant Progrexion Marketing, Inc. ("Progrexion") to market Lexington's services to consumers. Progrexion, in turn, contracted with Fluent to gather consumers' personal information through websites including www.retailproductzone.com and to contact such consumers on behalf of Lexington. The defendants contend that when Anand registered on the website, she submitted her contact information, including her phone number, and expressly consented to being contacted at that number by or on behalf of marketing partners including HomeHelp, which is a registered business name of Fluent, and Lexington. Anand denies that she consented to being contacted and alleges that during July 2017 she received several unwanted telemarketing voicemails and text messages from the defendants on behalf of Lexington. At least some of the calls and texts were made from a phone number that Anand believes belongs to Fluent.

         When Anand navigated through the www.retailproductzone.com website in 2017, the words "I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy" were displayed above a "Continue" button, as depicted in the image below.

         (Image Omitted)

         Bhadania Aff ¶ 9, ECF No. 22-1. Clicking the underlined "Terms & Conditions" hyperlink would have directed Anand to a page that displays the full terms and conditions. The terms and conditions included, among other things, an "Arbitration/Dispute Resolution" provision, which provided that "[t]he arbitrator will have exclusive authority to resolve any dispute including any claim that all or part of the Terms & Conditions, including this provision, are unenforceable." Bhadania Aff, Ex. A, Reward Zone Terms and Conditions, PageID # 73, ECF No. 22-2. The defendants offer no evidence that Anand clicked on the Terms and Conditions hyperlink, or ever saw the terms and conditions posted on the site, but they do maintain that Anand clicked the “Continue” button and ultimately completed a survey on the website. For her part, Anand asserts without explanation that there is no evidence to support the defendants' representations regarding the text relating to the manner in which the site presented the Terms and Conditions hyperlink and the “Continue” button. Resp. 4-5, ECF No. 31. She points out that a 2019 screenshot of a page of the www.retailproductzone.com website shows a notice about mandatory arbitration and the terms and conditions located in the footnotes of the page. See Resp. 5 n.9, Ex. A, ECF Nos. 31, 31-1.

         Defendants Fluent and Reward Zone have moved to compel arbitration, requesting that the Court dismiss Anand's complaint or stay the case pending arbitration. Mot. to Compel Arbitration, ECF No. 21. Fluent and Reward Zone contend that both of them are entitled to enforce the arbitration agreement because Anand agreed to arbitrate with both companies and because Anand's claims against the parent company (Fluent) and its wholly-owned subsidiary (Reward Zone) are intertwined. See Mem. 3, ECF No. 22 (stating that “both Reward Zone and Fluent are among the parties with whom Plaintiff agreed to arbitrate [her] disputes”); see also Id. at 2 n.2 (stating that Anand's claims against Fluent are intertwined with the allegations against Reward Zone and the underlying contractual obligations, as her claims against both companies arise from her use of www.retailproductzone.com). Although defendants Progrexion and Lexington did not join the motion to compel arbitration, they asserted in their respective affirmative defenses that if Anand agreed to arbitrate the dispute, then this case should be dismissed or stayed pending arbitration. See Def. Lexington's Answer to Pl.'s Class Action Compl. 23 (Thirteenth Affirmative Defense), ECF No. 24; see also Def. Progrexion's Answer to Pl.'s Class Action Compl. 23 (Thirteenth Affirmative Defense), ECF No. 25. Anand contends that she did not enter into an enforceable arbitration agreement, and that she is at least entitled to an evidentiary hearing because she has raised a genuine dispute of material fact as to the enforceability of the arbitration agreement. Fluent and Reward Zone respond that arbitration is required as a matter of law.

         DISCUSSION

         I. Standard

         The Federal Arbitration Act (“FAA”) provides that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA further provides that “upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed with arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. But “[i]f the making of the arbitration agreement . . . [is] in issue, the court shall proceed summarily to the trial thereof.” Id. “Under the FAA, arbitration should be compelled if three elements are present: (1) an enforceable written agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a refusal to arbitrate.” Scheurer v. Fromm Family Foods LLC, 863 F.3d 748, 752 (7th Cir. 2017). Anand does not dispute that the scope of the arbitration agreement would cover her claims. Instead, Anand opposes arbitration claiming that the arbitration agreement is not enforceable because she never agreed to arbitrate claims arising from her use of the website.

