SAN FRANCISCO (Legal Newsline) - A massage parlor franchising company can’t escape a sexual assault lawsuit by one of its customers by citing an arbitration clause buried in a 10-page electronic agreement she never read when she checked in to her local outlet, a California appeals court ruled.
Unlike other so-called “clickwrap” agreements upheld by California courts, the First Appellate District ruled, the customer in this case had no notice she was doing anything more than checking in to the San Rafael Massage Envy parlor when she clicked on several boxes on an electronic tablet an employee handed her.
The plaintiff, identified as Jane Doe, bought a “wellness agreement” entitling her to one massage a month plus additional services at discounted rates and attended San Rafael Massage Envy for several years without incident.
When she checked in in August 2017, the electronic tablet included a page for her to update her personal information, then several more pages including one that said “My Consent” that included a “Terms of Use Agreement” with a hyperlink to another 10-page document with a binding arbitration clause.
Doe said she didn’t click on the hyperlink and wasn’t required to. She then was allegedly assaulted by an employee. She claims she reported the assault but “no investigation was made,” “in keeping with an alleged cover-up of a widespread problem of women being sexually assaulted by massage therapists at Massage Envy locations.”
Doe sued the Arizona-based franchisor Massage Envy Franchising and the independent San Rafael location for sexual battery and fraud. MEF moved to compel arbitration, citing the hyperlinked document. The trial court denied the motion, holding there was no agreement to arbitrate between Doe and MEF. And California’s First Appellate District agreed.
“Although there is a strong public policy favoring arbitration, the policy has no application to parties who have not agreed to arbitrate their disputes,” the court wrote in a Dec. 29 decision.
Any contract requires mutual assent of the parties, the court continued, and when consumers are assenting to a contract by clicking boxes on an electronic screen the terms must be presented in full context so the consumer knows she is agreeing to the same thing as the business. In this case, the court ruled, Doe had no reason to believe that the check-in process or her massage involved MEF.
She had a pre-existing contract with San Rafael Massage Envy and “nothing about the process suggested that checking in for the massage involved entering a new, and continuing, relationship with MEF,” the court said. Neither did Doe use an internet browser to click through to the 10-page arbitration agreement with MEF and she received no instruction to do so anyway.
While California courts have upheld other so-called “clickwrap” contracts, the court said, the context here was different. Doe wasn’t downloading software and when she checked in she already had an agreement with the San Rafael business and couldn’t have understood she was entering into a new and different contract.