Best Buy's Arbitration Agreement 'Unconscionable,' Says Plaintiff in Fraud Case

Best Buy’s arbitration agreement is “unconscionable” and “unenforceable,” said plaintiff Sergio Rodriguez, opposing (docket 8:23-cv-01194) the retailer’s motion to compel arbitration in a fraud class action in U.S. District Court for Central California in Santa Ana. Rodriguez’s July fraud lawsuit against Best Buy and Samsung alleges the Samsung QLED 4K TV he bought in 2022 didn’t have the Xcelerator Turbo+, FreeSync and HDMI 2.1 features that were advertised.

Best Buy's motion to compel arbitration should be denied because Rodriguez didn’t agree to arbitrate the claims asserted in the July complaint (see 2309110045). Even if he did, it’s because terms and conditions were “inconspicuously posted” on Best Buy’s checkout and “Create an Account” pages, using “extra small font” that wasn’t “capitalized, bolded, or set out in any prominent manner,” said the opposition.

In addition, Best Buy’s terms and conditions don’t govern Rodriguez’s in-store purchase of the TV at the center of the lawsuit, said the plaintiff. Best Buy’s terms govern use of its website and mobile apps and the My Best Buy loyalty program, he said.

Best Buy contends Rodriguez “was on notice of and manifested assent to the My Best Buy and BestBuy.com Terms” when he created a My Best Buy account online in 2020, but Rodriguez did not see, click on or review the terms, he said. The disclosure of terms was in the smallest typeface on the page, he said.

Best Buy’s terms and conditions are known as “sign-in wrap” agreements that “include a text notice indicating the user will be bound by the terms, said the opposition. The agreements don't require the consumer to review the terms “or to expressly manifest their assent to those terms” by checking a box or clicking an “I agree” button, said Rodriguez. Instead, the consumer “is purportedly bound by clicking some other button that they would otherwise need to click to continue with their transaction or their use of the website,” typically a button that allows the consumer to sign into or up for an account, it said. In that passive scenario, it isn’t apparent to consumers that they are agreeing to contractual terms just by clicking a button, said Rodriguez. “The existence of a contract turns on whether a reasonably prudent offeree would be on inquiry notice of the terms at issue,” he said, citing Sellers v. JustAnswer.

The 9th Circuit U.S. Court of Appeals, citing Specht v. Netscape Communications, said, “[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility,” said the opposition. To be conspicuous, a notice “must be displayed in a font size and format such that the court can fairly assume that a reasonably prudent Internet user would have seen it,” said Rodriguez, citing Berman v. Freedom Financial Network. In Sellers, the court said website users “are entitled to assume that important provisions -- such as those that disclose the existence of proposed contractual terms -- will be prominently displayed, not buried in fine print.”

In a September declaration in support of Best Buy’s motion to compel arbitration, Jeremy Greene, senior director-product management, said when Rodriguez bought a $500 gift card online in 2018, he would have had to proceed through the checkout page, which said that by placing the order, he agreed to Best Buy terms and conditions. And when Rodriguez created a BestBuy.com account and signed up for the My Best Buy loyalty program in August 2020, he would have had to agree to terms and conditions by clicking a button or completing a process on the website.

Rodriguez didn’t notice the button saying that by placing the order for the gift card, he agreed to terms and conditions, including arbitration, said the opposition. In response to the declaration of Angela Mattox, Best Buy vice president-e-commerce digital marketing, who said terms were accessible via a hyperlink in blue text, “immediately above the ‘Place Your Order’ button,” when Rodriguez interacted on the website in 2018 and 2020, Rodriguez said if he had seen the terms in 2018 or 2020 when he made online transactions for the gift card and loyalty program account, “I would not have thought or understood that they would be applicable to or govern my purchase at a Best Buy store, especially years later.”

Rodriguez bought the Samsung TV at the center of the lawsuit at a physical Best Buy store, paid with cash and didn’t earn any My Best Buy points from the purchase, the opposition said. The retailer’s terms and conditions “are irrelevant to the purchase and his false advertising claims," said Rodriguez. Also, the “threshold question” of whether the arbitration provision is valid and enforceable should be decided by the court, because the plaintiff “challenges the existence of an enforceable arbitration agreement and the delegation clause is unconscionable.”

Mandatory arbitration provisions that “drastically limit consumers’ rights and rob them of their day in court are oftentimes buried in long, non-negotiable written agreements and presented in a manner where the consumer will not even notice they exist,” said Rodriguez. Best Buy’s disclosure is in a typeface that’s smaller than the others on the page, many of which are in large, bold letters and others in larger blue typeface, he said.