Rocket Mortgage Motion To Compel Arbitration Granted – TCPAWorld

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The District of Arizona just granted a motion to compel arbitration that you should know about! See generally MacDonald v. Rocket Mortgage LLC, No. CV-23-02558-PHX-KML, 2024 WL 5200480 (D. Ariz. Dec. 23, 2024). This one highlights the importance of quickly moving to compel arbitration and of having conspicuous user agreements.

The procedural history of this case is short. Plaintiff MacDonald filed a complaint against Rocket Mortgage LLC for violating the TCPA’s DNCR provisions. Rocket Mortgage responded by quickly filing a motion to dismiss and motion to compel arbitration. Id. at *5 n.2. At the Court’s direction, the parties then engaged in limited discovery on the arbitration issue and briefing on the motion to dismiss was stayed.

Essentially, MacDonald visited one of Rocket Mortgage’s websites—www.quickenloans.com—and submitted an online request to receive information about its products. To do so, MacDonald navigated through eighteen webpages, each containing a footer with a hyperlink to the “Terms of Use.” Macdonald then clicked a button on the final page labeled “Click to See your Results!”, under which was a block of bolded black text labelled “Communication Consent.” This text was in a smaller font than the rest of the page but was against a white backdrop, except for hyperlinked phrases which appeared in blue font.

This Communication Consent section provided that “[b]y submitting your contact information you agree to our Terms of Use and our Security and Privacy Policy.” Id. at *2. The Terms of Use contained a provision providing that Michigan law governed the terms of use and that users were required to “arbitrate TCPA claims.”

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In contesting the motion to compel arbitration, MacDonald argued that an agreement to arbitrate was not validly formed. The Court did not agree.

In deciding the enforceability of arbitration agreements, courts defer to state law contract formation principles, which require mutual assent and apply equally to contracts formed online. However, the Ninth Circuit specifically provides that to be enforceable, (1) an online agreement must provide “reasonably conspicuous notice” of the terms, and (2) the consumer must act in a way that “unambiguously manifests his or her assent to those terms,” such as by clicking a button. Id.

The Court explained that if valid, Rocket Mortgage’s online agreement would constitute a “hybrid” or “modified clickwrap” agreement, which requires a close analysis of these two prongs to determine its enforceability.

The Court discussed these prongs in reverse order, explaining that a user’s click of a button only unambiguously manifests assent if the user is explicitly instructed that clicked constitutes assent to the terms and conditions of an agreement. Rocket Mortgage’s website met this standard—it expressly stated that “[b]y submitting your contact information you agree to our Terms of Use.” Id. at *3. Since MacDonald submitted his contact information, the Court deemed this prong satisfied.

The “reasonably conspicuous” notice prong required the Court to consider (1) the size of the text; (2) the color of the text compared to the background behind it; (3) the location of the text, particularly its position and proximity to the button to the user clicks to consent; (4) the obviousness of hyperlinks to the terms of use in the text; and (5) the layout of the screen and whether it draws attention away from the agreement.

The Court found Rocket Mortgage to satisfy this prong, even though every factor didn’t weigh in its favor. First, it found that although the text of the Communication Consent was smaller than the rest of the text on the page, it wasn’t “tiny,” and the title was bolded. Second, the black text appeared against a white background, which drew attention. Third, the Court noted that the fact that the Communication Consent appeared below the consent button weighed against Rocket Mortgage, but it wasn’t dispositive. The Communication Consent was only a few lines below the button and no scrolling was needed to see it. Fourth, the hyperlinks were blue and obvious. And finally, nothing in the website’s layout distracted from the Communication Consent—it was “simple and clear, with black text on an uncluttered white background.” Id. at *4. Notice was therefore reasonably conspicuous.

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The Court also addressed MacDonald’s reliance on two other Rocket Mortgage cases which involved different websites and reached the opposite conclusion. It found that because the text in these cases involved small grey font, they were distinguishable from the instant case.

And, with that, the Court granted the motion to compel arbitration and denied the motion to dismiss as moot.

Moral of the story? Websites should have user agreements that are clear and obvious and that explicitly instruct users that to click is to consent. And companies hit with new TCPA complaints should move to compel arbitration as soon as possible, if they have grounds to.

Until next time.