[00:00:00] Speaker 03: And our next case on tap is Seneca versus Homoglo Inc, case number 24-887. [00:00:41] Speaker 01: Good morning. [00:00:42] Speaker 01: May it please the court, Michelle Gearhart on behalf of Appellant Homoglo Inc. [00:00:48] Speaker 01: This appeal concerns the enforceability of an arbitration agreement in the context of an online transaction, and specifically, the narrow threshold question of whether an agreement to arbitrate exists. [00:01:02] Speaker 01: Applying California contract formation law to online transactions, this court has stated an agreement to arbitrate is formed where two conditions exist. [00:01:12] Speaker 01: First, the website provides reasonably conspicuous notice of the terms to which the consumer will be bound. [00:01:20] Speaker 01: And second, the consumer takes some action, such as clicking a button that unambiguously manifests his or her assent to those terms. [00:01:31] Speaker 01: And in the context of an online transaction, the presentation of the terms, the way that the terms are presented in the user interface helps determine the enforceability of an arbitration provision that's found in the terms and conditions. [00:01:50] Speaker 00: I guess my biggest question is how a consumer would know, looking at Homoglo's website, that there is more than one set of terms and conditions at issue here, because there are terms and conditions that don't contain the arbitration provision, and then there are those that do. [00:02:07] Speaker 00: And I couldn't really see, looking at the video, how a consumer would know the difference between those sets. [00:02:14] Speaker 01: Well, I think there's information that's presented initially that summarizes what the key points of what I will call deal is, that Your Honor is calling terms and conditions. [00:02:26] Speaker 01: It's not until the point where the consumer is redeeming their voucher and triggering the Forever Clean membership that the terms and conditions [00:02:38] Speaker 01: that a normal consumer would expect to see in an ongoing forward relationship are presented via hyperlinks. [00:02:46] Speaker 01: So I think there are, in the beginning pages of the website, there are facts, there's information that's stated that explains the ForeverClean membership, explains that purchasing the voucher requires ForeverClean membership. [00:03:06] Speaker 01: I would not characterize those as being [00:03:08] Speaker 01: the types of terms and conditions that a consumer would expect that is ultimately presented when the consumer is redeeming their voucher. [00:03:19] Speaker 03: Well, Ms. [00:03:19] Speaker 03: Gierhardt, you raise the point that I wanted to ask you about because I do think those earlier pages indicate to a consumer that purchasing a voucher requires a membership, that they're kind of bundled up together. [00:03:35] Speaker 03: And so the trouble I have with your arguments is why the membership enrollment would attach at the I accept button and not when one has purchased the voucher itself. [00:03:49] Speaker 03: To me, once you've gone through the steps of knowing that these things are bundled together and you hit the purchase button and it's processing payment, [00:04:00] Speaker 03: and then you get into a scheduling cleaning page, you've entered into a contract. [00:04:07] Speaker 03: And that contract includes, you know, paying for the voucher, but also you're getting this membership. [00:04:13] Speaker 03: And at that point, none of those additional terms and conditions have been presented to a user to know that what they purchased also [00:04:21] Speaker 03: involves a class waiver release or binding arbitration. [00:04:26] Speaker 03: So to Judge Thomas's point, I don't see how this is clearly conspicuous at the point that someone hits the purchase button page, button. [00:04:35] Speaker 01: Well, I think we have to look at the overall context of the transaction. [00:04:39] Speaker 01: And the voucher entitles someone to deeply discounted rates. [00:04:46] Speaker 01: But the voucher doesn't have to be redeemed right away. [00:04:49] Speaker 01: So if somebody wants to make sure that they receive the entitlement to the discounted hourly rates, they can purchase the voucher. [00:04:58] Speaker 01: then they can do nothing with it, ultimately, and nothing happens. [00:05:03] Speaker 01: They're not charged anything until they go to redeem the voucher and schedule their ongoing cleanings. [00:05:10] Speaker 03: Then why does it say processing payment after you've hit the purchase button? [00:05:15] Speaker 03: If they're not being charged anything, I don't think a reasonable consumer would think that they're not being charged something at that point. [00:05:24] Speaker 01: Well, I believe they're being charged for the voucher. [00:05:27] Speaker 01: So, but once you purchase the voucher, there's no limitation on how much time can