Pennsylvania Supreme Court to Rule on Enforceability of ‘Browsewrap’ Arbitration Agreements
– The Pennsylvania Supreme Court is poised to deliver a ruling with potentially far-reaching implications for online contracts, specifically those utilizing “browsewrap” agreements. The case, Chilutti v. Uber Technologies, Inc., centers on whether a user’s continued use of a website constitutes acceptance of the site’s terms and conditions, even if those terms – including arbitration clauses – aren’t explicitly acknowledged with a click or other affirmative action.
The court agreed to review the case after a divided Pennsylvania Superior Court, and later the Superior Court en banc, determined that a “stricter burden of proof” should be applied when companies seek to enforce arbitration agreements embedded within their online terms. This stricter standard stems from the understanding that arbitration effectively waives a consumer’s constitutional right to a jury trial.
Browsewrap agreements differ significantly from “clickwrap” agreements, which are generally considered enforceable. Clickwrap agreements present users with the terms and require a deliberate action, such as checking an “I agree” box, to proceed. In contrast, browsewrap agreements typically disclose terms through a hyperlink, with assent inferred from the user’s continued use of the website.
According to Uber, as presented in court filings, a user’s continued interaction with its website signifies consent to all terms and conditions, even without direct viewing of those terms. This assertion is at the heart of the legal debate.
The Pennsylvania Supreme Court’s decision will address several key questions. One central issue is whether the Superior Court’s “special-notice rule” for enforcing online arbitration agreements conflicts with the Federal Arbitration Act (FAA), as interpreted by the U.S. Supreme Court. The court will also consider whether, under Pennsylvania law, online arbitration agreements should be subject to the same enforcement rules as traditional contracts.
The case draws on the precedent established in Berman v. Freedom Financial Network, LLC, a case decided by the Ninth Circuit. That ruling outlined that a contract can be established through evidence demonstrating the consumer’s actual knowledge of the terms. Alternatively, a contract can be formed through “inquiry notice” if the website provides “reasonably conspicuous” notice of the terms and the consumer takes an action that clearly indicates agreement.
The outcome of Chilutti v. Uber Technologies, Inc. is expected to provide clarity for businesses operating online and relying on browsewrap agreements. A ruling upholding the Superior Court’s stricter standard could significantly increase the difficulty of enforcing arbitration clauses in such agreements. Conversely, a decision favoring Uber could reinforce the enforceability of browsewrap agreements, potentially impacting consumers’ access to traditional legal remedies.
The court’s consideration of the FAA’s implications highlights the intersection of state and federal law in this area. The FAA generally favors arbitration, but the Pennsylvania court is grappling with how to balance that preference with the protection of consumers’ constitutional rights.
Recent activity from the Pennsylvania Supreme Court, as noted on the Unified Judicial System of Pennsylvania website, includes the posting of opinions and orders on , and . While these postings do not directly relate to the Chilutti case, they demonstrate the court’s ongoing activity and commitment to issuing rulings on significant legal matters.
