“Submerged” Forum Selection Clause on Seller’s Website is Presumptively Unenforceable

Hoffman v. Supplements Togo Management, LLC, 419 N.J. Super. 596 (App. Div. 2011).  In Caspi v. Microsoft Network, LLC, 323 N.J. Super. 118 (App. Div. 1999), the Appellate Division upheld a forum selection clause that was contained in an electronic contract between an internet service provider and its customers.  The location and presentation of the forum selection clause was sufficiently “fair and forthright,” and sufficiently notified customers of the existence of the provision, that the clause was binding.  

In Hoffman, however, which involved the purchase of a dietary supplement over the internet, a forum selection clause that assigned venue to Nevada was “submerged.”  That is, “the clause would not appear on a purchaser’s computer screen unless he or she scrolled down to display the ‘submerged’ clause before adding the product to his or her ‘shopping cart.'”  Despite that, the Law Division found that plaintiff had agreed to the forum selection clause and all other terms when he decided to order the product.  For that and other reasons, the lower court dismissed the case.  Plaintiff appealed.  The Appellate Division reversed, with Judge Sabatino writing a typically thorough opinion.

Judge Sabatino noted that the standard of review was de novo, since “[t]he issue of reasonable notice regarding a forum selection clause is a question of law for the court to determine.”  There was nothing to contradict plaintiff’s contention that the forum selection clause would not be visible on a consumer’s computer screen “unless he or she scrolled down to a submerged portion of the webpage where the disclaimer containing the clause appeared.”  Defendants also did not rebut plaintiff’s contention that if a purchaser clicked on a product and added it to his or her shopping cart, “the webpage would skip ahead to new pages that do not contain the disclaimer.” 

Accordingly, there was no reasonable notice of the forum selection clause.  Instead, it was “unreasonably masked from the view of the prospective purchasers because of its circuitous mode of presentation,” due to a website design that “makes it unlikely that consumers would ever see it at all on their computer screen.”  The panel thus held that the clause was presumptively unenforceable, unless there was evidence that plaintiff, an attorney and an experienced internet purchaser, had actually seen the provision.  Plaintiff had sought a further ruling that only a procedure requiring a customer to click “I agree” was sufficient, but Judge Sabatino found no need to go that far, finding that “the absence of reasonable notice to consumers, and the manifestly unfair manner in which defendants’ website was structured,” resolved the case at hand.

In a portion of the opinion that was not designated for publication, Judge Sabatino also reversed the dismissal of the case for plaintiff’s alleged failure to plead sufficiently the elements of consumer fraud and common law fraud.  Counsel who handle consumer cases would benefit from reading the not for publication version of this opinion as well.