pass before it needs to be redeemed. [00:05:39] Speaker 01: You can wait 30 days, you can wait 60 days, you can wait 90 days before you actually schedule your cleaning, which at that point, that triggers your six-month forever clean membership. [00:05:53] Speaker 03: But that's my question, why? [00:05:55] Speaker 03: If two different times they're in the terms and conditions and then also in this, I guess, review page there are these disclaimers that the voucher comes with the membership and then you put in your credit card or payment information and you hit purchase and then the payment is processed and then you're scheduling the cleaning. [00:06:16] Speaker 03: Why would someone think that at the point of scheduling a cleaning, you're also going to agree to another set of terms and conditions that include arbitration? [00:06:28] Speaker 03: Let me ask you this, because you guys raised a 28-J letter about a recent decision, and I noticed that that decision did not talk about this, but don't we look at what the district courts [00:06:42] Speaker 03: factual findings for clear error. [00:06:45] Speaker 03: And what do we make of that standard of review in looking at this? [00:06:49] Speaker 03: Because the district court found that there was already a payment made at the purchase end and then a, I guess, a separate attempt to agree to something else at the I accept end. [00:07:02] Speaker 03: Why shouldn't we accord that clear error review to say that this is not reasonably conspicuous? [00:07:10] Speaker 01: The court's review is de novo. [00:07:12] Speaker 01: And when we talk about the enforceability of arbitration provisions that are presented in the online context, where it's based on a website, this court can review the website for itself and make the determination. [00:07:30] Speaker 01: It's a question of law, ultimately, whether the consumer [00:07:36] Speaker 01: agreed to be bound by the terms and conditions that were presented. [00:07:41] Speaker 01: So I don't think that the court is bound by the incorrect factual determinations of the district court regarding the sign-up process. [00:07:52] Speaker 03: I mean, our cases talk about how whether something is arbitrable is reviewed de novo, but the factual findings underlying those decisions are reviewed for clear error. [00:08:03] Speaker 03: It seems that at least in the context of the district court finding that a payment had already been made and the type of agreement that's being presented and the visual inspection of it, aren't those factual findings that are subject to differential review? [00:08:20] Speaker 01: Well, I think in this instance, Your Honor, the factual findings are quite wrong because the district court concluded [00:08:30] Speaker 01: that purchasing the voucher is what triggered the Forever Clean membership. [00:08:36] Speaker 01: And that's not supported in the record. [00:08:38] Speaker 01: I believe it's page 140 of the record, the declaration of Aaron Chung, where he explains it's when you redeem the voucher and you schedule your first cleaning. [00:08:51] Speaker 01: that you're then agreeing to the six month forever claim membership. [00:08:56] Speaker 01: And that is where the terms and conditions are presented to the user. [00:09:02] Speaker 01: And that is where the user clicks the button stating, by legally binding electronic signature, I agree to Homeoglo's terms and conditions. [00:09:13] Speaker 01: So it's not purchasing the voucher. [00:09:15] Speaker 01: But this language that you mentioned. [00:09:16] Speaker 03: I'm sorry, Your Honor. [00:09:18] Speaker 03: This language that you mentioned, this voucher requires six month forever clean membership that you can cancel at any time. [00:09:26] Speaker 03: If there's disclaimer language prior to the purchase that says it requires it, [00:09:33] Speaker 03: Why is the district court clearly, I guess, in clear error that purchasing the voucher doesn't come with the incidental purchase of the membership itself at that point, not in the I accept stage? [00:09:49] Speaker 01: Well, I think it's error because it's not accurately reflected in the record. [00:09:55] Speaker 03: The record clarifies- But the record says this voucher requires a membership. [00:10:02] Speaker 01: In order to ultimately the voucher is entitling the user to deeply discounted hourly rates on cleanings and there's unlimited cleanings. [00:10:15] Speaker 01: So in order to be entitled to the discounted hourly rates, one needs to agree ultimately to the six month forever clean membership. [00:10:26] Speaker 01: If somebody purchases the voucher. [00:10:28] Speaker 00: The voucher without the membership does nothing. [00:10:33] Speaker 00: Correct. [00:10:34] Speaker 00: I cannot see how a consumer would know that. [00:10:38] Speaker 00: The statement says, voucher requires a forever clean membership, which grants future cleanings at 