17-2474-cv
Starke v. SquareTrade, Inc.



                              UNITED STATES COURT OF APPEALS
                                   FOR THE SECOND CIRCUIT



                                       August Term, 2017

                       Argued: April 30, 2018   Decided: January 10, 2019

                                     Docket No. 17-2474-cv



                                      ADAM J. STARKE,
                 Individually and On Behalf of All Others Similarly Situated,

                                                        Plaintiff-Appellee,

                                            — v. —

                                      SQUARETRADE, INC.,

                                                        Defendant-Appellant,




B e f o r e:

              LYNCH and DRONEY, Circuit Judges, and SESSIONS, District Judge.*




     Appellant SquareTrade, Inc., appeals from the district court’s denial of its
motion to compel arbitration. SquareTrade argues that the governing terms of its


*
 Judge William K. Sessions, III, of the United States District Court for the District
of Vermont, sitting by designation.
contract with Appellee Adam J. Starke includes an arbitration clause. The district
court concluded that the arbitration provision did not become part of the contract
because Starke did not have reasonable notice of and manifest his assent to it.
The order of the district court is AFFIRMED.



                   SOLOMON N. KLEIN (Bradley J. Nash, Schlam Stone & Dolan
                   LLP, New York, NY; Mark Schlachet, Law Offices of Mark
                   Schlachet, Cleveland, OH, on the brief) for Plaintiff-Appellee.

                   DOUGLAS A. WINTHROP, Arnold & Porter Kaye Scholer LLP,
                   San Francisco, CA (Michael D. Schissel, Arnold & Porter Kaye
                   Scholer LLP, New York, NY; Elisabeth S. Theodore, Arnold &
                   Porter Kaye Scholer LLP Washington, DC, on the brief) for
                   Defendant-Appellant.



GERARD E. LYNCH, Circuit Judge:

      Defendant-Appellant, SquareTrade, Inc., sells protection plans for

consumer products. Plaintiff-Appellee Adam J. Starke purchased one such

protection plan. Starke filed this putative class action, seeking to hold

SquareTrade accountable for alleged violations of consumer protection laws.

SquareTrade moved to compel arbitration, contending that its contract with

Starke included an arbitration clause. Starke opposed the motion, arguing that

the purported arbitration clause had not become part of the contract because he

did not have reasonable notice of the clause and did not manifest assent to it. The



                                          2
United States District Court for the Eastern District of New York (Nicholas G.

Garaufis, J.) denied SquareTrade’s motion, and SquareTrade appealed. For the

reasons that follow, we AFFIRM.

                                BACKGROUND1

      SquareTrade sells and administers service contracts called protection

plans, which provide protections against defects and damage to a variety of

consumer products. Unlike warranties, which are provided by the product’s

manufacturer and are often included in the purchase price, SquareTrade

protection plans cover products made by other companies, and are sold for

additional consideration separate from the product price. SquareTrade markets

and sells protection plans on its own website as well as through retailers

including Costco, Target, Staples, Office Depot, and Amazon.

      As relevant here, Starke purchased the “SquareTrade 2-Year Electronics

Protection Plan ($50-75)” (the “Protection Plan”) for $4.34 plus tax through



1
 Courts deciding motions to compel apply a standard similar to the one
applicable to a motion for summary judgment. Bensadoun v. Jobe-Riat, 

, 175 (2d Cir. 2003). On a motion for summary judgment, the court considers
all relevant, admissible evidence submitted by the parties and contained in the
pleadings, depositions, answers to interrogatories, admissions and affidavits, and
draws all reasonable inferences in favor of the non-moving party. Nicosia v.
Amazon.com, Inc., 

, 229 (2d Cir. 2016).

                                         3
Amazon. Starke intended the Protection Plan to cover a CD player he had

purchased from Staples for $61.83. Starke had previously purchased several

SquareTrade protection plans through Amazon and one through Staples to cover

other items.

      The Amazon webpage on which Starke purchased the Protection Plan

looked like this:




                                       4
5
6
App’x at 113–14.2

      The portion of the purchase page copied above contains several sections of

information about the Protection Plan. A block of text towards the top of the

purchase page informed Starke that his “Service Contract [would] be delivered

via email and not mailed to [him]. It [would] come from SquareTrade Warranty

Services . . . within 24 hours of purchase.” App’x at 113. Much further down in

the excerpted portion of the purchase page (which would likely require scrolling

on most computer screens), one encounters the heading: “Product information.”

Under that heading appears a small hyperlink labeled “Warranty [pdf].” The

“Warranty” hyperlink provided access to a two-page document titled “Terms &

Conditions” stating: “Congratulations on purchasing this Protection Plan. Please

read these terms and conditions carefully so that you fully understand your

coverage under this Protection Plan.” App’x at 40. The document contains terms

purporting to govern the transaction, in addition to those terms appearing on the

face of the Amazon purchase page. Notably, this document (the “Pre-Sale T&C”)




2
 That is what the top half of the purchase page looked like. One who continued
to scroll down the purchase page would come across additional customer
questions and answers, customer reviews, additional advertisements and
banners, and the Amazon.com footer. See App’x at 115–16.

