Justia Contracts Opinion SummariesArticles Posted in Internet Law
Gostev v. Skillz Platform, Inc.
Paymentech v. Landry’s
A major data breach compromised sensitive consumer information on thousands of credit cards. In this appeal, we address who must pay for the cleanup. Beginning in 2014, hackers compromised credit card data at multiple businesses owned by Landry’s Inc. (“Landry’s”). Many of those cards belonged to Visa and Mastercard. In response, Visa and Mastercard imposed over twenty million dollars in assessments on JPMorgan Chase and its subsidiary Paymentech (collectively, “Chase”), who were responsible for securely processing card purchases at Landry’s properties. Chase then sued Landry’s for indemnification, and Landry’s impleaded Visa and Mastercard. The district court dismissed Landry’s third-party complaints against Visa and Mastercard and granted summary judgment for Chase, finding that Landry’s had a contractual obligation to indemnify Chase. Landry’s argued that it should not have to indemnify Chase because the assessments are not an enforceable form of liquidated damages. The Fifth Circuit affirmed. The court explained that since Landry’s indemnification obligation stems from its own acts or omissions under the Merchant Agreement, the debt is its own. Further, the court wrote that Landry’s alleged for its deceptive business practices claims that the assessments were “invalid” under the Payment Brand Rules and “applicable law” and, therefore, the Payment Brands’ “imposition and collection of the [assessments] was an unlawful business practice.” Because these claims turn on the assessments’ enforceability under Chase’s contracts with the Payment Brands, they are functionally the same as the subrogated claims. Since Landry’s cannot challenge the Payment Brands over those contracts as Chase’s subrogee, it cannot do so through a change in labeling. View "Paymentech v. Landry's" on Justia Law
HIQ LABS, INC. V. LINKEDIN CORPORATION
LinkedIn Corp. sent hiQ Labs, Inc. ("hiQ") a cease-and-desist letter, asserting that hiQ violated LinkedIn’s User Agreement. LinkedIn asserted that if hiQ accessed LinkedIn’s data in the future, it would be violating state and federal law, including the CFAA, the Digital Millennium Copyright Act (“DMCA”) and the California common law of trespass.HiQ sought injunctive relief and a declaratory judgment that LinkedIn could not lawfully invoke the CFAA, the DMCA, California Penal Code Sec. 502(c), or the common law of trespass against it. LinkedIn appealed the district court’s decision ordering LinkedIn to withdraw its cease-and-desist letter, to remove any existing technical barriers to hiQ’s access to public profiles, and to refrain from putting in place any legal or technical measures with the effect of blocking hiQ’s access to public profiles.The court affirmed the district court, finding that hiQ currently had no viable way to remain in business other than using LinkedIn public profile data for its “Keeper” and “Skill Mapper” analytics services and that hiQ demonstrated a likelihood of irreparable harm absent a preliminary injunction. The court found that the district court properly determined that the balance of hardships tipped in hiQ’s favor. The court concluded that hiQ showed a sufficient likelihood of establishing the elements of its claim for contract interference, and it raised a question on the merits of LinkedIn’s affirmative justification defense. Finally, the court found that the district court properly determined that the public interest favored hiQ’s position. View "HIQ LABS, INC. V. LINKEDIN CORPORATION" on Justia Law
DANIEL BERMAN V. FREEDOM FINANCIAL NETWORK LLC
Plaintiffs used the defendants’ websites but did not see a notice stating, “I understand and agree to the Terms & Conditions, which includes mandatory arbitration.” When a dispute arose, defendants moved to compel arbitration, arguing that plaintiffs’ use of the website signified their agreement to the mandatory arbitration provision found in the hyperlinked terms.The Ninth Circuit held that plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating through the websites. As a result, they never entered into a binding agreement to arbitrate their dispute, as required under the Federal Arbitration Act. The panel explained that the courts have routinely enforced “clickwrap” agreements, which present users with specified contractual terms on a pop-up screen requiring users to check a box explicitly stating “I agree” to proceed. However, courts are more reluctant to enforce browsewrap agreements, which provides notice only after users click a hyperlink.Finally, the panel held that the district court properly exercised its discretion in denying the defendants’ motion for reconsideration based on deposition testimony taken two months prior to the district court’s ruling on the motion to compel arbitration. Plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating the website. Thus, they never entered into a binding agreement to arbitrate. The court affirmed the district court’s order denying the defendants’ motion to compel arbitration. View "DANIEL BERMAN V. FREEDOM FINANCIAL NETWORK LLC" on Justia Law
