Schnabel v. Trilegiant Corporatio

Facts

Lucy Schnabel, Edward Schnabel, and Brian Schnabel are the named plaintiffs (Ps) in this putative class action. Lucy and Edward are married to one another. Brian is their son. D is in the business of marketing and selling online programs that offer discounts on goods and services in exchange for a 'membership fee.' 'Great Fun' is the name of one of D's services.  By paying a monthly membership fee, Great Fun members are eligible to receive discounts on a wide variety of products and services including dining, retail shopping, car repair, and travel. Brian (P) was enrolled in Great Fun after making a purchase on the online travel site Priceline.com. In 2009, his father, Edward(P) was enrolled in Great Fun after making a purchase on the sports memorabilia site Beckett.com. Neither acknowledges intentionally or knowingly enrolling in the service. The initial Great Fun solicitation invites the purchaser to click on a hyperlink in order to receive 'Cash Back' on his or her purchase. According to D, Edward (P) would only have been brought to Great Fun's enrollment page after clicking on the hyperlinked invitation to 'See Details,' and Brian (P) after clicking on a similar invitation to 'Learn More,' posted on the purchase confirmation pages of the Beckett and Priceline sites. Neither P could join Great Fun without affirmatively entering personal information into various fields appearing on the enrollment page. It is undisputed, though, that Ps were not required to re-enter credit-card information when signing up for Great Fun. That information had already been entered in connection with the online purchase of goods and services through Beckett and Priceline. The enrollment page, like the original purchase confirmation page, does not plainly indicate that the offer is from a third party.  On the enrollment page are two hyperlinks. One is to a 'Privacy Policy,' and the other is to 'Terms & Conditions.' By clicking on the 'Terms & Conditions' hyperlink, purchasers would be brought to a page that includes many other terms, including the arbitration provision at issue in this litigation. D also emails to each newly enrolled member a written document entitled 'Great Fun Membership Terms and Conditions' following his or her online enrollment in the service. If the email bounced back, then D would send a paper version of the document to the member at his or her billing address. In early 2010, Edward and Lucy discovered that Edward's credit card had been charged $14.99 per month for every month between September 2009 and February 2010 for Edward's membership in Great Fun. He never made any allegedly discounted purchases for which he was qualified as a Great Fun member. Instead, he asked for a full refund of the charges. D offered to refund four of the six months of charges, but no more. Brian had similarly been charged $11.99 per month since December 2007 by D for membership in Great Fun. Brian asserts that he then called Great Fun to complain. In response, he says, D offered to refund four of the thirty months of charges. Ps sued D. D filed a motion to dismiss and compel arbitration pursuant to the emailed arbitration provision. The judge concluded that the parties had never agreed to arbitrate. The judge ruled that the contract that they formed with D did not include an arbitration clause. The contract was formed at the moment Ps entered their information into the online enrollment screen and 'included terms exactly as D proposed them in their prompts -- a monthly charge in exchange for online savings.' Ps never expressly or implicitly assented to additional terms, which included the arbitration provision, which were to follow by email. D appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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