Keeping Tabs on the Ninth Circuit
February 17, 2023 - This Week at the Ninth

This Week At The Ninth: Live Nation Arbitration

This week, the Court addresses the enforceability of an arbitration provision in Live Nation and Ticketmaster’s terms of use.

The Court holds that Live Nation and Ticketmaster’s terms of use contain a valid and enforceable arbitration agreement.

The panel: Judges Boggs (6th Cir.), Wardlaw, and Ikuta, with Judge Boggs writing the opinion.

Key highlight: “Appellees’ notice is conspicuously displayed directly above or below the action button at each of three independent stages that a user must complete before purchasing tickets. The language ‘By continuing past this page and clicking [the button], you agree to our Terms of Use’ clearly denotes that continued use will act as a manifestation of the user’s intent to be bound. And, crucially, the ‘Terms of Use’ hyperlink is conspicuously distinguished from the surrounding text in bright blue font, making its presence readily apparent. Based on these features, this court and several others have held that these very same Ticketmaster and Live Nation websites have designs that provide constructive notice of the Terms.” (Internal quotation marks and citations omitted.)

Background: Plaintiffs filed a putative class action alleging that they paid supra-competitive fees for tickets purchased from Live Nation and Ticketmaster’s websites. Live Nation and Ticketmaster moved to compel arbitration based on an arbitration provision in the terms of use on their websites. The district court granted the motion and dismissed the case, finding that the terms of use were a valid agreement that plaintiffs had assented to. Plaintiffs appealed.

Result: The Ninth Circuit affirmed.  It first addressed plaintiffs’ contention that the terms of use were invalid because they failed to adequately identify Ticketmaster and Live Nation as parties to the agreement. The Court explained that California law (which both sides agreed governed this issue) required “that it be possible for a reasonable user to identify the parties to the contract.” The terms of use satisfied this standard because they repeatedly used Ticketmaster and Live Nation’s common trade names, explicitly referenced Live Nation’s full legal name, and provided users with avenues to identify Ticketmaster’s full legal name. The Court found distinguishable cases cited by plaintiffs because those cases considered contracts that used undefined generic terms to refer to the parties. It rejected plaintiffs’ argument that those cases established that common trade names for corporate entities cannot adequately identify such entities as parties to a contract. It also noted that Live Nation’s full legal name was used in the terms of use, including in the arbitration provision itself. Although plaintiffs argued that users might understand this reference to identify only the recipient of certain legal notices, not a party to the agreement, the Court concluded that users would understand that the addressee of the notice initiating arbitration was a party to the arbitration agreement.

The Court then turned to whether there was actual or constructive notice of the agreement as required to form a contract under either California or Massachusetts law (which plaintiffs contended applied to plaintiff Sophie Burke). “Clickwrap” agreements, which require website users to check a box indicating that they agree to specified contractual terms, are generally enforceable. “Browsewrap” agreements, which disclose contractual terms via a hyperlink on a webpage that users ostensibly assent to by continuing to use the website, often are not. When an agreement falls in between those extremes (as the terms of use in this case did), courts evaluate constructive notice by applying an objective-reasonableness standard. 

The Court rejected plaintiffs’ argument that Massachusetts law imposes a stricter standard for constructive notice than California law. It explained that the Massachusetts decision plaintiffs cited, Kauders v. Uber Technologies, Inc., 486 Mass. 557 (2021), had in fact adopted a two-step reasonableness test borrowed from a decision that applied California law. That test requires both “reasonable notice of the [contractual] terms” and “reasonable manifestation of assent to those terms.” Id. at 1049. Contrary to plaintiffs’ contention, Kauders did not establish that mutual assent was particularly difficult to establish absent clickwrap. Instead, it applied the same fact-specific inquiry employed by other courts, including the Ninth Circuit. Unpublished district court decisions criticizing a First Circuit decision that applied this standard did not demonstrate the existence of a different framework under Massachusetts law. They merely reflected that a fact-specific inquiry may lead to divergent results in different cases. Because California and Massachusetts law applied the same standard, the Court declined plaintiffs’ invitation to “engage in a detailed choice-of-law analysis.”

Applying the two-part test, the Court held that both requirements were satisfied by Live Nation and Ticketmaster’s terms of use. Although the terms of use were not pure clickwrap, notice of the terms was “conspicuously displaced directly above or below the action button at each of three independent stages that a user must complete before purchasing tickets.” It was clear that continued use of the website manifested users’ intent to be bound by the terms. And the hyperlink to the terms of use was “conspicuously distinguished from the surrounding text in bright blue font.” Based on these features, the Court concluded that Live Nation and Ticketmaster’s websites provided constructive notice of their terms of use. It distinguished cases finding that hyperlinks to contractual terms were insufficiently conspicuous because in those cases the hyperlink was merely underlined but not identified with a contrasting font color. Although Ticketmaster and Live Nation’s websites satisfied the requirements for establishing constructive notice, the Court noted that “clickwrap is the safest choice.”

The second requirement, that the user take some action unambiguously manifesting their intent to be bound by the terms of use, was also satisfied. Live Nation and Ticketmaster’s websites had made clear that users agreed to the terms of use “by creating an account, signing in, or purchasing a ticket, and proceeding to the next page.”

Finally, the Court held that the district court did not err by finding constructive notice as a matter of law. The Court explained that “whether a certain set of facts is sufficient to establish a contract is a question of law.” As a result, if the evidence relevant to that question is not in dispute, it may be decided by the court as a question of law. That was appropriate here because the district court relied on evidence (features of Live Nation and Ticketmaster’s websites) that was neither in dispute nor undermined by plaintiffs’ evidence.