One of the largest home improvement retailers in the United States secured a significant victory with representation from Faegre Drinker in the Seventh Circuit, which affirmed an order compelling individual arbitration of deceptive-pricing claims.
The putative class action challenged the practice of charging a convenience fee to consumers who choose to make a purchase online and have their items located in a store and prepared for in-store pickup. A Faegre Drinker team removed the case to federal court and moved to compel arbitration pursuant to the terms and conditions the plaintiff had accepted when she made her online purchase. The district court granted that motion and dismissed the case. The plaintiff appealed to the Seventh Circuit.
In a published opinion issued on September 3, 2024, the Seventh Circuit affirmed the trial court’s order. Its opinion was particularly notable in three respects. First, it is the first decision in the Seventh Circuit to adopt a standard for determining consumer consent to terms and conditions in online contracting. To that end, it adopted and applied the five-factor test proposed by the Faegre Drinker team, establishing critical guidance for other businesses whose websites serve customers in Illinois, Indiana or Wisconsin.
Second, the court agreed with the Faegre Drinker team’s argument that the “reasonable online shopper” should be assumed not to be “a novice with technology” — a presumption that “permits certain basic, objective assumptions regarding the user’s familiarity with commercial websites, hyperlinks, and online contracts, regardless of subjective experience.” That rule not only enables defendants to argue that the adequacy of disclosures is an objective question that may be decided as a matter of law but also prevents plaintiffs from making hyper-technical arguments that ignore common knowledge about how online commerce works in practice.
Finally, the majority rejected the position of their concurring colleague, who wrote that the reasonableness of notice of contractual terms should be questions of fact for a jury. Rather than adopt that approach — which would ossify the arbitration process and impose prohibitive costs on defendants who invoke it — the majority rightly recognized that the assessment of reasonableness in this context is a legal issue, albeit a “fact-intensive” one.
Results may vary depending on your particular facts and legal circumstances.
