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Dewayne Hubbert v. Dell Corp.

359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)

Purchasers Bound By Contract Terms Available By Hyperlink

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

Contract Terms Available Online Via Hyperlink

Plaintiffs visited Dell’s website and purchased Dell computers which contained Pentium 4 microprocessors.  According to plaintiffs, Dell claimed these microprocessors were the fastest, most powerful Intel Pentium processors then available.  Plaintiffs asserted that this representation was false, because the Pentium 4 microprocessor contained in their computers was not as fast or powerful as either the Pentium 3 or AMD Athlon processors.  As a result, plaintiffs commenced this putative class action, charging Dell, inter alia, with violating Texas’ Deceptive Trade Practices Consumer Protection Act.
Dell moved to compel plaintiffs to arbitrate their dispute, arguing plaintiffs were bound by an arbitration clause contained in Dell’s Terms and Conditions of Sale, which formed a part of the parties’ contract.

The Trial Court rejected this claim, holding both that the Terms and Conditions were not part of the parties’ contract, and that even if they were, they were unenforceable because they were procedurally and substantively unconscionable.

Purchasers Bound By Terms Because They Were Advised That Purchases Were Subject Thereto  

On appeal, the Illinois Appellate Court reversed, holding both that the Terms and Conditions were part of the parties’ contract, and that the arbitration clause contained therein was enforceable.

To make their purchases, plaintiffs visited five separate pages of Dell’s website.  Each of these web pages contained a blue hyperlink titled “Terms and Conditions of Sale.”  Clicking on this link took the consumer to the full Terms and Conditions.  Three of these five pages also advised the consumer that his purchase was subject to these Terms and Conditions of Sale.
The Terms themselves provided that “by accepting delivery of the computer systems and/or other products described on that invoice, Customer agrees to be bound by and accepts these terms and conditions.”

A copy of the Terms accompanied the computers on shipment, and were contained on the back of Dell’s invoice.  Dell also advised plaintiffs that they could return their computers within 30 days for a full refund or credit.

The Court held that by purchasing their computers online with express notice that such a purchase was subject to the Terms and Conditions, the plaintiffs had entered into a contract that contained said Terms.  Such was the case, held the court, notwithstanding the fact that such Terms were only made available via a hyperlink.  Importantly, the court did not rely on the subsequent delivery of the Terms to plaintiffs along with the computers, in reaching this result.  Said the Court:

We find that the online contract included the “Terms and Conditions of Sale.”  The blue hyperlink entitled ‘Terms and Conditions of Sale’ appeared on numerous Web pages the plaintiffs completed in the ordering process.  The blue hyperlinks for the “Terms and conditions of Sale” also appeared on the defendant’s marketing Web pages, copies of which the plaintiffs attached to their complaint.  The blue hyperlinks on the defendant’s Web pages, consitituting the five step process for ordering the computers, should be treated the same as a multipage written paper contract.  Although there is no conspicuousness requirement, the hyperlink’s contrasting blue type makes it conspicuous.  Common sense dictates that because the plaintiffs were purchasing computers online, they were not novices when using computers.  A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.

Additionally, on three of the defendant’s Web pages that the plaintiffs completed to make their purchases, the following statement appeared: “all sales are subject to Dell’s Terms and Conditions of Sale.”  This statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and that it would be wise to find out what the terms and conditions were before making a purchase.  The statement that the sales were subject to the defendant’s “Terms and Conditions of Sale” combined with making the “Terms and conditions accessible online by blue hyperlinks, was sufficient notice to the plaintiffs that purchasing the computers online would make the “Terms and Conditions of Sale” binding on them.  Because the “Terms and Conditions of Sale” were part of the online contract and because the plaintiffs did not argue that their claims were not within the scope of the arbitration agreement, they were bound by the “Terms and Conditions of Sale” including the arbitration clause.

Because we conclude that the “Terms and Conditions of Sale” were part of the online contract formed at the time of the plaintiffs’ purchase of the computers, we need not consider what effect the copies of the “Terms and Conditions of Sale” enclosed in the shipping boxes have on the contract.

Court Upholds Validity Of Arbitration Clause

The Court also reversed the lower court’s holding that the arbitration clause was in any event unenforceable because it was procedurally and substantively unconscionable.  As explained by the court, “procedural unconscionability refers to the circumstances surrounding the adoption of the arbitration provision.  Substantive unconscionability refers to the fairness of the arbitration provision itself.”

In reaching this result, the court rejected the lower’s court’s conclusion that the clause was procedurally unconscionable because it was not conspicuous.  Under Texas law, an arbitration clause need not be conspicuous.  In any event, held the court:

In the instant case, the hyperlinks for the Terms and Conditions of Sale were in a contrasting blue color.  On the linked Web page for the “Terms and Conditions of Sale” the arbitration clause was partially in capital letters, thereby drawing attention to the clause.  Also, the beginning of the “Terms and conditions of sale” stated in bold, capital letters that the terms and conditions contained a dispute-resolution clause.  Thus, although we do not hold that an arbitration clase must be conspicuous, in this case the “Terms and Conditions of Sale” and the arbitration clause were conspicuous.

The court also rejected plaintiffs’ claim that the arbitration clause was substantively unconscionable because it prevented plaintiffs from pursuing a class action lawsuit to achieve redress of their grievances.  In rejecting this argument, the court, quoting with approval AutoNation USA Corp v. Leroy, 105 S.W.3d 190 (Tex. App. 2003) stated: “this assumes that the right to proceed on a class-wide basis supercedes a contracting party’s right to arbitrate under the FAA.”  Such an assumption, held the court, was incorrect. 

Because the parties’ contract contained a valid arbitration clause, the court directed that the matter be resolved via arbitration before the NAF.

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