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California Federal Court Enforces Website Browsewrap Terms Based on “Constructive Knowledge”
In general, San Diego businesses and consumers can only be bound to a contract if they agree to the contract. This is the essential element of entering into a contract knowingly. With online contracts — like a website Terms of Service Agreement — consumers often argue that “I did not know I was agreeing to anything.” Over the last couple of decades, California courts have been sympathetic to these sorts of consumer-friendly arguments and have, thus, imposed various requirements that browsewrap and clickwrap contracts be conspicuous and easy to find on the website.
The pendulum may be swinging back in the other direction, however. Recently, a federal court sitting here in the Golden State rejected an “I did not know” argument based on the consumer’s constructive knowledge that there was a Terms of Service Agreement. See Gutierrez v. FriendFinder Networks Inc., Case No. 18-cv-05918-BLF (US Dist. N.D.Cal. May 3, 2019).
What is “Constructive Knowledge?”
In general, under California law, a person can be said to have actual knowledge of something or constructive knowledge. Actual knowledge is having direct knowledge or information. “I have read the contract and signed it” is an example of actual knowledge. With respect to a website, actual knowledge is when a user clicks on the hyperlink and is directed to the pages where the Terms of Service contract is written. Constructive knowledge, on the other hand, is having knowledge of something imputed by the law. In general, one cannot intentionally “turn one’s head away” from something and then claim, “I did not know.”
In the Gutierrez case, the plaintiff claimed that he did not know about the Terms of Use Agreement for a certain dating website. Gutierrez sued after there was a data breach on the website. He brought claims based on negligence and privacy-rights violations. The Terms of Use Agreement contained a mandatory arbitration provision and the website sought to compel arbitration. Gutierrez object and, as noted, claimed he did not know about the Terms of Use Agreement or about the arbitration provision.
However, the court rejected his claim based on the legal doctrine of constructive knowledge. In particular, the court noted the following facts:
- After Gutierrez signed up, based on certain bad conduct on message boards, his privileges were temporarily suspended
- After being suspended, the website sent an email stating that he had to agree to the Terms of Use Agreement before he could be reinstated
- Gutierrez spoke with a phone representative who told Gutierrez, among other things, that “[b]ecause we set restrictions on the website so you need to follow our rules and regulations”
- Gutierrez continued to use the website after his privileges were reinstated
From the foregoing, the court concluded that Gutierrez had constructive knowledge of the website’s Terms of Use Agreement. At minimum, Gutierrez knew there was a Terms of Use Agreement. The court concluded that, by continuing to use the website, Gutierrez agreed to the terms of the Agreement even if he never actually went to the hyperlinked pages and read the agreement. Contractual terms can be accepted by use of a service.
Contact San Diego Corporate Law Today
If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has been named a “Rising Star” for four years running by SuperLawyers.com. Every business needs a good business attorney like Mr. Leonard. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. He can be reached at (858) 483-9200 or via email. Like us on Facebook.
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