                                        7
did not contain an arbitration provision or a class action waiver.3 Starke did not

click on the “Warranty” hyperlink and therefore, did not review the Pre-Sale

T&C. The Amazon purchase page did not contain a hyperlink to anything titled

“Service Contract.”

      Slightly above the “Product information” was another heading,“Things to

know.” The first bullet point under this heading warns customers that

“SquareTrade Protection Plans are only valid for new products purchased at

Amazon within the last 30 days.” App’x at 114 (emphasis added). The fifth bullet

point under this heading informs customers that they “may cancel [their] plan

anytime within the first 30 days for a full refund.” 

not read that

part of the purchase page and was not aware that the Protection Plan would not

cover items that had not been purchased through Amazon.

      After his purchase, Starke received a confirmation email from Amazon

which informed him that “[his] protection plan service agreement [would] be


3
 SquareTrade represented to the district court that the Pre-Sale T&C document
was “an outdated version of SquareTrade’s Terms and Conditions.” App’x at 75.
Upon realizing that the outdated version was posted on Amazon, as a result of
this lawsuit, SquareTrade contacted Amazon and requested that the updated
version—apparently containing an arbitration provision—be posted in its place.
On appeal, SquareTrade characterizes the Pre-Sale T&C as only a “sample” of
SquareTrade’s terms and conditions. Appellant’s Br. at 5 n.1.

                                          8
sent via a separate e-mail by [the] seller.” App’x at 81. As the Amazon purchase

page and confirmation email promised, Starke received an email from

SquareTrade later that day. The email looked like this:




App’x at 83–84.



                                        9
      The subject line of the email says “SquareTrade Protection Plan on

Amazon.com - Contract is Enclosed.” The email contains several prompts and

text in various formats. As relevant to this case, the email contains a hyperlink in

the bottom left corner, labeled “Terms & Conditions,” that links to an eleven-

page document titled “Protection Plan Terms & Conditions.” That document (the

“Post-Sale T&C”) is a different document from the Pre-Sale T&C, and contains

several provisions that were absent from the Pre-Sale T&C. One of the provisions

appearing in the Post-Sale T&C but not the Pre-Sale T&C purports to bind the

parties to arbitration of “[a]ny controversy or claim arising out of or relating to

this Protection Plan, or breach thereof . . . in accordance with the Commercial

Arbitration Rules of the American Arbitration Association.” App’x at 70. The

Post-Sale T&C also contained a class action waiver and a California choice-of-law

clause. Starke did not click on the “Terms & Conditions” hyperlink and did not

review the Post-Sale T&C. Nothing in the body of the email referred to

arbitration, and the email did not contain or refer to any attachments.4

4
 According to Starke, following his prior purchases of SquareTrade protection
plans on Amazon he had received, at most, confirmation emails that, at the very
bottom, had links to Terms & Conditions, but that he never reviewed those
documents. Starke’s explanation of the emails he received from SquareTrade on
these prior occasions is consistent with an affidavit submitted on behalf of
SquareTrade indicating that SquareTrade’s purchase confirmation emails have

                                          10
        After receiving the email, Starke followed the instructions directing him to

send SquareTrade a copy of the receipt for his electronics item. Starke alleges that

the receipt clearly stated that his CD player was purchased at Staples. Two days

later, SquareTrade confirmed that it had received a copy of his receipt.

        Some months later, Starke’s CD player required repair or replacement, and

Starke made a claim for coverage under the Protection Plan. SquareTrade denied

the claim, notifying Starke that since the CD player had not been purchased

through Amazon, it was not covered, and that his Protection Plan would be

cancelled. SquareTrade offered Starke a refund for the full price of the Protection

Plan.

        Shortly thereafter, Starke filed this putative class action against

SquareTrade, alleging fraudulent and deceptive practices by SquareTrade in the

selling and marketing of protection plans. The complaint seeks damages and

injunctive relief for violations of Sections 349 and 350 of New York’s General

Business Law, and the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.,



been delivered with substantially the same form and content since 2014. The one
time Starke purchased a SquareTrade protection plan through Staples, he
received a confirmation email from SquareTrade with the terms and conditions
governing the transaction in the body of the email. Those terms and conditions
contained neither an arbitration provision nor a class action waiver.

