Had the plaintiffs agreed to arbitrate their claims?
A group of plaintiffs sued Netscape, claiming that two of the company’s products illegally captured private information about files that they downloaded from the Internet. The plaintiffs alleged that this was electronic eavesdropping, in violation of two federal statutes.
From Netscape’s Web page, the plaintiffs had downloaded SmartDownload, a software plug-in that enabled them to download the company’s Communicator software. The Web page advertised the benefits of SmartDownload, and near the bottom of the screen was a tinted button labeled “Download.” The plaintiffs clicked to download. If, instead of downloading, they had scrolled further down, they would have seen an invitation to “review and agree to the terms of the Netscape Smart- Download software license agreement.” By clicking the appropriate button, they would have been sent to a series of linked pages, and finally arrived at a license agreement. Among the terms was an agreement to arbitrate any dispute. In other words, a consumer downloading SmartDownload was in theory giving up the right to file suit if anything went wrong, and agreeing to settle the dispute by arbitration. However, the plaintiffs never reviewed the license terms.
In the district court, Netscape moved to dismiss the case and compel arbitration. Netscape claimed that the plaintiffs had forfeited any right to sue based on the license agreement. The district court denied the company’s motion, ruling that the plaintiffs had not agreed to the terms of the license. Netscape appealed.