Defontes v. Dell, Inc.

984 A.2d 1061 (2009)

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Nature of the Case

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Facts

DeFontes (P) brought suit against D, alleging that its collection of taxes from them on the purchase of Dell optional service contracts violated the Deceptive Trade Practices Act. D filed a motion to stay proceedings and compel arbitration, citing an arbitration provision within the parties' purported agreements. Ds argued that the arbitration provision was part of a 'Terms and Conditions Agreement,' which they contend P had accepted by accepting delivery of the goods. P had three separate opportunities to review the terms and conditions agreement, to wit, by selecting a hyperlink on the D website, by reading the terms that were included in the acknowledgment/invoice that was sent to Ps sometime after they placed their orders, or by reviewing the copy of the terms D included in the packaging of its computer products. The hearing justice found that although Ps had three opportunities to review the terms, none was sufficient to give rise to a contractual obligation. The hearing justice found that the link was 'inconspicuously located at the bottom of the webpage' and insufficient to place customers on notice of the terms and conditions. Nevertheless, the hearing justice noted that the terms and conditions agreement also appeared both in the acknowledgment that D sent when they placed their orders and later within the packaging when the computers were delivered. The hearing justice noted that 'courts generally recognize that shrinkwrap agreements, paper agreements enclosed within the packaging of an item, are sufficient to put consumers on inquiry notice of the terms and conditions of a transaction.' He also observed, however, that shrinkwrap agreements generally contain an express disclaimer that explains to consumers that they can reject the proposed terms and conditions by returning the product. The crucial test, according to the hearing justice, was 'whether a reasonable person would have known that return of the product would serve as rejection of those terms.' The hearing justice found that the language was insufficient to give a reasonable consumer notice of the method of rejection. He found that D's failure to include an express disclaimer meant that they could not prove that plaintiffs 'knowingly consent[ed]' to the terms and conditions of the agreement. The hearing justice found that Ps could not be compelled to enter arbitration. D appealed.