                                           11
and for unjust enrichment. Starke alleges that SquareTrade knowingly and

deceptively sells protection plans for items not purchased on Amazon and

therefore, not eligible for coverage, despite knowing that under the terms of the

plan, which are not prominently disclosed, the products which its customers

have sought to protect are not eligible for coverage. According to the complaint,

SquareTrade’s limiting of covered products to those purchased through Amazon

operates as an intentionally deceptive scheme to take money from unsuspecting

customers. If a SquareTrade customer never makes a claim under her plan,

SquareTrade keeps her premium and retains the policy until expiration. But if the

customer makes a claim that requires SquareTrade to honor the policy,

SquareTrade informs the customer that her protection plan is void because the

underlying product was not purchased through Amazon.

      Starke also alleges that SquareTrade fails to disclose other material terms

and restrictions prior to the sale, and hoodwinks customers by providing them

with pre-sale terms and conditions that differ from the more restrictive post-sale

terms and conditions that are disclosed only after the purchase has been

completed and only via a deliberately obscure hyperlink.

      In response, SquareTrade moved to stay the action and compel Starke to



                                        12
arbitrate his claims individually, citing the arbitration clause and class action

waiver contained in the Post-Sale T&C. SquareTrade argued that Starke had

reasonable notice of the Post-Sale T&C because the Amazon purchase page

notified him that he would receive his “Service Contract” via email, the email he

received from SquareTrade contained a hyperlink to the Post-Sale T&C, and

Starke manifested assent to the Post-Sale T&C by failing to return the Protection

Plan within the 30-day window SquareTrade allowed. SquareTrade also argued

that Starke’s prior course of dealing with SquareTrade put him on notice of the

Post-Sale T&C.

      The district court denied SquareTrade’s motion. The court applied New

York contract law to determine whether the parties had bound themselves to an

enforceable arbitration agreement. First, the district court found that Starke did

not have actual knowledge of the arbitration provision in the Post-Sale T&C

because he did not click on the “Terms & Conditions” hyperlink in the

SquareTrade confirmation email and read the hyperlinked document. Then the

court considered whether Starke (1) had reasonable notice of the Post-Sale T&C

and (2) offered an objective manifestation of assent to the Post-Sale T&C.

      In determining whether Starke had reasonable notice of the Post-Sale T&C



                                          13
and manifested assent to such terms and conditions, the district court applied the

test adopted in Berkson v. Gogo LLC, 

, 402–03 (E.D.N.Y. 2015).5

Under that test, according to the district court, the court assesses four factors: (1)

whether Starke was aware that he was binding himself to more than an offer of

goods or services in exchange for money; (2) whether the design and content of

the SquareTrade confirmation email made the Post-Sale T&C readily and

obviously available; (3) whether SquareTrade required any affirmative

manifestation of agreement to the Post-Sale T&C; and (4) whether SquareTrade

clearly drew the consumer’s attention to the Post-Sale T&C in general or the

arbitration provision in particular.

      As to the first factor, the district court concluded that Starke had

reasonable notice that some contractual terms would be forthcoming because he

set out to purchase a service contract. But, the district court noted, Starke’s

knowledge of the existence of some contractual terms did not necessarily mean

that he could reasonably be expected to discern and agree to all of the contractual

terms to which SquareTrade intended to bind him.



5
 The Berkson court applied the substantive contract law of New York, California,
and Illinois, and determined that “these states[’] laws are substantively similar
with respect to . . . contract formation.” 

.

                                          14
      The second, third, and fourth factors, according to the district court,

counseled against finding reasonable notice and manifestation of assent. The

district court found that the design and content of the SquareTrade confirmation

email did not make the Post-Sale T&C readily and obviously available, because it

did not draw any attention to the inconspicuously placed Terms & Conditions

hyperlink in small font at the very bottom of the email. Rather, a reasonable

person in Starke’s position would have thought that the body of the email

constituted the contract itself. Given that the terms of the contract were obscured

and minimized, the district court held that Starke could not have evidenced a

clear manifestation of assent. Lastly, the district court noted that SquareTrade did

not draw Starke’s attention to the arbitration provision buried in the Post-Sale

T&C. The district court, therefore, held that SquareTrade failed to establish an

enforceable arbitration agreement with Starke, and denied its motion to compel

arbitration.6

      SquareTrade timely appealed the district court’s order pursuant to 9 U.S.C.

§ 16(a)(1)(C), which permits an interlocutory appeal from the denial of a motion



6
 Because the district court concluded that there was no enforceable agreement to
arbitrate, it declined to assess the scope of the arbitration provision or the validity
of the class action waiver.

                                          15
to compel arbitration. On December 15, 2017, the district court stayed the

underlying action pending the outcome of this appeal.

                                  DISCUSSION

I. Standard of Review

      We review the district court’s denial of a motion to compel arbitration de

novo where the denial is based on a legal conclusion about whether the parties

contractually bound themselves to arbitrate. See Meyer v. Uber Techs., Inc., 

, 72–73 (2d Cir. 2017). Since the district court’s conclusions regarding

notice and assent were based on undisputed facts, those conclusions are also

subject to de novo review. 

