Another Invalidated Clickwrap Agreement

Richard Raysman is a Partner in Holland & Knight's New York office.

The foremost case dealing with whether "wrap agreements" (e.g. clickwrap, shrinkwrap and browsewrap) are legal is almost 13 years old. See Specht v. Netscape Commc'ns Corp., 306 F.3d 17 (2d Cir. 2002). And yet, a new case confronting the same questions seems to materialize almost weekly. With some regularity, those cases invalidate the wrap agreement, even though one would think that the companies writing them would have learned from all of the precedents that discuss how to construct a valid agreement. Yet confusion seems to reign for some defendants. In the recent past, one of these defendants could conceivably argue that the presiding court simply does not have the requisite technological knowledge to understand how wrap agreements function. This argument has become less probative over time, as some variation of a wrap agreement is now ubiquitous in the world of online commerce, and therefore courts are likely familiar with them if only because of the frequency with which they arise on the docket. Another example of an invalidated wrap agreement arose recently in the case of Savetsky v. Pre-Paid Legal Services, Inc., 2015 WL 604767 (N.D. Cal. Feb 12, 2015).

Facts/Procedural Background

Michael Savetsky (Savetsky) purchased an online membership from Pre-Paid Legal Services, Inc. (LegalShield). LegalShield sells pre-paid legal service plans allowing its customers to utilize, through its website, a menu of legal services. For a monthly fee of as low as $20, LegalShield gives its members access to legal services from law firms that it contracts with separately. When a prospective customer visits LegalShield's website, he is presented with two options: "Buy Now" or "Learn More." If he chooses "Buy Now," he is given a particularized (depending on his geographic location) overview of available pre-paid legal service plans. Alongside this overview is a link to a page labeled "More Plan Details." However, visiting this page is not a prerequisite to effectuating a purchase of LegalShield's services. Rather, the "More Plan Details" page contains a "general overview" of Legal Shield's services, as well as a link to a sample version of LegalShield's membership contract (Member Contract) if the user desires to learn "more specific information." The Member Contract in force at the time Savetsky purchased his membership included a mandatory arbitration provision.

Once a customer selects...