## Facts

- SquareTrade sold consumer “protection plans” as service contracts for electronics, including plans marketed through Amazon.
- Adam Starke bought a CD player from Staples and separately purchased a SquareTrade two-year protection plan for that player through Amazon.
- The Amazon purchase page referenced delivery of the service contract by email and included links to “pre-sale” terms and conditions that did not contain an arbitration clause.
- After purchase, SquareTrade sent a visually cluttered confirmation email with varied fonts and promotional content; a hyperlink near the bottom led to “post-sale” terms and conditions containing an arbitration clause.
- The email did not clearly indicate that the hyperlink contained the governing contract terms or that keeping/using the plan would constitute assent to those terms.
- Starke registered the CD player by sending a Staples receipt; SquareTrade confirmed coverage, but later denied a claim when the player failed, asserting the plan covered only items purchased on Amazon.
- Starke filed a putative class action alleging consumer-protection violations; SquareTrade moved to compel individual arbitration based on the arbitration clause in the post-sale terms.

## Issues

1. Whether the arbitration clause in post-sale terms, accessible only through a buried hyperlink in a confirmation email, became part of the parties’ contract through reasonable notice and manifestation of assent.
2. Whether Starke’s prior purchases of SquareTrade plans supplied inquiry notice of the arbitration clause through a course of dealing sufficient to bind him.

## Decision

- The Second Circuit affirmed the denial of SquareTrade’s motion to compel arbitration.
- The court held the arbitration clause was not part of the contract because Starke lacked reasonable notice of the term and did not manifest assent to it.
- The court rejected SquareTrade’s course-of-dealing argument because the record did not show Starke had previously been placed on notice of, or assented to, the same arbitration provision.

## Legal Principles

- Under state contract law applied through the Federal Arbitration Act, arbitration may be compelled only if a valid agreement to arbitrate was formed.
- Online contract terms are enforceable only when the consumer receives reasonable notice of the terms and manifests assent; courts assess the clarity, prominence, labeling, and context of hyperlinks and accompanying language.
- Where multiple sets of terms are presented and the operative terms are not clearly identified, ambiguity can defeat reasonable notice.
- Post-purchase introduction of material terms (including arbitration) requires clear disclosure and an unambiguous mechanism for assent; a seller cannot add such terms after contract formation without adequate notice and assent.
- A prior course of dealing does not bind a consumer to a disputed term absent evidence that prior transactions provided meaningful notice of, and assent to, that term.

## Conclusion

Because the confirmation email did not clearly alert a reasonable consumer that the hyperlinked post-sale terms contained binding contract provisions, and because prior transactions did not establish inquiry notice of arbitration, no agreement to arbitrate was formed and arbitration could not be compelled.


Starke v. SquareTrade, Inc., 913 F.3d 279 (2d Cir. 2019)