(holding de novo review appropriate where the

evidence “consists exclusively of screenshots from the Web site and order

confirmation email, and the authenticity of these screenshots is not subject to

factual dispute”).

      “Where the undisputed facts in the record require the matter of

arbitrability to be decided against one side or the other as a matter of law, we

may rule on the basis of that legal issue and avoid the need for further court

proceedings.” Wachovia Bank, Nat’l Ass’n v. VCG Special Opportunities Master Fund,

Ltd., 

, 172 (2d Cir. 2011) (internal quotation marks omitted).


                                         16
II. Governing Legal Principles

      The Federal Arbitration Act (“FAA”) provides that written agreements to

arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA

“is a congressional declaration of a liberal federal policy favoring arbitration

agreements, notwithstanding any state substantive or procedural policies to the

contrary.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 

, 24

(1983). This policy is founded upon “a desire to preserve parties’ ability to agree

to arbitrate, rather than litigate, [their] disputes.” Schnabel v. Trilegiant Corp., 

, 118 (2d Cir. 2012).

      But despite the strong federal policy favoring arbitration, arbitration

remains a creature of contract. See Howsam v. Dean Witter Reynolds, Inc., 

, 83 (2002); AT&T Mobility LLC v. Concepcion, 

, 339 (2011)

(reiterating that it is a “fundamental principle” of the FAA that “arbitration is a

matter of contract”) (quoting Rent-A-Center, West, Inc. v. Jackson, 

, 67

(2010)). Thus, courts must still decide whether the parties to a contract have

agreed to arbitrate disputes. 

(“The threshold question

facing any court considering a motion to compel arbitration is . . . whether the


                                           17
parties have indeed agreed to arbitrate.”); Specht v. Netscape Commc’ns Corp., 

, 26 (2d Cir. 2002) (observing that it is “well-settled that a court may not

compel arbitration until it has resolved the question of the very existence of the

contract embodying the arbitration clause”) (internal quotation marks omitted).

That question is governed by state-law principles of contract formation. Here, the

parties agree that New York contract law applies.

      It is a basic tenet of contract law that, in order to be binding, a contract

requires a “meeting of the minds” and “a manifestation of mutual assent.” See

Express Indus. & Terminal Corp. v. N.Y. Dep’t of Transp., 

, 589 (N.Y.

1999). The manifestation of mutual assent must be sufficiently definite to assure

that the parties are truly in agreement with respect to all material terms. See

Joseph Martin, Jr., Delicatessen, Inc. v. Schumacher, 

, 109 (N.Y. 1981);

Register.com, Inc. v. Verio, Inc., 

, 427 (2d Cir. 2004) (“Mutual assent is

essential to the formation of a contract and a party cannot be held to have

contracted if there was no assent or acceptance.”). These requirements assure that

the judiciary can enforce the parties’ mutually-agreed terms and conditions when

one party seeks to uphold them against the other. Express 

.

Generally, courts look to the basic elements of the offer and the acceptance to


                                           18
determine whether there was an objective meeting of the minds sufficient to give

rise to a binding and enforceable contract. 

offeree does not have actual notice of certain contract terms, he is

nevertheless bound by such terms if he is on inquiry notice of them and assents to

them through conduct that a reasonable person would understand to constitute

assent. See 

. In determining whether an offeree is on

inquiry notice of contract terms, New York courts look to whether the term was

obvious and whether it was called to the offeree’s attention. See 22 N.Y. Jur. 2d

Contracts § 29 (“[A] party should not be bound by clauses printed on the reverse

side of a contract unless it is established that they were properly called to his or her

attention and that he or she assented to them.”) (emphasis added). This often

turns on whether the contract terms were presented to the offeree in a clear and

conspicuous way. See, e.g., Gildor v. USPS, 179 F. App’x 756, 759–60 (2d Cir. 2006)

(refusing to enforce contract provision incorporated on reverse side of postage

label where the provision was “very small and difficult to read”); Arthur Philip

Export Corp. v. Leathertone, Inc., 

, 667 (1st Dep’t 1949) (refusing to

enforce contract terms that were inconspicuously placed in “small type and in

parenthesis” on the back of a confirmation order).

                                           19
      We apply these same contract law principles to online transactions. See

(“While new commerce on the Internet has exposed

courts to many new situations, it has not fundamentally changed the principles of

contract.”); 

(“These principles apply equally to the

emergent world of online product delivery, pop-up screens, hyperlinked pages,

clickwrap licensing, scrollable documents, and urgent admonitions to

“Download Now!”); Resorb Networks, Inc. v. YouNow.com, 

, 511

(N.Y. Sup. Ct. 2016) (noting that when evaluating a transaction occurring online,

courts focus on “whether a reasonably prudent offeree would be on notice of the

term at issue” and whether the terms of the agreement were “reasonably

communicated to the user,” because assent is mostly passive online).

