Visual comparison in online contract formation

Cody v. Jill Acquisition LLC, --- F.Supp.3d ----, 2025 WL 1822907, No. 25-CV-937 TWR (KSC) (S.D. Cal. Jun. 30, 2025)

I wouldn’t usually blog a consumer class action that was just about arbitration, but I want to highlight this one because of the use of images. Not only does the court include the visuals of what the consumer saw (in the course of deciding that the arbitration agreement wasn’t clearly enough disclosed to be binding), it compares those to visuals from past cases. However, it ultimately distinguishes cases that are visually similar because of the different context--a one time purchase as a "guest" compared to signing up for an ongoing relationship. Whether or not you agree with the result, kudos to the judge to looking beyond text to what the precedents actually showed.

This is otherwise a standard “deceptive discount/misleading reference price” case. JJill argued that the plaintiff agreed to arbitrate. 

She first had to click “add to bag.” 

​Then “continue checkout.” 

She was then prompted to add her shipping address and select a shipping method: 

Then a payment method:

 

Then ​“Proceed to Order Review” and the order review page:

 

​ Directly above the “Place Order” button was this statement: “By clicking ‘Place Order’ you agree to J.Jill’s Terms of Use & Privacy Policy.” “Terms of Use” was a blue, underlined hyperlink. Those terms explicitly called attention to the arbitration clause at the top of the page:

 

There was a section called “Binding Arbitration Agreement and Class Action Waiver” under the “DISPUTE RESOLUTION” heading.

It was undisputed that the plaintiff didn’t have actual notice. “[A]n 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.” “This test has two aspects: the visual design of the webpages and the context of the transaction.”

Conspicuous notice “is a matter of whether an advisal is ‘displayed in a font size and format such that the court can fairly assume that a reasonably prudent Internet user would have seen it.’ ” The Ninth Circuit “deemed the [below] notice insufficient”:  

“The text disclosing the existence of the terms and conditions on the[ ] websites [wa]s the antithesis of conspicuous” because it was “printed in a tiny gray font considerably smaller than the font used in the surrounding website elements, and indeed in a font so small that it [wa]s barely legible to the naked eye,” whereas “[t]he comparatively larger font used in all of the surrounding test naturally direct[ed] the user’s attention away from the barely readable critical text.” Further, the hyperlink was “simply underscore[d],” without the “[c]ustomary design elements denoting the existence of a hyperlink[,] includ[ing] the use of a contrasting font color (typically blue) and the use of all capital letters.”

More recently, the Ninth Circuit concluded that, “[c]onsidering the [following] notice in the full context of the transaction, [it] would not expect a reasonably prudent internet user to be on inquiry notice of the contract” because “[t]he advisal [wa]s not ... located directly above or below the action button and [wa]s displayed in relatively small text.”

But the Ninth Circuit approved different displays as sufficient: 

With these, “a reasonable user would have seen the notice and been able to locate the Terms via hyperlink” because the “notice [wa]s conspicuously displayed directly above or below the action button” and “the ‘Terms of Use’ hyperlink [wa]s conspicuously distinguished from the surrounding text in bright blue font, making its presence readily apparent.”

Another Ninth Circuit case “found a single screen sufficiently conspicuous”:

This one “explicit[ly]” included “clear and legible” “notice on the final order review page, directly below key information such as the purchase total, and directly below the button [the plaintiff had] tapped to complete his purchase ... on an uncluttered page[,] ... not hidden or obscured” with “the hyperlinked phrase ‘terms of use’ ... colored bright green—contrasted against the surrounding white background and adjacent black text” and “the same color as other clickable links on the page, suggesting clearly that it is a hyperlink.”

Also, the Ninth Circuit reversed a district court order that found that these images failed to provide reasonably conspicuous notice:

​The relevant admonition was “[d]irectly beneath the operative Play button,” “[t]he design elements use[d] ‘a contrasting font color’ making the notice legible on the dark background,” and “the sign-in screen lack[ed] clutter and use[d] ‘[c]ustomary design elements denoting the existence of a hyperlink.’ ”

Here, the notice at issue was visually on the acceptable side. While the text of the notice might be “considerably smaller than the font used in the surrounding website elements,” it wasn’t “so small that it is barely legible to the naked eye,” or placed on a cluttered page or obscured. Nor was it in a color lighter than surrounding text of a similar size. The hyperlink was both underlined and in a blue font, like other hyperlinks on the page. “Finally and critically,” the text of the notice was directly below the “Place Order” button, not “outside of the user’s natural flow.” 

But that wasn’t enough. Courts also have to “consider ... the ‘full context of the transaction,’ ” ... such as whether the type of transaction ‘contemplates entering into a continuing, forward-looking relationship’ that would be governed by terms and conditions.” Courts are more likely to conclude that a user anticipating “some sort of continuing relationship” would expect to be bound by terms, whereas a user “who simply purchases goods or avails herself of a one-time discount offer” would be less likely to form such an expectation. Relevant considerations include: (1) whether the transaction contemplates a “continuing relationship” by creating an account requiring a “full registration process,” (2) whether the user is entering a “free trial,” (3) whether a user enters “credit card information,” and (4) whether the user has downloaded an app on their phone, representing an intent to have continued access to the app.

Here, the plaintiff opted to check out as a guest, distinguishing this case from others where the Ninth Circuit found inquiry notice. The California Court of Appeal noted that “most consumers would not expect to be bound by contractual terms” when engaging in a “trivial” transaction like “the sale of a single item, such as a pair of socks.” Because “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers,” defendant failed to meet its burden of establishing that its notice was sufficiently conspicuous to bind the plaintiff to arbitration.