Since its enactment in 2010, California's Automatic Renewal Law (ARL) has motivated an ever-increasing number of putative class action complaints. The latest surge is due in large part to amendments that went into effect last summer that add to the statute's requirements for businesses offering goods or services on a subscription basis. These amendments introduced specific requirements for online subscription termination options, as well as for the timing and content of reminder notices to be sent before term expiration. While less rigorous in some respects, Colorado, Delaware, Illinois, Idaho, and Virginia also enacted similar statutes that, in turn, mirror several requirements of the federal Restore Online Shoppers Confidence Act (ROSCA).
For businesses with subscription models or offerings, compliance with dynamic regulatory schemes can prove a moving target, particularly when even minor technical noncompliance exposes a company to costly litigation. Added protections like arbitration agreements with class action waivers may help to reduce the risk of expensive class action complaints, but only if properly implemented. The cases below illustrate key issues that courts have recently considered when determining whether to enforce such arbitration provisions.
The caselaw relating to the enforcement of arbitration clauses and class action waivers in the ARL context continues to develop, with the California Appellate Court's decision in Sellers v. JustAnswer LLC, 73 Cal. App. 5th 444 (2021) setting the stage. Sellers employed the concept of constructive notice'requiring that the arbitration and class action waiver terms were "sufficiently conspicuous"'in determining that those provisions were enforceable. In arriving at its decision, the Sellers court distinguished among the varying types of internet contracts:
- Scrollwrap - Users are presented with the entire agreement and must physically scroll to the bottom of it to find the "I agree" or "I accept" button.
- Clickwrap - An agreement that requires users to accept a website's terms by clicking a button, with a link to the agreement readily available.
- Browsewrap - Users accept a website's terms by simply browsing the site.
- Sign-in Wrap - A hybrid of clickwrap and browsewrap in which users are advised that by using the website, signing-in, or creating an account, they are agreeing to the contract, which is usually available by hyperlink.
Each of these agreements provides...