50% off. [00:10:46] Speaker 00: Membership's charged at this price. [00:10:47] Speaker 00: It can be canceled at any time. [00:10:51] Speaker 00: I can't see what in there tells a consumer that they haven't already purchased that membership at that point, that essentially what they've purchased at this point is nothing at all. [00:11:03] Speaker 00: It doesn't seem to say that. [00:11:05] Speaker 00: I can't see that the district court erred in any way in its conclusion. [00:11:17] Speaker 01: The presentation of the terms and what the deal, ultimately the purchase of the voucher entitles the consumer to a discounted cleaning, to discounted, a deeply discounted initial first cleaning and then discounted hourly rates on all subsequent. [00:11:39] Speaker 00: But it doesn't. [00:11:40] Speaker 00: It's the purchase of a voucher and a membership that [00:11:43] Speaker 00: that allows them these discounted cleanings, right? [00:11:46] Speaker 00: Because you said the voucher doesn't do anything standing alone. [00:11:50] Speaker 01: Right. [00:11:50] Speaker 01: So it entitles users to a discounted initial cleaning and a discount on subsequent cleanings that, yes, it's conditioned on a six-month membership in the Forever Clean program. [00:12:06] Speaker 03: You can't buy a voucher without getting the membership, can you? [00:12:10] Speaker 01: Well, you can buy a voucher, and then before scheduling your first claiming, you can decide that, no, I don't want to utilize this service. [00:12:21] Speaker 01: And you can return the voucher for a full refund. [00:12:25] Speaker 03: Which would also end your membership. [00:12:27] Speaker 01: Well, the membership doesn't get triggered until you redeem the voucher. [00:12:32] Speaker 03: So the court made a separate point that [00:12:35] Speaker 03: There's no consideration for this. [00:12:37] Speaker 03: I guess what you're arguing is a second contract. [00:12:40] Speaker 03: There's an initial contract of buying the voucher. [00:12:44] Speaker 03: And then at the point of scheduling the cleaning, the user enters into a second contract for the membership. [00:12:53] Speaker 03: And what is the user giving in consideration for that second contract? [00:13:00] Speaker 01: $49 per month. [00:13:03] Speaker 03: And the voucher is not, and so what is the voucher purchase? [00:13:09] Speaker 03: Because that second agreement doesn't have a user resubmit payment information or signal to them. [00:13:17] Speaker 03: You're making a separate purchase. [00:13:20] Speaker 01: That's the point where they sign up for an account. [00:13:23] Speaker 01: They create a username. [00:13:25] Speaker 01: They provide all of their detailed information. [00:13:29] Speaker 01: and designate how often they want their cleanings, how many hours, and they schedule them. [00:13:37] Speaker 01: They indicate what their preference is for, are you going to have weekly cleanings? [00:13:41] Speaker 01: Are you going to have biweekly, bimonthly, et cetera? [00:13:45] Speaker 01: So they're redeeming the voucher. [00:13:48] Speaker 01: That's the point where they're signing up for the Forever Clean membership. [00:13:54] Speaker 01: That's the point where the $49 per month fee is triggered. [00:14:00] Speaker 01: And then that's the point in the transaction where the terms and conditions are presented. [00:14:07] Speaker 01: And they're presented very conspicuously above the action button. [00:14:12] Speaker 01: And that's the forward-looking relationship that is being initiated at that time. [00:14:20] Speaker 03: Any other questions? [00:14:21] Speaker 03: No, thank you. [00:14:21] Speaker 03: Did you want to reserve your time? [00:14:22] Speaker 01: I'll reserve my time. [00:14:23] Speaker 03: Thank you. [00:14:24] Speaker 03: Thank you. [00:14:32] Speaker 02: Good morning, may I please the court, Sean Markley on behalf of plaintiffs below and respondents here on appeal. [00:14:38] Speaker 02: I'm going to jump in where it seemed like we spent most of the time here during counsel's argument, which is whether there are two distinct transactions that are made conspicuous to a consumer as they navigate this multi-step signup process. [00:14:51] Speaker 02: To us, the discord did not err and in fact got it exactly right that there is a singular transaction that ends on the checkout page when you're purchasing your $19 get clean voucher, which in our view, unbeknownst to the consumer, ties them to this forever clean membership for $49 a month. [00:15:08] Speaker 02: They are inherently tied together. [00:15:10] Speaker 02: The use of one triggers the other. [00:15:13] Speaker 02: Again, we were alleging, I think, entirely the presumption at this stage, the consumer does not know that when they're checking out of the scheduling page. [00:15:19] Speaker 02: And I think in addition to the earlier presentation of the terms, the terms and