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Maine Supreme Judicial Court affirms denial of arbitration in online contract formation case
Earlier this year, the Maine Supreme Judicial Court affirmed a lower court’s decision to deny a ride-sharing company’s motion to compel arbitration in case concerning the enforceability of contracts formed through a smart phone application. In agreeing with the plaintiff that the terms and conditions were not binding under the circumstances, the Court concluded that the plaintiff was not provided reasonable notice of, nor manifested her assent to, binding arbitration when she clicked “DONE” after setting up her account and entering payment information. The Court characterized the company’s rider registration process as a “sign-in wrap agreement,” in which the plaintiff was informed she was assenting to the terms by creating an account, instead of having to affirmatively signify agreement with the terms. The Court stated that while it has not yet considered the enforceability of online contracts, “other courts have held that the formation of online contracts is governed by the same principles as traditional contracts.” The Court analyzed the enforceability of a sign-in wrap agreement using the following three components: (i) “Conspicuous terms or access to terms: The more likely that the user must at least view, if not read, the terms themselves as a condition of utilizing the website or the product, the more likely that a court will hold that the terms are binding”; (ii) “Uncluttered screen: Where notice or the hyperlink to agreement terms appears on an interface that is cluttered with other features and therefore is not easily spotted, an agreement is less likely to be binding on the user”; and (iii) “Explicit manner of expressing assent: The more obvious the user’s assent to terms, the more likely the terms will be binding.”
The Court determined that the plaintiff did not have reasonable notice because the hyperlink containing the terms was presented in muted gray coloring, was “not obviously identifiable as a hyperlink,” and the sequence in which it appeared during the registration process “render[ed] it relatively inconspicuous” and made it less likely to draw the user’s attention, particularly because the focus of the registration process was on entering payment information rather than on the terms. The Court distinguished its conclusion from a decision issued by the U.S. Court of Appeals for the Second Circuit in Meyer v. Uber Technologies Inc., et al. (covered by InfoBytes here), which the company heavily relied upon. In Meyer, the 2nd Circuit upheld contract formation on the grounds that a “reasonably prudent smartphone user” would have been on “reasonably conspicuous notice” of the terms and conditions of service and that the text beneath the registration button put the plaintiff on notice that clicking “REGISTER” meant acceptance of those terms—regardless of whether he actually reviewed them. “The interface in Meyer increased the likelihood that the terms would come to the user’s attention—the hyperlink text to the terms in Meyer was underlined and in blue, and the hyperlink itself appeared in close proximity to the “REGISTER” button,” the Court wrote.
The Court further concluded that the plaintiff did not manifest her assent to the terms because a reasonably prudent user would conclude that by clicking “DONE” she was only entering her payment information given the heading of the window read “LINK PAYMENT.” While the court acknowledged that the hyperlink containing the terms was on the same page as the “DONE” button, the notice did not state that “By clicking DONE, you agree to the Terms.”
The Court concluded that the company “could have designed its rider app to incorporate scrollwrap or clickwrap contracts that provided adequate notice of [the company’s] original and updated Terms and required consumers to express actual assent” but “apparently decided not to do so.” Furthermore, the Court found that a subsequent email notifying users of updates to the terms (which also required arbitration) did not obligate the plaintiff to arbitrate her dispute because the email did not require users to read or acknowledge the updated terms to remain registered as rider.
1st Circuit vacates ruling in Maine FCRA case
On February 10, the U.S. Court of Appeals for the First Circuit vacated a district court’s ruling that the FCRA preempts amendments to the Maine Fair Credit Reporting Act that govern how certain debts are reported to credit reporting agencies. As previously covered by InfoBytes, a trade association—whose members include the three nationwide consumer credit reporting agencies (CRAs)—sued the Maine attorney general and the superintendent of Maine’s Bureau of Consumer Credit Protection (collectively, “defendants”) for enacting the 2019 amendments, which, among other things, place restrictions on how medical debts can be reported by the CRAs and govern how CRAs must investigate debt that is allegedly a “product of ‘economic abuse.’” The trade association argued that the amendments, which attempt to regulate the contents of an individual’s consumer report, are preempted by the FCRA, and contended that language under FCRA Section 1681t(b)(1)(E) should be read to encompass all claims relating to information contained in consumer reports. The district court agreed, ruling that, as a matter of law, the amendments are preempted by § 1681t(b)(1)(E). According to the court, Congress’ language and amendments to the FCRA’s structure “reflect an affirmative choice by Congress to set ‘uniform federal standards’ regarding the information contained in consumer credit reports,” and that “[b]y seeking to exclude additional types of information” from consumer reports, the amendments “intrude upon a subject matter that Congress has recently sought to expressly preempt from state regulation.” The defendants appealed.