         “Whether the parties have validly agreed to arbitrate is governed by state-law principles of contract formation.” Faulkenberg v. CB Tax Franchise Systems, LP, 637 F.3d 801, 809 (7th Cir. 2011). The defendants contend that New York substantive law applies because the arbitration agreement contains a New York choice-of-law provision.[1] Anand has not responded to this contention, nor has she suggested that the law of another jurisdiction should apply. The parties have made no argument that application of contract formation principles of one jurisdiction as opposed to another's would affect the outcome. The Court also discerns no meaningful differences in contract formation principles among the jurisdictions to which the parties have cited. Accordingly, the Court relies primarily on the substantive law of the forum state, Illinois. Cf. Faulkenberg, 637 F.3d at 809 (applying Illinois substantive law to issue of contract formation notwithstanding contract's choice-of-law provision).

         Formation of a contract in Illinois requires an objective manifestation of “a meeting of the minds or mutual assent as to the terms of the contract.” Sgouros v. TransUnion Corp., 817 F.3d 1029, 1034 (7th Cir. 2016) (citation omitted); see also Bank Computer Network Corp. v. Cont'l Ill. Nat'l Bank and Trust Co. of Chicago, 442 N.E.2d 586, 591 (Ill.App.Ct. 1982) (“The intention of the parties [to manifest mutual assent] must in some way be communicated, since a person's intention can be ascertained by another only by means of outward expressions such as words and acts.”). Assent to contractual terms requires knowledge of those terms; “[a] party cannot assent to terms of which it has no [actual] or constructive” knowledge. In re Zappos.com, Inc., Customer Data Sec. Breach Litig., 893 F.Supp.2d 1058, 1066 (D. Nev. 2012); see also CouponCabin, Inc. v. PriceTrace, LLC, No. 18 C 7525, 2019 WL 1572448, at *4 (N.D. Ill. Apr. 11, 2019) (“Courts enforce [certain kinds of Internet] agreements only when there is actual or constructive knowledge of terms.”) (citation omitted). “This principle of knowing consent applies with particular force to provisions for arbitration. Clarity and conspicuousness of arbitration terms are important in securing informed assent.” Specht v. Netscape Communications Corp., 306 F.3d 17, 30 (2d Cir. 2002) (internal citation and quotation marks omitted). A party has constructive knowledge of a contractual term if “she is on inquiry notice of the term and assents to it through the conduct that a reasonable person would understand to constitute assent. Inquiry notice is actual notice of circumstances sufficient to put a prudent man upon inquiry.” Schnabel v. Trilegiant Corp., 697 F.3d 110, 120 (2d Cir. 2012) (internal quotation marks and emphasis omitted); see also Nicosia v. Amazon.com, Inc., No. 14-cv-4513, 2019 WL 2482674, at *8 (E.D.N.Y. June 14, 2019) (“A website user is deemed to be on inquiry notice of contract terms so long as the ‘design and content' of the webpage renders ‘existence' of those terms ‘reasonably conspicuous.'”) (citing Nicosia v. Amazon.com, Inc., 834 F.3d 220, 233 (2d Cir. 2016)).

         Here, there is no evidence that Anand had actual notice of the terms and conditions the defendants sought to impose, and the facts necessary to resolve the question of whether she had constructive notice of those terms and conditions (that is, that a reasonable user in Anand's shoes would have understood she was assenting to the terms and conditions by clicking the “Continue” button) are not disputed. The issue of her assent, or lack thereof, may therefore be resolved by the Court. “A trial to determine arbitrability is required . . . only if the issue that an evidentiary hearing would resolve is fairly contestable.” Am. Int'l Specialty Lines Ins. Co. v. Elec. Data Sys. Corp., 347 F.3d 665, 671 (7th Cir. 2003). In deciding whether the party opposing arbitration has identified a genuine issue of material fact for a trial on arbitrability, “the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor.” Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th ...


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