B.D. v. Blizzard Entertainment
Blizzard Entertainment, Inc. (Blizzard) appealed an order denying its motion to compel arbitration. B.D., a minor, played Blizzard’s online videogame “Overwatch,” and used “real money” to make in-game purchases of “Loot Boxes” - items that offer “randomized chances . . . to obtain desirable or helpful ‘loot’ in the game.” B.D. and his father (together, Plaintiffs) sued Blizzard, alleging the sale of loot boxes with randomized values constituted unlawful gambling, and, thus, violated the California Unfair Competition Law (UCL). Plaintiffs sought only prospective injunctive relief, plus attorney fees and costs. Blizzard moved to compel arbitration based on the dispute resolution policy incorporated into various iterations of the online license agreement that Blizzard presented to users when they signed up for, downloaded, and used Blizzard’s service. The trial court denied the motion, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements. The Court of Appeal disagreed: the operative version of Blizzard’s license agreement was presented to users in an online pop-up window that contained the entire agreement within a scrollable text box. View "B.D. v. Blizzard Entertainment" on Justia Law
Weinhoffer v. Davie Shoring, Inc.
In this dispute over terms of an online auction, the Fifth Circuit concluded that the district court abused its discretion by improperly admitting evidence and taking judicial notice of the terms. The court explained that Exhibit 41, an internet printout, was not properly authenticated, and the district court abused its discretion by determining that the exhibit was fit under Federal Rule of Evidence 803. Furthermore, the district court erred in taking judicial notice of the terms because a private internet archive falls short of being a source whose accuracy cannot reasonably be questioned as required by Rule 201. Because the district court's errors were not harmless, the court reversed and remanded for further proceedings. View "Weinhoffer v. Davie Shoring, Inc." on Justia Law
McKeon Products, Inc. v. Howard S. Leight & Associates, Inc.
McKeon has sold “MACK’S” earplugs to retail consumers since the 1960s. In the 1980s, Honeywell's predecessor began marketing and selling MAX-brand earplugs to distributors. The brand names are phonetically identical. In 1995, McKeon sued. The parties entered a settlement agreement that the district court approved by consent decree. To prevent customer confusion, Honeywell agreed not to sell its MAX-brand earplugs into the “Retail Market” but could continue to sell its earplugs in “the Industrial Safety Market and elsewhere." The agreement and the consent decree never contemplated the internet. In 2017, McKeon complained about sales of MAX-brand earplugs on Amazon and other retail websites.The district court ruled in favor of McKeon. The Sixth Circuit affirmed and remanded. Laches is available to Honeywell as an affirmative defense but does not apply to these facts. Parties subject to consent decrees cannot scale their prohibited conduct over time, using minor undetected violations to justify later larger infringements. Honeywell did not establish that McKeon should have discovered the breaching conduct before Honeywell drastically increased online sales. McKeon’s interpretation of the consent decree is the better reading. Concluding that Amazon is a “retail establishment” makes sense given the parties’ intent. View "McKeon Products, Inc. v. Howard S. Leight & Associates, Inc." on Justia Law
Sosa v. Onfido, Inc.
Onfido provides biometric identification software that is incorporated into its customers’ products and mobile apps for verifying users’ identities. Onfido partnered with OfferUp—an online consumer marketplace—to verify users’ identities. Sosa verified his identity with OfferUp using the technology provided by Onfido—the app’s TruYou feature. To complete the verification process, Sosa uploaded a photograph of his driver’s license and a photograph of his face. Sosa alleges that Onfido then used biometric identification technology without his consent to extract his biometric identifiers and compare the two photographs.Sosa brought class action claims against Onfido under the Illinois Biometric Information Privacy Act. Onfido moved to stay the case and to compel individual arbitration based on an arbitration provision in OfferUp’s Terms of Service. The district court rejected each of Onfido’s nonparty contract enforcement theories and denied Onfido’s motion. The Seventh Circuit affirmed. Onfido failed to establish that there was an outcome-determinative difference between Illinois and Washington law, and the district court properly applied Illinois law—the law of the forum state—to determine that Onfido failed to establish that it was a third-party beneficiary of the Terms of Service or that it could otherwise enforce the contract’s arbitration provision either as an agent of OfferUp or on equitable estoppel grounds. View "Sosa v. Onfido, Inc." on Justia Law
Parish Transport LLC, et al. v. Jordan Carriers Inc.