conditions making clear that the two run together, there's a single transaction, the scheduling page [00:15:31] Speaker 02: should really end any further consideration of whether there's a clear conspicuous secondary contract entered into at that stage. [00:15:39] Speaker 02: The scheduling page makes zero reference to Forever Clean. [00:15:43] Speaker 02: It makes zero reference to memberships of any kind, and it makes zero reference to a $49 charge being triggered at that point. [00:15:51] Speaker 02: The scheduling page actually tells you the exact opposite, which is that what you're signing up for is a three-hour cleaning, and the price listed on the page in big bold letters, once in black, once in green, is that the cost is free. [00:16:04] Speaker 02: So at the scheduling stage, the consumer sees that they're basically getting what they already paid for, which is now a free three-hour cleaning. [00:16:11] Speaker 02: And if Home Eagle wanted to bind them to some [00:16:14] Speaker 02: Secondary contract it needed to make that conspicuous on that scheduling page. [00:16:19] Speaker 02: So, for example, the page should read, you know, schedule and start my six month forever clean membership, which will be charged at forty nine dollars and it definitely shouldn't say on that page that while you're getting free if they're going to turn around and charge your credit card forty nine dollars at that stage. [00:16:31] Speaker 02: So to us, the district court got that exactly right, and the court should affirm on those grounds. [00:16:36] Speaker 03: Well, Mr. Merkley, just to circle back to my question to your opposing counsel, the Chabola decision didn't get into standards of review, and what do we do with the district court's findings versus conclusions of law? [00:16:50] Speaker 03: What do you think about whether we are supposed to accord some of these findings clear of error of review? [00:16:57] Speaker 02: Yeah, I think it's a little bit nuanced. [00:16:59] Speaker 02: So in general, if courts are interpreting whether there was conspicuousness on a series of web pages and the contents are relatively undisputed, the district court looks at the same video that you all looked at. [00:17:12] Speaker 02: In that case, I actually have to agree with the opposing counsel that that would be a de novo standard. [00:17:17] Speaker 02: I think the more recent Ninth Circuit cases said if you're just looking at the contents of a basic page and not making any resolutions of disputed facts, that that would be a de novo review. [00:17:30] Speaker 03: What cases, for example, would you point us to? [00:17:32] Speaker 02: I believe that's in Oberstein and Kiba, one of those two. [00:17:39] Speaker 02: Whereas if the court is weighing mixed evidence or trying to draw a conclusion based on a more disproved fact, it would be clearer. [00:17:47] Speaker 03: What about the fact that there was some disagreement about what type of [00:17:51] Speaker 03: notice was here, inquiry notice, whether it was a click wrap or a sign-in wrap, and I took it, the parties had disagreements over that, and the district court said it's a little bit of a blend of the two. [00:18:02] Speaker 03: That would seem to me to then, under what you just described, to be a clearer basis of review. [00:18:10] Speaker 02: That's fair your honor. [00:18:11] Speaker 02: Yeah, and I do think that the court weighed You know, I guess compete competing interpretations of whether this you know hyperlink terms above a button is Equivalent to kind of checking a box saying I agree with the terms and conditions or whether it's merely signing in I think that the textual notice for what I agree means He presents sort of a mixed setting. [00:18:31] Speaker 02: I do think the district court weighed that I [00:18:32] Speaker 03: What about the district court talking about how conspicuous the final box was before I accept whether it was visually conspicuous enough or not? [00:18:43] Speaker 03: Does that fall more under the de novo standard or is that more of a factual finding? [00:18:50] Speaker 02: It's a it's a web page that It wasn't you know, we didn't present any other evidence. [00:18:55] Speaker 02: It's just a one web page. [00:18:56] Speaker 02: So I think that would probably be a de novo review. [00:19:00] Speaker 02: I do think that Their argument about what I agree means on that page that they're getting a lot of mileage out of what I agree means You're you're doing a lot of things on that page. [00:19:08] Speaker 02: You're selecting a cleaner right up at the top you're submitting some contact information and [00:19:14] Speaker 02: There's cancellation policies, rescheduling policies, various FAQs on that page. [00:19:20] Speaker 02: And then even for the text box that they've kind of honed in on here, when you read that, it says you're agreeing to three different hyperlink terms and