      In the context of web-based contracts, we look to the design and content of

the relevant interface to determine if the contract terms were presented to the

offeree in way that would put her on inquiry notice of such terms. See Nguyen v.

Barnes & Noble Inc., 

, 1177 (9th Cir. 2014) (“Where the link to a

website’s terms of use is buried at the bottom of the page or tucked away in

obscure corners of the website where users are unlikely to see it, courts have

refused to enforce the [] agreement.”); 

(refusing to enforce


                                         20
terms of use that “would have become visible to plaintiffs only if they had

scrolled to the next screen”).

        In 

–38, we examined an Amazon order page to

determine if it put a consumer on constructive notice of Amazon’s “Conditions of

Use,” which contained an arbitration clause.7 The Amazon order page looked like

this:




7
 In Nicosia, we applied Washington law on the question of contract formation, 

but Washington law is the same as New York law with respect to the issue
of contract formation, see 

                                        21


(Addendum B).

      Amazon claimed that an arbitration provision contained in the “conditions

of use” hyperlink (at the top of the page under the “Review your order” heading)

was part of the contract it formed with the customer who placed an order on this


                                       22
page. Several features of the order page’s design and content were relevant to

our analysis of whether the customer had inquiry notice of the terms at this

hyperlink:

             •     The message “By placing your order, you agree to
                   Amazon.com’s . . . conditions of use” was not bold,
                   capitalized, or conspicuous in light of the whole
                   webpage. 

             •     Numerous other links on the webpage, in several
                   different colors, fonts, and locations, generally
                   obscured the message. 

buttons and promotional advertisements on
                   the order page drew attention away from the message.
                   

presence of customers’ personal address, credit
                   card information, shipping options, and purchase
                   summary were distracting. 

features of the order page, we held that reasonable minds

could disagree regarding whether the customer was on inquiry notice of an

arbitration provision contained in Amazon’s Conditions of Use. 

We

therefore left it up to the factfinder to determine whether, when the customer

clicked the “Place your order” button, she had manifested assent to the

arbitration provision contained at the “conditions of use” hyperlink. 

                                         23
      More recently, in Meyer, we had to determine whether a user signing up

for an Uber account was on inquiry notice of an arbitration provision contained

in Uber’s “Terms of Service,” which were provided to the user via Uber’s

smartphone interface. 

.8 The “Terms of Service” were hyperlinked to

the sign-up screen in an interface that looked like this:




8
 The Meyer Court applied California law to the contract formation question, but
noted that “New York and California apply substantially similar rules for
determining whether the parties have mutually assented to a contract term.” 

(internal quotations omitted).

                                         24


(Addendum B).

      We concluded that this interface did provide reasonable notice of the

contract terms contained in the “TERMS OF SERVICE & PRIVACY POLICY”

hyperlink because the hyperlink was clear and conspicuous. 

In so

concluding, we noted the following things about the design of the screen and the

language used:

            •     The payment screen was uncluttered with only fields
                  for the user to enter his or her credit card details,
                  buttons to register for a user account or to connect to
                  the user’s pre-existing PayPal account or Google
                  Wallet to the Uber account, and the warning that “By
                  creating an Uber account, you agree to the TERMS OF
                  SERVICE & PRIVACY POLICY.” 

            •     The text, including the hyperlinks to the Terms and
                  Conditions and Privacy Policy, appeared directly
                  below, i.e., was “spatially coupled” with the
                  registration button. 

entire screen was visible at once, and thus the user
                  did not need to scroll beyond what was immediately
                  visible to find notice of the Terms of Service. 

register button was “temporally coupled” with
                  the hyperlink – i.e., the consumer was notified of the
                  terms at the time of sale. 

language “[b]y creating an Uber account, you
                  agree” was a clear prompt directing the users to read

                                   25
                   the Terms and Conditions and signaling that their
                   acceptance of the benefit of registration would be
                   subject to contractual terms. 

      These factors led us to conclude that the user had been provided with

objectively reasonable notice of the terms contained at the “TERMS OF

SERVICE” hyperlink. And, since a reasonable user would know that by clicking

the registration button he was agreeing to the terms and conditions accessible via

the hyperlink, regardless of whether he actually clicked the hyperlink, we

compelled arbitration. 

      The reasoning of Nicosia and Meyer provides the framework within which

we analyze the validity of assent to terms and conditions presented through a

web interface.

III. Reasonable Notice of the Arbitration Provision

      To determine whether Starke had reasonable notice of the arbitration

provision, we must analyze whether the Post-Sale T&C were provided to Starke

in a clear and conspicuous way.9 See 

. Several things about

the transaction and the email Starke received from SquareTrade following the



9
 The district court found that Starke “did not have actual notice” of the
arbitration provision, and SquareTrade does not dispute that finding.

