(CN) - An online marketing company cannot compel arbitration in a class action accusing a background-check website of illegally charging users' credit cards for a "Family Safety Report," the 9th Circuit ruled Monday.
Lead plaintiff Donovan Lee filed a class action against Bellevue, Wash.-based Intelius Inc. after discovering in 2009 that he'd been charged $19.95 per month for a year for a "Family Safety Report" that he'd purchased unknowingly after ordering a background check on Itelius's website.
Lee and others claimed in Seattle District Court that they had not ordered the report. They argued that, after they purchased a background check from Intelius, they were directed to a new webpage controlled by third-party Adaptive Marking that was, according to the District Court, "designed to deceive."
Lee claimed that he had entered his email address on the new website as directed and clicked a "large orange Yes button," thinking that this was next step in receiving the background report from Intelius. In reality, he had by clicking the Yes button ordered a seven-day free trial of a "Family Safety Report", and had agreed to to pay $19.95 per month until he canceled it.
Intelius sued Adaptive Marketing, which it had hired in 2007 to drive customers to its website and which was, according to the ruling, responsible for about 40 percent of Intelius's revenue. Adaptive then moved to compel arbitration of the claims raised in both the class action and Intelius's third-party suit.
U.S. District Judge Robert Lasnik denied the motion to compel, the 9th Circuit unanimously affirmed on Monday.
"When Lee entered his email address and clicked on the large orange 'YES' button, he had completed his purchase of the background check from Intelius but had not yet received a copy of his promised report," wrote Judge William Fletcher for the three-judge appeals panel. "He did not re-enter his credit card number on the new webpage. The language on the 'YES' button told him that the effect of clicking on that button would allow him to see the report he had already purchased. The critical text on the new webpage was written in small, light-colored print. We are skeptical that, under such circumstances, Lee objectively manifested assent to a contract."
The panel also concluded that "the webpage insufficiently identified Adaptive, or an entity affiliated with Adaptive, as a contracting party to support a conclusion that Lee entered into a contract with Adaptive to purchase the Family Safety Report."
Judge Fletcher noted that the kind of sharing of customers' credit card information that is the subject of this case has been illegal since 2010 and the passage of the Restore Online Shoppers' Confidence Act.