UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

DANIEL BERMAN; STEPHANIE No. 20-16900 HERNANDEZ; ERICA RUSSELL, Plaintiffs-Appellees, D.C. No. 4:18-cv-01060- v. YGR

FREEDOM FINANCIAL NETWORK, LLC; FREEDOM DEBT RELIEF, LLC; OPINION FLUENT, INC.; LEAD SCIENCE, LLC, Defendants-Appellants.

Appeal from the United States District Court for the Northern District of California Yvonne Gonzalez Rogers, District Judge, Presiding

Argued and Submitted October 21, 2021 San Francisco, California

Filed April 5, 2022

Before: Paul J. Watford and Andrew D. Hurwitz, Circuit Judges, and M. Miller Baker, * International Trade Judge.

Opinion by Judge Watford; Concurrence by Judge Baker

* The Honorable M. Miller Baker, Judge for the United States Court of International Trade, sitting by designation. 2 BERMAN V. FREEDOM FINANCIAL NETWORK

SUMMARY **

Arbitration

The panel affirmed the district court’s order denying defendants’ motion to compel arbitration in a putative class action under the Telephone Consumer Protection Act.

In Part I of its opinion, the panel summarized the facts and procedural history. Plaintiffs used defendants’ websites but did not see a notice in fine print stating, “I understand and agree to the Terms & Conditions which includes mandatory arbitration.” When a dispute arose and plaintiffs filed this lawsuit, defendants moved to compel arbitration, arguing that plaintiffs’ use of the websites signified their agreement to the mandatory arbitration provision found in the hyperlinked terms and conditions.

In Part II, the panel held that plaintiffs did not unambiguously manifest their assent to the terms and conditions when navigating through the websites, and as a result they never entered into a binding agreement to arbitrate their dispute, as required under the Federal Arbitration Act. The parties agreed that either New York or California contract law governed. To form a contract under New York or California law, including a contract formed online, the parties must manifest their mutual assent to the terms of the agreement, and they may do so through conduct. The panel explained that the courts have routinely found enforceable “clickwrap” agreements, in which a website presents users with specified contractual terms on a pop-up ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. BERMAN V. FREEDOM FINANCIAL NETWORK 3 screen and users must check a box explicitly stating “I agree” in order to proceed. Courts are more reluctant to enforce “browsewrap” agreements, in which a website offers terms that are disclosed only through a hyperlink and the user supposedly manifests assent to those terms simply by continuing to use the website.

The panel held that unless the web operator can show that a consumer has actual knowledge of an arbitration agreement, an enforceable contract will be found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. The panel concluded that defendants’ webpages did not provide reasonably conspicuous notice because of the small font size and format and because the fact that a hyperlink was present was not readily apparent. The panel further concluded that by clicking on a large green “continue” button, plaintiffs did not unambiguously manifest their a