Dick’s Cannot Scuttle TCPA Suit After Court Finds Its Terms of Use Unenforceable

On July 5, the U.S. District Court for the Central District of California refused to compel a TCPA plaintiff to arbitrate his dispute against Dick’s Sporting Goods, Inc., thus allowing the case to proceed in federal court.  This decision potentially paves the way for class certification despite the class waiver provision contained in Dick’s Terms of Use. This case highlights that no matter how bulletproof a company’s terms and conditions may appear, it is equally important that companies should assess how they obtain consumer assent to their terms and conditions if companies want to be able to enforce them later.  A copy of the decision can be found here. 
 
The relevant facts and allegations of this case are that the plaintiff affirmatively opted into Dick’s mobile alert program by texting “JOIN” to Dick’s short code.  The plaintiff later texted “STOP” to the same short code, but he allegedly received at least 8 additional text messages from Dick’s after attempting to opt out. After the plaintiff filed suit for these alleged TCPA violations, Dick’s sought to enforce its Terms of Use that require any disputes related to its website – which included the link to Dick’s text alert program – to be arbitrated on an individual basis. 
 
The court, however, refused to compel arbitration because it found that Dick’s “browsewrap agreement” was not enforceable as against this plaintiff because Dick’s could not establish that he had actual or constructive knowledge of the Terms of Use.  Specifically, because Dick’s Terms of Use did not require a user to affirmatively agree to be bound by the terms, or otherwise conspicuously put the user on notice of the existence of the terms, Dick’s could not prove that the plaintiff had the requisite knowledge to bind him to the arbitration provision.  While inapplicable to Dick’s practices, the court nevertheless held that when a website contains an “explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound” by a company’s terms and conditions, a court will find that the user has constructive notice sufficient to make the terms enforceable. 
 
The takeaway from this decision is that click-through agreements are the best choice for companies when this onboarding method is feasible.  But even when it’s not, companies can still protect themselves by calling attention to relevant terms and conditions and explicitly stating that such terms will apply to the user.  Such disclosures are particularly advisable for call-to-action displays that invite consumers to join mobile alert programs like the one at issue in this case, as well as including a link to the terms again via text message after the consumer opts in. 
 
Finally, while not relevant to the court’s decision in the end, it was also established that the plaintiff, Phil Nghiem, was an attorney previously employed by a TCPA plaintiffs’ firm and he “did sign up for a significant number of mobile alerts programs within a few months.” For those companies on the receiving end of TCPA demand letters, it may not come as a surprise that Mr. Nghiem currently works for Manning Law according to this firm’s website. With no apparent slowdown of plaintiffs actively soliciting the text messages they later seek to cash in on, it is more important than ever that companies engaging consumers through calls or texts ensure that they are following TCPA best practices. For more information on the impact of this decision or if you have questions about your company’s TCPA compliance obligations and best practices, please contact Adam Bowser or the Arent Fox professional who handles your matters.