Sgouros v. Transunion Corp.

Decision Date25 March 2016
Docket NumberNo. 15–1371.,15–1371.
Citation817 F.3d 1029
Parties Gary W. SGOUROS, on behalf of himself and all others similarly situated, Plaintiff–Appellee, v. TRANSUNION CORPORATION, Trans Union LLC, and TransUnion Interactive, Inc., Defendants–Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Christopher Benjamin Sanchez, Attorney, Cafferty Clobes Meriwether & Sprengel LLP, Chicago, IL, Leslie Bailey, Attorney, Public Justice, Oakland, CA, for PlaintiffAppellee.

Michael C. O'Neil, Attorney, Timothy R. Carraher, Attorney, Michael D. Richman, Attorney, Reed Smith LLP, Chicago, IL, for DefendantsAppellants.

Before WOOD, Chief Judge, and EASTERBROOKand RIPPLE, Circuit Judges.

WOOD, Chief Judge.

Hoping to learn about his creditworthiness, Gary Sgouros purchased a "credit score" package from the defendant, TransUnion. Armed with the number TransUnion gave him, he went to a car dealership and tried to use it to negotiate a favorable loan. it turned out, however, that the score he had bought was useless: it was 100 points higher than the score pulled by the dealership. Believing that he had been duped into paying money for a worthless number, Sgouros filed this lawsuit against TransUnion. In it, he asserts that the defendant violated various state and federal consumer protection laws. Rather than responding on the merits, however, TransUnion countered with a motion to compel arbitration. It asserted that the website through which Sgouros purchased his product included (if one searched long enough) an agreement to arbitrate all disputes relating to the deal. The district court concluded that no such contract had been formed and denied TransUnion's motion. TransUnion has appealed from that decision, but we agree with the district court and affirm its order.

I

On June 10, 2013, Sgouros purchased TransUnion's "3–in–1 Credit Reports, Credit Scores & Debt Analysis" for $39.90; he did so using TransUnion's website. In order to complete the purchase, Sgouros had to take three steps. First, he clicked on a large orange "Click Here" button on the homepage under the heading "Get Your Credit Score & Report." This click took him to a page headed with the message "Your FREE credit score & $1 credit report are only moments away." Here is what it looked like:

As the screenshot shows, the customer was told that he had to take three steps in order to obtain his "FREE credit score & $1 credit report." Step 1, pictured above, required Sgouros to furnish some identifying information and select "Yes" or "No" in response to a prompt that said "Please send me helpful tips & news about my service, including special offers from TransUnion and trusted partners!" Sgouros answered these questions and clicked the large orange button labeled "Submit & Continue to Step 2." Step 2 is reproduced below:

It requires the customer to create an account user name and password and to type in his credit card information. It also asks "Is your home address the same as your billing address?" and offers "Yes" and "No" bubbles. Below these bubbles one can see a rectangular scroll window.

Inside the scroll window the words "Service Agreement" appear at the top. They are followed by two fully visible lines and a third that is chopped off horizontally but is legible enough to read. Including that third line, the visible text says "Welcome to the TransUnion interactive web site, membership tui.transunion.com (the "Site"). This Service Agreement ("Agreement") contains the terms and conditions upon which you ("you" or "the member") may access and use...." (The version of the Service Agreement presented in TransUnion's brief includes the full third line, and it underlines the words "Service Agreement" and "the terms and conditions" in the visible text, even though there is no such underlining in the attached web page exhibit. These discrepancies, while troubling, do not affect our analysis.) Underneath the scroll box and to the right are the small hyperlinked words "Printable Version." Below those words was this paragraph, in bold text:

You understand that by clicking on the "I Accept & Continue to Step 3" button below, you are providing "written instructions" to TransUnion Interactive, Inc. authorizing TransUnion Interactive, Inc. to obtain information from your personal credit profile from Experian, Equifax and/or TransUnion. You authorize TransUnion Interactive, Inc. to obtain such information solely to confirm your identity and display your credit data to you.

Sgouros proceeded to Step 3 by clicking on the "I Accept & Continue to Step 3" button. Nowhere did this button require him first to click on the scroll box or to scroll down to view its complete contents, nor did it in any other way call his attention to any arbitration agreement. But, buried at page 8 of the full, 10–page printable version of the Service Agreement there was a purported arbitration agreement. In addition, the first page of the Agreement contains a brief statement indicating that it includes an arbitration clause and class action waiver.

