Denying the motion of the defendant internet service provider, Clearwire, to compel arbitration, the U.S. District Court for the Western District of Washington held last week that Clearwire’s e-mail confirmation to the plaintiffs was inadequate notice of the terms of service.  This e-mail confirmation included, on the third page of the e-mail, a link to Clearwire’s home page rather than a direct link to Clearwire’s terms of service.  To navigate to the terms of service from the home page, the plaintiffs would have had to follow two hyperlinks.  The court held that this “trail of breadcrumbs” left by Clearwire to lead the plaintiffs to its terms of service did not constitute sufficient or reasonably conspicuous notice of the terms of service.  Accordingly, the court declined to enforce the arbitration clause of the terms of service without an evidentiary hearing with respect to the factual issue of the plaintiffs’ assent to the terms.

The court applied Washington and Texas law to reach this decision, but it was heavily informed by well-known federal court decisions on the formation of contracts on the Internet.  Under those cases, Internet users must have reasonable notice of the terms of an agreement in order to be found to have assented to the agreement.  Courts considering whether users have reasonable notice of the terms have considered how conspicuous the placement of the terms is on the web page and whether it was possible to determine that a user has actually seen the terms.