97 F. Supp. 3d 359 (E.D.N.Y. 2015)
Plaintiffs Adam Berkson, a New York resident, and Kerry Welsh, a California resident, sued Gogo LLC and Gogo Inc. in the United States District Court for the Eastern District of New York.1 They alleged that Gogo charged them recurring monthly fees for in-flight Wi-Fi service without adequate notice or consent, resulting in unauthorized credit card charges.2
On August 7, 2011, Welsh subscribed to Gogo's service on an Alaska Airlines flight from Los Angeles to Seattle.3 He viewed a create account page that required fields marked with asterisks but presented an optional checkbox next to the statement "I agree to the Terms of Use" in small print with a hyperlink.4 Welsh was billed monthly from September 2011 through December 2012 without receiving any monthly bills or renewal notices from Gogo.5
On September 25, 2012, Berkson subscribed on a Delta Airlines flight from New York to Indianapolis.6 He interacted with sign-in pages containing "SIGN IN" buttons and a create account page stating in small print "By clicking 'NEXT' I agree to the terms of use and privacy policy" with hyperlinks.7 His credit card was charged $34.95 on September 25, October 25, November 26, and December 25, 2012, for a total of $104.85 before American Express reversed the charges.8
The sign-in and create account pages did not require users to view or scroll through the terms of use before clicking the buttons to proceed.9 The arbitration clause was first added to Gogo's terms of use in December 2012.10 Earlier versions contained only Illinois venue provisions accessible after scrolling multiple pages.11
Berkson filed the class action complaint on February 25, 2014.12 Welsh joined via the amended complaint filed on April 24, 2014.13 Defendants moved to compel arbitration, transfer venue to the Northern District of Illinois, and dismiss for lack of standing.14 Welsh's counsel sent a CLRA demand letter on July 24, 2013, after which Gogo sent a refund check directly to Welsh.15 Oral argument on the motions occurred on October 15, 2014, and discovery was completed on February 13, 2015.16
Whether plaintiffs agreed to Gogo's terms of use containing arbitration and venue provisions by clicking sign-in or next buttons on the website sign-in pages?17
No. Plaintiffs did not agree to Gogo's terms of use containing arbitration and venue provisions.20 Welsh encountered an optional checkbox next to the statement "I agree to the Terms of Use" that was not marked with an asterisk on the create account page and did not click it.21 Berkson interacted with sign-in pages and a create account page where the statement "By clicking 'NEXT' I agree to the terms of use and privacy policy" appeared in small print below the button with hyperlinks.22 The pages did not require viewing or scrolling through the terms before proceeding.23
The arbitration clause was added only in December 2012 after both plaintiffs subscribed.24
Plaintiffs did not agree to the arbitration or venue provisions in Gogo's terms of use.25
Whether the website's design and presentation of the terms of use provided reasonable notice to plaintiffs of the arbitration clause, venue clause, and automatic renewal terms?26
Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.27 Where the assent to terms of a contract is largely passive, the contract-formation question will often turn on whether a reasonably prudent offeree would be on inquiry notice of the terms at issue.
No. The website's design and presentation of the terms of use did not provide reasonable notice to plaintiffs of the arbitration clause, venue clause, and automatic renewal terms.28 The references to the terms appeared in small print below the buttons with hyperlinks that were not prominent.29 Plaintiffs were not required to view the terms before clicking.30 The venue provisions were accessible only after scrolling to the seventh or eighth page.31
No arbitration clause existed at the time of subscription.32 A reasonably prudent user would not have known or learned of these terms before using the service.33
The website's design did not provide reasonable notice of the arbitration clause, venue clause, or automatic renewal terms.34
Whether plaintiffs have Article III standing to pursue claims for unauthorized recurring charges after receiving reimbursements from credit card companies or Gogo?35
To establish Article III standing, a plaintiff must allege an injury-in-fact that is concrete and particularized and actual or imminent, fairly traceable to the challenged action, and likely to be redressed by a favorable ruling of the court.36 An injury occurs on the date a credit card is charged without authorization.37
Yes. Plaintiffs have Article III standing to pursue claims for unauthorized recurring charges after receiving reimbursements from credit card companies or Gogo.38 Berkson suffered particularized injury on each date Gogo billed his credit card without authorization in October, November, and December 2012.39 The reversal by American Express does not negate the injury traceable to Gogo.40 Welsh incurred unauthorized charges from September 2011 through December 2012 without monthly notices.41 The subsequent refund does not moot his claim.42
Plaintiffs have Article III standing despite the reimbursements.43
Whether Gogo's direct refund to Welsh after receiving his CLRA demand letter affects his ability to represent the putative class?44
An offer of judgment or settlement does not render a named plaintiff's claim moot when the plaintiff retains an individual interest in the litigation.45 Picking off named plaintiffs by offering individual relief before class certification frustrates the objectives of class actions.46 Direct contact with a represented party in violation of the no-contact rule renders the offer irrelevant for class action purposes.47
No. Gogo's direct refund to Welsh after receiving his CLRA demand letter does not affect his ability to represent the putative class.48 Welsh's counsel sent the demand letter on July 24, 2013, putting Gogo on notice of the intended class action.49 The subsequent direct refund check violated the no-contact rule.50 Such pick-off attempts before certification do not moot the class claims or eliminate Welsh's status as a representative.51
Gogo's direct refund does not affect Welsh's ability to represent the putative class.52