Hello again, everyone. I wanted to write about a recent ruling which granted a Motion to Compel Individual Arbitration.

John Franz v. Hyundai Motor America, 8:23-cv-01640-NS-ADS, Slip Copy (C.D.Cal., 2024)

Plaintiff John Franz, who purchased a 2023 Hyundai Tucson, filed a class action lawsuit against the defendant Hyundai Motor America when he learned about a recall through social media that was related to malfunctioning oil pumps for over 90,000 vehicles, which included his own. The plaintiff claimed that the fix that Hyundai was proposing on this recall would not permanently fix the issue, and that Hyundai was negligent (along with a slew of other charges) by not catching this issue beforehand.

Hyundai timely filed a Motion to Compel Individual Arbitration, stating that when the plaintiff activated his vehicle’s optional Bluelink services, which is a “connected car system that includes various functions and features.”, the plaintiff had to click a non-pre-populated box that said “I Agree” to Hyundai’s Terms and Conditions in order to access Bluelink. The Terms and Conditions he accepted included a hyperlink to the specifics of the agreement, which included an Arbitration Clause. Hyundai stated that by the plaintiff consenting to their Terms and Conditions and clicking “I Agree”, the plaintiff effectively waived his right to bring claims as a class representative in a court. The court agreed, reinforcing how clicking “I Agree” can legally bind you to Arbitration.

Although the plaintiff argued that he never consented to specifically anything “Arbitration” related, the court disagreed for two key reasons:

First, Hyundai provided evidence that activating Bluelink required clicking “I Agree” to the Terms and Conditions, which conspicuously included an Arbitration provision. Had the plaintiff clicked and read what he was “agreeing” to, he as well as anyone else, would have been well-aware of the Arbitration Clause in question. The plaintiff’s click objectively indicated his consent, favoring Hyundai’s argument.

Second, the Arbitration Clause was transparent and not buried in fine print. It was a separate section in bold font marked “Binding Arbitration”, which contained an all-caps notice declaring that disputes must go through Arbitration.

Given the clear presentation of evidence provided by Hyundai, as well as the plaintiff’s definitive “I Agree” click, the court found mutual assent existed under contract law. His click manifested intent to be bound to the terms as they were presented.

So why is this important?

Because it shows how courts analyze online consent. By clicking the “I Agree” box, the plaintiff provided acceptance of adjacent terms, and because those terms were conspicuous, the court was not persuaded in any way by the plaintiff’s arguments, as he conveyed an intent to form a contract by clicking “I Agree”.

Let Hyundai’s victory here be a reminder for all companies to ensure their Terms and Conditions are clear and concise to the consumer. By ensuring that the Terms and Conditions are transparent, Arbitration Clauses likely hold merit in court as we saw here.

What are the final takeaways from this? Two things.

One, consumers beware – clicking “I Agree” has consequences. It manifests legal consent according to the language presented. Make sure you read the Terms and Conditions beforehand, as you may unknowingly consent to a binding contract you may not necessarily agree with.

Two, it is vital for companies to understand that by ensuring you have transparent and conspicuous terms as Hyundai did, you are more likely to persuade a court that the consumer waived their right to bring claims against you as a class.