Sgouros filed a putative class action suit against TransUnion under the Fair Credit Reporting Act, 15 U.S.C. § 1681g(f)(7)(A); the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. ; and the Missouri Merchandising Practices Act, MO.REV.STAT. § 407.010 et seq. , for misleading consumers by failing to inform them that the formula used to calculate their purchased credit scores was materially different from the formula used by lenders. We have jurisdiction to review the district court's denial of the motion to compel arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 16(a)(1)(B).

II

Our review of the issues on this appeal—the question whether an agreement to arbitrate arose, and the denial of TransUnion's motion to compel arbitration—is de novo. Janiga v. Questar Capital Corp., 615 F.3d 735, 742 (7th Cir.2010)(contract formation); Int'l Bhd. of Elec. Workers Local 2150 v. NextEra Energy Point Beach, LLC, 762 F.3d 592, 593–94 (7th Cir.2014)(arbitrability). The relevant facts are not disputed.

A

As the Supreme Court repeatedly has emphasized, arbitration is a creature of contract. E.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011); Stolt–Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 684, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010). We thus turn first to the question whether an agreement to arbitrate arose between TransUnion and Sgouros. TransUnion's primary support for the alleged agreement relies on Sgouros's act of clicking on the button that said "I Accept & Continue to Step 3." Courts around the country have recognized that this type of electronic "click" can suffice to signify the acceptance of a contract. See, e.g., Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 23 (2d Cir.2002)(applying California contract law and finding plaintiffs had not assented to arbitration clause in a license agreement located below the download button on a website offering free software). There is nothing automatically offensive about such agreements, as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement. Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1257 (10th Cir.2012)(finding that Florida and Oklahoma law would uphold the validity of acceptance using a click where customers could review the service terms in a scroll box and could not complete purchase without clicking "I Agree"); Feldman v. Google, Inc., 513 F.Supp.2d 229, 236–37 (E.D.Pa.2007)(finding a "click" agreement valid under California law because the user agreement was "immediately visible," contained a "prominent admonition in boldface to read the terms and conditions carefully, and with instruction to indicate assent if the user agreed to the terms," and required the "affirmative action" of clicking "Yes"); Jallali v. Nat'l Bd. of Osteopathic Med. Examiners, Inc., 908 N.E.2d 1168, 1173 (Ind.Ct.App.2009)(finding valid agreement for purposes of Indiana law where user had to click "Accept" under a box containing an "Acknowledgement and Agreement").

The present case, the parties agree, is governed by Illinois law. In Illinois, as in many states, the law governing the formation of contracts on the Internet is still in the early stages of development. But there is no reason to think that Illinois's general contract principles do not apply. Formation of a contract requires mutual assent in virtually all jurisdictions; Illinois courts use an objective approach to that question. See, e.g., Beverly v. Abbott Labs., No. 15–1098, 817 F.3d 328, 333, 2016 WL 1042545, at *3 (7th Cir. Mar. 16, 2016); Vill. of S. Elgin v. Waste Mgmt. of Ill., Inc., 348 Ill.App.3d 929, 284 Ill.Dec. 868, 810 N.E.2d 658, 670 (2004)(" 'Intent' refers to objective manifestations of intent in the words of the contract and the actions of the parties; it does not encompass one party's secret, undisclosed intentions or purely subjective understandings of which the other party is unaware."). Under the objective theory, intent to manifest assent in Illinois is revealed by "outward expressions such as words and acts." Bank Computer Network Corp. v. Cont'l Ill. Nat. Bank & Trust Co. of Chicago, 110 Ill.App.3d 492, 66 Ill.Dec. 160, 442 N.E.2d 586, 591 (1982). The parties do not need to "share the same subjective understanding as to the terms of the contract." Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill.2d 306, 113 Ill.Dec. 252, 515 N.E.2d 61, 65 (1987). But "there must be a meeting of the minds or mutual assent as to the terms of the contract." Id.

Generally, a party who signs a written contract is presumed to have notice of all of the contract's terms. Janiga, 615 F.3d at 743. The trick here is to know how to apply these general principles to newer forms of contracting. In the context of cruise-ship tickets, which present problems similar to those of agreements formed on...

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