On appeal, the plaintiff argued that the phrase “relating to information contained in consumer reports” broadly preempts all state laws, but the appellate court was not persuaded and concluded that the broad interpretation “is not the most natural reading of the statute’s syntax and structure.” The 1st Circuit found “no reason to presume that Congress intended, in providing some federal protections to consumers regarding the information contained in credit reports, to oust all opportunity for states to provide more protections, even if those protections would not otherwise be preempted as ‘inconsistent’ with the FCRA under 15 U.S.C. § 1681t(a).” In addition, the court reminded the plaintiff that “even where Congress has chosen to preempt state law, it is not ousting states of regulatory authority; state regulators have concurrent enforcement authority under the FCRA, subject to some oversight by federal regulators.” As such, the appellate court held that the FCRA did not broadly preempt the entirety of Maine’s amendments, and remanded the case back to the district court to determine the scope under which the amendments may be preempted by the FCRA.
Maine to establish program to assist homeowners impacted by Covid-19
On May 28, Maine’s Bureau of Consumer Protection announced the Maine Homeowner Assistance Fund (HAF) Program to mitigate financial hardship for certain homeowners resulting from the Covid-19 pandemic. The details of the program are still in development as the superintendent holds meetings with stakeholders.
Maine governor launches grant program for small businesses and nonprofits
On August 20, the Maine governor launched a $200 million economic grant program to assist Maine small businesses and nonprofits. To qualify for a grant, a business or nonprofit must demonstrate financial relief need due to Covid-19 impacts or a related public health response. Additionally, the business or organization must meet eligibility requirements, including having “significant operations” in Maine and being current and in good standing with certain tax filings through July 31, 2020. Grants may be used to cover expenses including, payroll costs and expenses, rent or mortgage payments for business facilities, and utilities payments. The application period begins on August 21, 2020, and runs through September 2, 2020. Awards will be made in early October. Additional information about the program can be found on the Maine Department of Economic and Community Development’s website.
Maine Real Estate Commission adopt emergency rule regarding sales agent examinations
On May 1, the Maine Department of Professional and Financial Regulation, Real Estate Commission, adopted an emergency rule extending the time period during which applicants for a sales agent license have to pass the sales agent examination after they successfully complete the sales agent course. The time is extended from one year to 180 days after testing sites fully reopen.
Maine governor relaxes certain lending requirements for Covid-19 loan guarantee program
On April 21, Maine’s governor issued an executive order concerning the Covid-19 Loan Guarantee Program recently established by Maine’s legislature. The order suspends the enforcement of certain statutory lending requirements law to allow financial institutions to consider a consumer’s creditworthiness and extent the amortization period of loans issued pursuant to the program. The order also extends certain grace periods, repayment periods, and claims provisions.
Maine issues executive order prohibiting certain evictions
On April 16, the governor of Maine issued an executive order prohibiting landlords and property owners from attempting to evict a tenant by means not authorized by law and prohibiting the serving of writs of possession upon tenants in certain circumstances. The executive order also extends the notice periods for evicting a tenant for nonpayment of rent where such late payment is due to loss of income caused by Covid-19. The order will expire 30 days after the termination of the Covid-19 state of emergency, unless amended or rescinded earlier.
Maine Supreme Court revises court guidelines amid Covid-19 crisis
On April 14, Maine Supreme Court Acting Chief Justice Andrew Meade issued a revised emergency order providing court guidelines for navigating the Covid-19 crisis. The guidelines pertained to the types of cases the courts will schedule and hear; exceptions and motion-filing procedures; postponement of jury trials and grand jury proceedings; boards, committees, and continuing legal education; and hearing of oral arguments. The revised order supersedes the initial order issued from March 30, and is effective until May 1, unless otherwise changed, revised, or lifted.
Maine governor issues order and guidelines regarding temporary suspension of in-person notary requirements
On April 8, Maine Governor Janet Mills issued an executive order temporarily suspending certain in-person notarization requirements due to the Covid-19 crisis. The order details the requirements for remote notarization, including use of two-way, audio-video communication technology, and recording requirements. Governor Mills’ order is set to terminate 30 days after termination of the Covid-19 state of emergency, unless otherwise amended.
Maine issues executive orders relating to remote notarizations
On April 8, the Maine governor issued an executive order permitting remote notarization, provided that certain requirements set forth in the order are met. On April 24, the Maine governor issued a subsequent executive order that extends the time period required for certain steps in the remote notarization process. The executive orders will remain in effect until 30 days after the termination of the Covid-19 state of emergency, unless amended or rescinded at an earlier time.
- Keisha Whitehall Wolfe to discuss “Tips for successfully engaging your state regulator” at the MBA's State and Local Workshop
- Max Bonici to discuss “Enforcement risk and trends for crypto and digital assets (Part 2)” at ABA’s 2023 Business Law Section Hybrid Spring Meeting
- Jedd R. Bellman to present “An insider’s look at handling regulatory investigations” at the Maryland State Bar Association Legal Summit