                                        26
Amazon confirmation email lead us to conclude that Starke did not have

reasonable notice of the arbitration provision, which was contained only in the

Post-Sale T&C.

      First, SquareTrade never directed Starke’s attention to the “Terms &

Conditions” hyperlink that contained the Post-Sale T&C. The first screen Starke

encountered during the course of the transaction, the Amazon purchase page,

did not provide Starke with notice that terms governing the sale would be

provided via hyperlink. Instead, the Amazon purchase page notified Starke that

he would receive something called a “Service Contract” via email. Then, Starke

received an email from Amazon, notifying him that he would receive a “service

agreement” from SquareTrade. Starke subsequently received an email from

SquareTrade indicating that his “Contract” was enclosed. None of these various

communications put Starke on notice that his “Service Contract” would come in

the form of a hyperlink, rather than in the body of the email.

      Second, when Starke opened the email from SquareTrade he was

presented with a chart titled “Your Protection Plan.” The chart described the

particular Protection Plan that Starke purchased, and identified the “Coverage

Amount,” “Protection Plan Price,” “Coverage Type,” “Covered Product,”


                                        27
“Deductible,” “Quantity,” “Coverage Term,” “Coverage Start Date,” “Coverage

End Date,” and “Waiting Period.” This information took up approximately half

of the email.10 Nothing else in the email stands out as obviously being related to

Starke’s Protection Plan, and none of the language in the cluttered email directed

Starke’s attention to the hyperlink containing the Post-Sale T&C.

      Third, the SquareTrade email bears more resemblance to the Amazon

order page in 

, than to the uncluttered screen in 

. The “Terms & Conditions” hyperlink is some of the smallest text in the


10
  SquareTrade argues that Starke could not have believed that the “Your
Protection Plan” chart was his “Contract” because the chart itself referenced
more detailed terms and conditions. Specifically, SquareTrade notes that the
“Coverage Amount” is defined in the chart as “[u]p to the maximum coverage
price of the Protection Plan, or the purchase price of your item, whichever is
lower,” and the “Coverage Type” is listed as “Standard.” Without more,
SquareTrade says, those terms would be meaningless.
       But the language in the chart does not obviously point to additional details
in another document. In fact, the terms that SquareTrade references are not even
elucidated in the actual contract at the hyperlink. “Coverage Type” is defined in
the Terms & Conditions only as “the level of coverage You purchased, such as
whether Your Protection Plan includes Optional Coverage, such as Accidental
Damage from Handling (ADH) coverage,” App’x at 103, but nowhere does it
describe the contents of “Standard” coverage, App’x at 83. Nor is there mention
of the “coverage price of this Protection Plan” in the contract, such that Starke
could compare it to the “purchase price of [his] item.” App’x at 103. And, even if
Starke thought that those terms could be defined in greater detail elsewhere,
there was no reason for him to believe that such detail was available in the
SquareTrade email, let alone the “Terms & Conditions” hyperlink.

                                         28
email and comes after several prompts unrelated to the enclosure of the contract,

including a “Need help?” hyperlink, a button for Starke to log in to his

SquareTrade account, a hyperlink for Starke to submit the receipt for his CD

player, the chart with details of the plan, and a banner urging Starke to review

the Protection Plan on Amazon. Like the interface in Nicosia, and in sharp

contrast with the screen in Meyer, the interface here is cluttered with diverse text,

displayed in multiple colors, sizes and fonts, and features various buttons and

promotional advertisements that distract the reader from the relevant hyperlink.

See 

–32 (finding no inquiry notice of contract terms that were

provided via hyperlink at the very bottom of the Netscape webpage which

distracted viewer with praise for the product and a “Download” button).

      Moreover, unlike in Meyer, the SquareTrade email in no way signals to

Starke that he should click on the link, and it does not advise him that he would

be deemed to agree to the contract terms in the document to be found by clicking

that link. Nor does the email instruct him that the hyperlink is where his

promised service contract can be found. The “Terms & Conditions” hyperlink

appears without any “language advising [Starke] to click on [it],” 

, or a “clear prompt directing [Starke] to read the Terms and


                                         29
Conditions,” 

. The hyperlink was buried at the bottom of the

email directly above the email footer. Far above the hyperlink, the second

sentence of the email told Starke “You’re all set!” encouraging him to look no

further. The placement of the “Terms & Conditions” hyperlink in the email

makes it hard to escape the inference that SquareTrade hoped the reader’s eye

would be drawn elsewhere.