conditions. [00:19:30] Speaker 02: That's dozens and dozens of pages that they're trying to get through one click. [00:19:34] Speaker 02: And then as the lower court pointed out, and even after the, by clicking I agree, here are the hyperlinks you're agreeing to text, there's also another form of agreement that they're agreeing to receive email and text message correspondence from both Homeoglo and the cleaners. [00:19:50] Speaker 02: So when you have all of these things going on on a pretty busy and cluttered webpage, I don't think it's conspicuous, as the lower court found, to also link terms and conditions that [00:20:00] Speaker 03: But I take it you share the view that an agreement was entered into when you hit the purchase button in the checkout page. [00:20:10] Speaker 03: And at that point, we have not seen anything of the additional terms and conditions that involve binding arbitration or class action waiver. [00:20:16] Speaker 02: That's correct. [00:20:17] Speaker 02: And in our view, under the auto renewal law, that is independently fatal. [00:20:22] Speaker 02: And this came up in the Sellers case. [00:20:25] Speaker 02: The Just Answers had submitted basically two theories for how they bound the user to their terms and conditions. [00:20:33] Speaker 02: The first was when you're signing up for your $5 trial and then the second one [00:20:36] Speaker 02: was when you're actually going to review the answer that you had submitted. [00:20:40] Speaker 02: This comes in a separate webpage after you've already paid your $5. [00:20:43] Speaker 02: And that was actually a click wrap box. [00:20:47] Speaker 02: But they said that the fact that it came post purchase, it was by definition not in visual proximity to the offer, the $5 trial offer. [00:20:54] Speaker 02: And so the same thing is true here. [00:20:56] Speaker 02: When you actually commit yourself to the $19 voucher and the recurring membership at the checkout page, [00:21:04] Speaker 02: And then several steps later at the scheduling phase, if they're trying to bind you to new terms and conditions, those are not in visual proximity to the offer. [00:21:12] Speaker 02: And that's at business special code 17602 sub A1 has that requirement for auto renewing memberships. [00:21:22] Speaker 02: Let me see. [00:21:22] Speaker 02: I don't have any. [00:21:23] Speaker 02: I'll submit on the, thank you. [00:21:24] Speaker 02: Thank you. [00:21:42] Speaker 01: So the way that the entire website flows, it does contemplate the user redeeming the voucher immediately after purchasing the voucher. [00:22:01] Speaker 01: because there's multiple steps that are listed across the top of the page, whether it's the website on a computer or on a mobile app. [00:22:11] Speaker 01: And so it's contemplating that the person purchasing the voucher is going to continue with the online process of then redeeming the voucher for the discounted rates, signing up for the membership, [00:22:29] Speaker 01: and completing the registration process, creating an account, and scheduling their initial cleaning, designating the frequency of their subsequent cleanings, which is contemplated by a membership. [00:22:46] Speaker 01: So the entire context of the transaction is that the consumer would be doing this in one sitting. [00:22:57] Speaker 01: And again, it's at that point where the voucher is being redeemed that the terms and conditions are being presented. [00:23:05] Speaker 01: And I think the presentation is consistent with other Ninth Circuit cases that have concluded that they were conspicuous and it was very clear that the user manifested their assent to those terms by clicking a button stating, I agree. [00:23:23] Speaker 03: I was looking for it and I didn't see it, but is there a Ninth Circuit case that addresses this factual circumstance of a purchase and then another sort of indication to click an I accept button that adds these additional terms and conditions? [00:23:41] Speaker 03: Is there any case analogous to that, either in the Ninth Circuit or California? [00:23:46] Speaker 01: Well, I think there are cases where there are subsequent purchases. [00:23:50] Speaker 01: So Oberstein versus Live Nation, Meyer, which I believe it's Meyer versus Uber. [00:24:00] Speaker 01: And then the Blizzard case, where there were subsequent purchases of loot boxes in a video game. [00:24:08] Speaker 01: Same thing with Keybaugh. [00:24:10] Speaker 01: That concerned authorized subsequent in-app purchases. [00:24:15] Speaker 01: So I think in those cases, it contemplates there's continuing charges that are going to be made. [00:24:22] Speaker 01: And those are controlled by the terms and conditions that are presented initially. [00:24:28] Speaker 03: OK. [00:24:29] Speaker 03: Thank you. [00:24:30] Speaker 03: Thank you, counsel, for your argument. [00:24:32] Speaker 03: The matter will stand submitted and court is adjourned.