Second Circuit Enforces Terms Hyperlinked In Confirmation Email–Starkey v. G Adventures
Plaintiff Starkey booked a trip online through G Adventures. She alleges a G Adventures employee assaulted her during the trip. She sued G Adventures in the Southern District of New York. That court dismissed her lawsuit based on a forum selection clause requiring any claims to be brought in Ontario, Canada. She appealed, and the Second Circuit affirmed.
G Adventures did not employ a clickthrough agreement that would have required customers to indicate assent to the terms by clicking “I Agree” as a condition of making a reservation (though seemingly it could have done so easily). Instead, the court says only that Starkey booked her ticket via the website, and subsequently G Adventures sent several emails clearly labeled “terms and conditions.” The terms and conditions contained a hyperlink to the actual terms, which contained the forum selection clause. In addition to the “booking information” email, plaintiff received two other email messages, a confirmation invoice and a service voucher, both of which also included hyperlinks to the terms (containing the forum selection clause). The confirmation invoice contained the following text:
Confirmation of your reservation means that you have already read, agreed to and understood the terms and conditions, however, you can access them through the below link if you need to refer to them for any reason.
[It’s unclear what she did to “confirm” the reservation; the court does not say.] The court says that a mandatory forum selection clause is enforceable to the extent it is “reasonably communicated” to the customer. In the context of a tour operator’s efforts to enforce such a term, the court considers whether (1) the “promotional brochure” directs the traveler’s attention to the conditions, and (2) the ticket contract itself clearly and unambiguously includes the clause. The court says the three emails plaintiff received, each containing hyperlinks to the terms, were sufficient–i.e., hyperlinks are an acceptable way to draw a passenger’s attention to the terms. And the terms themselves are clear—they say they designate the forum for all disputes and that this forum (for all disputes) is Ontario. This raises a presumption of enforceability.
Plaintiff tries rebut this presumption by pointing to the unreasonable result of forcing her to litigate in Ontario and because of the differences in the legal system (she stands a higher risk of being liable for fees in Canada). The court says no.
Eric recently blogged about another incorporation-by-reference case, but in that case the incorporation failed: “If You’re Going To Incorporate Online T&Cs Into a Printed Contract, Do It Right–Holdbrook v. PCS”. (His post contains good tips for ensuring maximum likelihood of successful incorporation.) The two cases are similar in that the terms were electronic, but the contract itself was not formed on the website. Yet, the court in G Adventures enforces the terms, but not so in Holdbrook. Perhaps one plausible explanation for the differing results is the Holdbrook case involved a less compelling “call to action” indicating that the customer was binding itself to terms.
An odd aspect of G Adventures case is the lack of discussion around whether the online terms were actually part of the purchase contract. (The court says the parties “forfeited” this argument, and also notes that a clickthrough agreement would have made the case much easier). If the terms were viewed or communicated only after the fact, which may well be the case, would they not be an “additional term” that the passenger could reject? And is the standard for communicating after-the-fact terms that a merchant seeks to impose the same as in the formation context? Interestingly, an uncited Second Circuit case addressed this issue and came to the opposite conclusion, declining to enforce terms emailed post-formation. (Schnabel v. Trilegiant.) That case reached the opposite conclusion despite the fact that the customer continued to use the service after ostensibly receiving the communication containing the additional terms. Perhaps the court’s reluctance to enforce the term in the Schnabel case can be explained by the vendor’s use of negative option marketing, a disfavored business practice. However, this case raised similar public policy concerns.
Perhaps you can chalk this decision up to the eccentricity of carriage contracts (or anything involving a ticket purchase, such as parking, stadium events, amusement parks, etc.). But the ruling does not seem restricted to this, and leaves open room for online entities to more freely impose their terms on consumers. In this case, the operative term requires a traveler to litigate a dispute relating to the trip not a state other than her home state, but in another country altogether. This could likely spell the end of the road for plaintiff’s lawsuit, but perhaps she will expend the resources to litigate it in Canada.
Case citation: Starkey v. G Adventures, Inc., 14-1361-cv (2d Cir. Aug. 7, 2015)