      This case is also distinguishable from Meyer because here, the “Terms &

Conditions” hyperlink was neither spatially nor temporally coupled with the

transaction. The “Terms & Conditions” hyperlink was spatially decoupled from

the transaction because it was not provided near the portion of the Amazon

purchase page actually requiring Starke’s attention (that is, the “Add to Cart”

button), or indeed anywhere on the purchase page. To provide conspicuous

notice of the Post-Sale T&C, SquareTrade could have simply included a

noticeable hyperlink on the Amazon purchase page directing consumers to

review the terms and conditions. See, e.g., 

–38 (noting that

“Amazon chose not to employ a clickwrap mechanism,” which is “certainly the

easiest method of ensuring that terms are agreed to”); 

n.3

(noting that it would have been “simpler to resolve” this question had a


                                         30
clickwrap mechanism been used). And, even if SquareTrade was committed to

providing the Post-Sale T&C via email, it could have done so in several more

conspicuous ways, including by providing the Post-Sale T&C in the body of the

email, providing an attachment to the email with the Post-Sale T&C, or by

providing the “Terms & Conditions” hyperlink at the top of the email in a bigger

font notifying the customer that the hyperlink is where he will find his “Service

Contract,” and that by rejecting the Protection Plan within the specific period, he

would be deemed to have accepted those terms.11



11
   SquareTrade’s argument that internet users know how hyperlinks work misses
the point. The issue here is not that the Post-Sale T&C were provided via
hyperlink. The problem is that the hyperlink was obscured and SquareTrade did
nothing to alert Starke to the fact that this hyperlink contained his “Service
Contract.” See Hines v. Overstock.com, Inc., 

, 367 (E.D.N.Y. 2009)
(finding contract term contained in hyperlink unenforceable where hyperlink
was not prominently displayed on the website and there was nothing prompting
the user to click on hyperlink); In re Zappos.com, Inc., 

, 1064
(D. Nev. 2012) (finding plaintiff did not manifest assent to contract terms
contained in hyperlink where the hyperlink was “inconspicuous, buried in the
middle to bottom of every . . . webpage among many other links, and the website
never direct[ed] a user to the Terms of Use”); cf. 

(“As long as
the hyperlinked text was itself reasonably conspicuous—and we conclude that it
was—a reasonably prudent smartphone user would have constructive notice of
the terms.”) (emphasis added); Starkey v. G Adventures, Inc., 

, 197 (2d
Cir. 2015) (finding terms enforceable where the email containing the “TERMS
AND CONDITIONS” hyperlink directed the plaintiff to read the hyperlinked
document).

                                         31
      The Post-Sale T&C were also temporally decoupled from the transaction.

Starke purchased the Protection Plan from the Amazon website, but he had no

way to review the Post-Sale T&C until he received the SquareTrade confirmation

email. In 

–80, we placed significant weight on the fact that

the “Terms of Service” hyperlink was temporally coupled with the register

button. For one, that meant that the user could not avoid noticing the hyperlink

when she registered for an account. But importantly, that also allowed the

plaintiff “to review the Terms of Service prior to registration, unlike web

platforms that provide notice of contract terms only after the user manifested his

or her assent.” 

(emphasis added).

      In defense of its pay-now-terms-later approach, SquareTrade notes that

New York Insurance Law, which creates the legal framework within which

service contracts may be sold in the state, permits sellers to provide customers

with the contract governing their transactions within a reasonable amount of

time after the purchase. See N.Y. Ins. Law § 7903(b)(1). The law requires that

consumers be provided at least twenty days after the service contract has been

mailed to return the contract to the seller for a full refund. 

7903(e).

SquareTrade points out that it provided Starke with thirty days within which to


                                           32
return his contract. However, Section 7903 is a regulatory regime that imposes

certain disclosure responsibilities and other duties on sellers of service contracts,

but it does not appear to alter New York law as to the manifestation of assent in

contract formation. Nor has SquareTrade provided authority to support the

proposition that it does.

      Under general principles of contract law, moreover, providing contract

terms after a transaction has taken place may be an appropriate way to contract

in certain situations. But we find little justification for it here, where it would

have been virtually costless for SquareTrade to provide the governing terms and

conditions to Starke before he bought the Protection Plan. See 

–28 (noting that there was no policy rationale for a “terms later by email”

conception of contract formation under the circumstances). Indeed, SquareTrade

did provide a hyperlink to the Pre-Sale T&C, which do not contain the terms that

SquareTrade seeks to enforce, on the Amazon purchase page.12 But, had Starke



12
  We do not mean to suggest that the “Warranty” hyperlink provided sufficient
notice of the Pre-Sale T&C, since that hyperlink was itself buried on the busy
Amazon purchase page amidst various other hyperlinks, banner advertisements,
and customer reviews, among other things. The point is merely that a consumer
who clicked on that link would have been misled about the terms governing the
transaction.

