Courts have generally categorized online agreements into two types: “clickwrap” agreements and “browsewrap” agreements, write Joshua R. Stein and J. Alexander Lawrence of Morrison & Foerster LLP in an article posted on Lexology.com.

The explain:

Clickwrap agreements—which require a user to check a box or click an icon to signify agreement with the terms—are usually enforceable under U.S. law, even where the terms appear in a separate hyperlinked webpage but where language accompanying the box or icon indicates that checking the box or clicking the icon indicates assent to such terms.

On the other hand, browsewrap agreements—where the terms are passively presented to users in a hyperlink somewhere on a webpage, often at the very bottom of the page in small font—are often unenforceable because it often cannot be proved the user knew the terms existed or even was aware of the hyperlink.

They describe a case in which a signed contract did not include an arbitration clause, but instead included an Internet link to terms and conditions that included arbitration conditions.

Read the article.

Most questions of arbitrability can be resolved on motion, using a summary judgment-like standard, writes Liz Kramer in Stinson Leonard Street’s ArbitrationNation.com. “However, just like summary judgment, if there are genuine disputes of material fact about whether a claim must be arbitrated — like competing evidence about whether the parties ever formed an arbitration agreement — those should be determined by a trial.  That is the lesson of three recent cases from the Third Circuit, the Ninth Circuit, and the Supreme Court of Alabama.”

She writes that the very existence of an arbitration agreement can be hotly disputed. “For contract negotiators, that means it is critical to obtain (and retain) a signed copy of the final agreement including the arbitration clause. For advocates trying to enforce agreements, that means it is critical to recognize when to give up on motion practice and ask for a trial on the issue, so that you don’t waste years on appeal, only to get sent back to square one.”

Read the article.

Myanna Dellinger of the University of South Dakota School of Law has posted a discussion of a recent case in which a judge faulted Uber with presenting its drivers with a contract that was “likely, frankly, to engender confusion.”

Dellinger wrote about the case in the ContractsProf Blog.

The underlying case is a class action lawsuit against Uber for allegedly misclassifying its drivers as “independent contractors” instead of regular “employees.”

“Whether this is an example of deliberate strong-arming or intimidating the drivers into not joining the lawsuit or simply unusually poor contract drafting may never be known. Judge Chen did, however, order Uber to stop communicating with drivers covered by the class action suit and barred the company from imposing the new contract on those drivers,” Delinger writes.

Read the article.

A couple of words here or there in a contract can make a huge difference, particularly when those words relate to what happens if there is a breach or some other dispute between the parties, writes Shep Davidson in Burns & Levinson’s blog, The In-House Advisor.

He discusses the case of Family Endowment Partners, L.P. v. Sutow.

That case involved a lawsuit that resulted in a $48 million award to the plaintiffs in a ruling issued by an arbitrator. Part of the award included triple damages. Davidson explains how some simple changes in the contract could have avoided much of the defendant’s loss.

Read the article.

The typical reinsurance contract arbitration involves a tri-partite panel of arbitrators, with each party appointing an arbitrator and a separate process governing appointment of the third arbitrator (known as “the umpire”),” according to a white paper published by Sidley Austin LLP and available on Lexology.com.

Most arbitrations run smoothly, the paper says, but “arbitrators should be ready for the exceptional case, which can be occasioned by another arbitrator or counsel. The remedy for rogue behavior may rest within the panel, or it may require judicial intervention. Judicial relief can be hard to come by, given the procedural and substantive hurdles to be cleared; but the truly egregious case has a way of catching a court’s attention.”

The article examines some examples of panel breakdown and how they have been addressed.

Read the white paper.

The U.S. Supreme Court has reversed a California appellate court’s refusal to enforce an arbitration provision in a contract, concluding that the court’s decision is incompatible with the Federal Arbitration Act and prior Supreme Court precedent, reports John G. Papianou of Montgomery McCracken Walker & Rhoads LLP.

DirecTV, Inc. v. Imburgia involved two DirecTV customers who sued the company in California state court, claiming early termination fees in their service agreements violated California law, Papianou wrote in an article published by Lexology.com. DirecTV cited a provision in the service agreement that called for binding individual arbitration of all disputes between DirecTV and its customers. The trial court denied the request and DirecTV appealed.

He wrote that the message is clear: arbitration agreements that waive class actions or class arbitration are enforceable. And state-court judges must enforce them.

Read the article.

As demonstrated by two recent cases, the trends of delegating arbitrability questions to the arbitrator, and precluding parties from contractually modifying appellate rights, are here to stay, writes Timothy J. Abeska of Barnes & Thornburg in an article published by the National Law Review.

In Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015), a dispute in an employment agreement, Brennan sued his employer, Opus Bank, claiming he was entitled to terminate his employment for “Good Reason” and collect a severance benefit. The bank treated Brennan’s termination as a voluntary resignation which did not trigger an entitlement to severance.

The other case was Atlanta Flooring Design Centers, Inc. v. R.G. Williams Construction, Inc., 333 Ga. App. 528, 773 S.E.2d 868 (Ga. Ct. App. 2015).

Read the article.

The latest of a line of recent cases in which the U.S. Supreme Court has weighed the enforceability of class action waivers in arbitration agreements was before the court on Oct. 6, 2015, when the court heard oral argument in DirecTV, Inc. v. Imburgia, et al., No. 14-462, reports James A. McKenna of Jackson Lewis.

“These decisions almost uniformly have favored arbitration, and many employers have adopted and successfully utilized arbitration agreements containing class action waivers,” he explains.

DirecTV’s customers signed agreements requiring claims relating to the agreement or to the company’s service to be decided by binding arbitration on an individual basis. “Arbitration on a class basis was specifically prohibited. At the time Amy Imburgia signed the agreement, the controlling California law was the “Discover Bank rule” announced by the California Supreme Court in 2005. Under the Discover Bank rule, almost all consumer arbitration agreements containing class action waivers were deemed unconconscionable and, therefore, unenforceable,” according to the article.

Read the article.

The Consumer Financial Protection Bureau (CFPB) announced that it is exploring a rulemaking to eliminate the use of certain arbitration agreements in consumer contracts that block consumers from participating in class-action lawsuits, report Bill Mayberry and Jodie Herrmann Lawson of McGuireWoods. They write that, if the new rule is enacted, it will impact companies that fall within the CFPB’s broad interpretation of businesses that provide financial products and services for consumer purposes.

“The announcement comes on the heels of the CFPB’s publication of a three-year study on arbitration that concluded that consumers generally are better served through litigation. According to CFPB Director Richard Cordray, arbitration clauses amount to ‘a free pass to sidestep the court and avoid accountability for wrongdoing,” they write.

The article is on the firm’s Subject to Inquiry blog.

Read the article.