Eric Parish and Parish Transport LLC (Parish Transport) emailed Doug Jordan, the Vice President of Jordan Carriers Inc. (Jordan Carriers), to inquire about purchasing heavy haul equipment from Jordan Carriers. After several email exchanges, Doug Jordan offered to sell the equipment for $1,443,000. Months later, Eric Parish responded, submitting Parish Transport’s offer to buy the equipment for $1,250,000. Later that day, Jordan replied, informing Parish Transport that he needed to discuss the offer and would get back with an answer. Jordan concluded his email with his name and contact information. After discussing the deal with his partner, Jordan replied to Parish’s email, stating, “Ok. Let’s do it.” But this time, Jordan’s email concluded with “Sent from my iPhone” instead of his name and contact information. The next day, Jordan received a higher bid for the equipment from Lone Star Transportation LLC (Lone Star), which Jordan accepted verbally over the telephone. After receiving a confirmation email from Lone Star, Jordan emailed Parish Transport informing the company that “a contract has already been entered into for the sale of [the equipment].” Parish Transport sued for breach of contract and negligent misrepresentation. The matter was later transferred and consolidated with Jordan Carriers’ motion for declaratory judgment. After the cases were consolidated, Jordan Carriers moved for summary judgment, arguing “that it did not have an enforceable contract with Parish [Transport] for the sale of the equipment.” The circuit court agreed and granted Jordan Carriers’ motion for summary judgment. Parish Transport appealed. The Court of Appeals affirmed the trial court’s grant of summary judgment because “[w]ithout a signature, an enforceable contract does not exist.” The Court of Appeals determined that “[m]erely sending an email does not satisfy the signature requirement” and that “[a]n email that states ‘Sent from my iPhone’ does not indicate that the sender intended to sign the record.” The Mississippi Supreme Court granted certiorari to address an issue of first impression: an interpretation or application of Mississippi’s Uniform Electronic Transactions Act (UETA). After careful analysis, the Court found the UETA permitted contracts to be formed by electronic means, i.e, emails. Further, the Court found that the determination of whether an email was electronically signed pursuant to the UETA was a question of fact that turned on a party’s intent to adopt or accept the writing, which was a determination for the fact finder. Because there was a genuine issue of material fact about Doug Jordan’s intent, judgment was reversed and the matter remanded for further proceedings. View "Parish Transport LLC, et al. v. Jordan Carriers Inc." on Justia Law
Posted in: Business Law, Contracts, Internet Law, Supreme Court of Mississippi
Selden v. Airbnb, Inc.
When Selden signed up for Airbnb, an online home rental platform, he was presented with a sign-in webpage that informs the user he is agreeing to certain terms by signing up. Airbnb’s Terms of Service required that all disputes be resolved by arbitration. After Selden signed up for Airbnb, he attempted to rent a listed room and suspected that the host denied his request because of his race, which the host could see from Selden’s profile picture. Selden created two fake Airbnb accounts with profile pictures of white individuals and used his fake accounts to request renting the same property for the same dates. According to Selden, the host accepted both requests. Selden posted his claims on social media where they went viral.Selden sued, citing Title II of the Civil Rights Act of 1964, 42 U.S.C. 2000a), the Civil Rights Act of 1866, 42 U.S.C. 1981, and the Fair Housing Act, 42 U.S.C. 3604. The district court compelled arbitration of his claims. The arbitrator ruled in favor of Airbnb. The court refused to vacate the arbitration award. The D.C. Circuit affirmed, rejecting Selden’s arguments that he did not agree to arbitrate because Airbnb’s sign-up screen failed to put him on notice of the arbitration clause in its Terms of Service, that his discrimination claims were not arbitrable, and that the arbitrator committed misconduct by failing to provide for sufficient discovery and by refusing to consider his expert report. View "Selden v. Airbnb, Inc." on Justia Law