                                           33
clicked on the “Warranty” hyperlink on the Amazon purchase page, he would

have been taken to a document containing the Pre-Sale T&C, which set forth

what would have appeared to be a complete recitation of the terms of the

contract between the purchaser and SquareTrade. A consumer reviewing the Pre-

Sale T&C would have reasonably believed that his contract did not contain an

arbitration provision.

      Of course, Starke, like any other offeree, had a duty to read the terms of the

contract presented to him, including contract terms provided post-sale. But cases

applying the duty-to-read principle still require that the offeree be put on notice

of the existence of additional contract terms before it can be said that he has

assented to them. See 

; 

(“An

exception to [the duty to read] rule exists when the writing does not appear to be

a contract and the terms are not called to the attention of the recipient.”). Thus,

the duty to read does not morph into a duty to ferret out contract provisions

when they are contained in inconspicuous hyperlinks. See 

(“Given the breadth of the range of technological savvy of online

purchasers, consumers cannot be expected to ferret out hyperlinks to terms and

conditions to which they have no reason to suspect they will be bound.”). That is


                                         34
particularly so where, as here, the consumer was presented with several

documents including the Pre-Sale T&C, the body of the subsequent email, and

the Post-Sale T&C, none of them specifically identified as the “Service Contract”

governing the purchase, and all containing different sets of terms.

IV. Starke’s Prior Course of Dealing with SquareTrade

      Finally, SquareTrade points to the prior course of dealing between Starke

and SquareTrade to demonstrate that Starke was on inquiry notice of terms and

conditions that he would receive via email. SquareTrade relies on Register.com,

, where this Court found that a prior course of dealing between the

parties supported the conclusion that they had agreed to certain terms and

conditions. In Register.com, the party challenging the applicability of the terms

and conditions was a sophisticated corporate customer that had made “daily”

use of its counter-party’s services subject to the terms and conditions, and had

been “fully aware” of the terms and conditions that the counter-party sought to

enforce. 

We compared the situation before us then to one in which a

person maintains a roadside fruit stand displaying bins of apples with a sign at

the exit of the fruit stand telling customers that the apples are 50 cents each. 

We said that a visitor who comes, takes an apple, bites into it, and does not

                                          35
see the sign until he exits may well believe he has no obligation to pay for the

apple because he had no notice when he bit into it that 50 cents was expected in

return. 

the visitor returns to the apple stand on a daily basis, each

day taking an apple without paying for it, he cannot later use the same defense.

his prior transaction(s), he knows full well that the owner is offering

apples in exchange for 50 cents. 

apple stand visitor, who learns of the terms governing his

contract with the owner and feigns ignorance that the same terms will apply in

future transactions, Starke was not put on notice of SquareTrade’s terms and

conditions through his prior transactions. Although Starke had transacted with

SquareTrade on six prior occasions, SquareTrade never gave Starke clear and

conspicuous notice that the transaction would subject him to binding arbitration.

Each time Starke purchased a SquareTrade protection plan through Amazon, he

received a confirmation email from SquareTrade which looked just like the

confirmation email at issue here. The fact that Starke received emails with the

same inconspicuous hyperlink on more than one occasion does not lead us to

conclude that Starke had either actual or inquiry notice of the Post-Sale T&C.




                                         36
      On only one occasion (when Starke purchased a SquareTrade protection

plan through Staples) did Starke receive an email from SquareTrade in which the

terms and conditions were actually provided in the body of the email. In that

instance, however, the terms and conditions in the email did not contain an

arbitration provision, so that transaction could not have put Starke on notice of

such term. Starke notes that when SquareTrade introduced an arbitration clause

into its terms and conditions, it pivoted to providing its terms and conditions via

a nondescript hyperlink. Thus, the prior course of dealing between Starke and

SquareTrade by no means resembles the apple hypothetical in Register.com, and it

does not convince us that Starke was on inquiry notice of the arbitration

provision contained in the Post-Sale T&C.

      We emphasize that we in no way hold that the terms of a contract may not

be provided by a hyperlinked document. So long as the purchaser’s attention is

adequately directed to a conspicuous hyperlink that is clearly identified as

containing contractual terms to which the customer manifests assent by

completing the transaction or retaining the product or service, a hyperlink can be

an effective device for specifying contract terms. Nor do we hold that the format

used in Meyer is the only effective way to use hyperlinks (though we note that the


                                        37
clean, uncluttered, and conspicuous labeling of the location and binding nature

of the terms in the hyperlinked document can be used as a model that this Court

has found effective). We hold merely that on the totality of the circumstances in

this case, Starke was not on sufficient notice of the terms of the Post-Sale T&C,

including its arbitration clause, and therefore did not manifest assent to those

terms.

                                   CONCLUSION

         For the reasons stated above, we AFFIRM the order of the district court,

denying SquareTrade’s motion to compel arbitration.




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