Doe v. Massage Envy Franchising, LLC

Citation: Not availableDocket: A161688

Court: California Court of Appeal; December 28, 2022; California; State Appellate Court

Original Court Document: View Document

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Jane Doe filed a lawsuit against Massage Envy Franchising, LLC (MEF) after alleging she was sexually assaulted by a massage therapist at a Massage Envy location in San Rafael, California. The lawsuit seeks damages from MEF and the franchise location. MEF attempted to compel arbitration based on a 'Terms of Use Agreement' that was accessible via a hyperlink on an electronic tablet provided to Doe during her check-in for the massage. The trial court denied MEF's motion, determining there was no binding arbitration agreement between Doe and MEF.

MEF asserts that the check-in process involved a valid 'clickwrap' agreement, which is typically enforceable. However, the court found that Doe did not have reasonable notice of entering into an agreement with MEF or of the agreement's terms. Prior to the incident, Doe had a 'Wellness Agreement' with a Massage Envy franchisee that did not mention arbitration and allowed her to receive one massage monthly for a fee.

During her check-in on August 7, 2017, Doe was presented with an electronic tablet to complete her check-in without being informed that she was entering into a contract with MEF. MEF acknowledged it had no prior relationship with Doe but claims the check-in process executed a contract. The tablet's interface included screens that did not clearly indicate any contractual obligations or the nature of the agreement with MEF. The court ultimately affirmed its decision that Doe was not reasonably notified of any agreement with MEF.

The excerpt outlines the process by which the plaintiff engaged with Massage Envy's service customization and consent forms. It begins with a message emphasizing the uniqueness of each client and the ability to tailor the massage experience. Two forms were presented: 'My Massage' and 'General Consent,' along with a button labeled 'View My Forms.' Upon clicking this button, the plaintiff navigated through a series of screens related to the 'My Massage' form, where she was prompted to identify areas of stress, comfort levels for therapeutic massage, daily activities, lifestyle questions, and to fill out a lengthy 'My Health History' form.

After completing the health history, the plaintiff confirmed her age and proceeded to the 'My Consent' screen, which contained the 'General Consent' document. This document included a release of liability and noted that the information provided could be shared with any Massage Envy location. It clarified the terms by defining the parties involved—'you' referring to the plaintiff and 'we' referring to the independently operated Massage Envy franchise. Importantly, the General Consent did not reference 'MEF' as a service provider or employer of therapists.

Towards the end of the General Consent form, the plaintiff was presented with a statement agreeing to the 'Terms of Use Agreement,' accompanied by a checkbox. Notably, the 'Terms of Use Agreement' was a hyperlink leading to a document titled 'Terms and Conditions,' which was the only hyperlink provided during the check-in process. The text indicating the Terms of Use was visually distinct, being lighter and underlined compared to the main text of the General Consent.

Plaintiff did not notice a hyperlink to the Terms and Conditions while under pressure to complete forms quickly. She checked the agreement box without being prompted to click the hyperlink and signed on a tablet, which led her to a screen confirming her check-in. Unlike the General Consent form, she was not required to review the Terms and Conditions. Had she clicked the hyperlink, she would have encountered a lengthy agreement that included a bold notice about a binding arbitration provision and class action waiver. The arbitration clause was extensive, spanning three pages.

In the summer of 2017, the plaintiff alleges she was sexually assaulted by a massage therapist at a Massage Envy location, reporting the incident but claiming no investigation occurred, indicative of a broader issue of sexual misconduct at the franchise. She filed a lawsuit against MEF and the San Rafael location for sexual battery and fraud. MEF sought to enforce arbitration based on the checked agreement, but the trial court found no enforceable arbitration agreement existed and denied MEF’s motion, additionally ruling that her claims fell outside the arbitration provision's scope. MEF appealed the decision.

The applicable law emphasizes that arbitration is favored only when parties have agreed to it. The burden is on MEF to demonstrate the existence of a valid arbitration agreement. Under California law, mutual consent is essential for contract formation, determined by objective criteria reflecting the parties' outward expressions rather than their unspoken intentions. The focus is on the reasonable interpretation of the parties' actions.

Under California law, an offeree is not bound by inconspicuous contractual provisions that they were unaware of, especially concerning arbitration clauses. In electronic transactions, assent to contractual terms can be inferred from consumer actions, such as checking boxes or clicking buttons, but these actions must clearly indicate consent to those specific terms. The context of the transaction is crucial for determining if the consumer was adequately notified of the terms, especially when they are on a separate hyperlinked page.

In this case, the court found that the plaintiff did not enter into an arbitration agreement with MEF. During her check-in at San Rafael Massage Envy, she had no indication that her actions were related to MEF, as she had a pre-existing relationship solely with the San Rafael location. The forms presented during check-in pertained to her existing relationship and the services she was receiving, with no implication of a new agreement with MEF. The checkbox for agreeing to the Terms of Use Agreement was embedded within the General Consent form, which emphasized the assumption of risk and related liabilities, leading the plaintiff to believe it was part of the consent for services rather than a separate agreement. Thus, the trial court's denial of the petition to compel arbitration was upheld due to the absence of an agreement to arbitrate.

The placement of the check-box during the check-in process led the plaintiff to believe she was agreeing to the General Consent with San Rafael Massage Envy, rather than assenting to a separate contract with MEF. The contractual terms of the Terms and Conditions, including the arbitration provision, were not presented in a way that made it clear to the plaintiff that she was agreeing to those terms by clicking the button next to "I agree and assent to the Terms of Use Agreement." The check-in experience indicated that her agreement was solely with San Rafael Massage Envy. MEF argued that the Terms of Use Agreement constituted an enforceable "clickwrap" agreement, which typically requires users to click an "I agree" button after being presented with the terms. However, this situation differed from standard clickwrap agreements as there was no evidence the plaintiff was using a website for check-in, nor was she informed of such. The plaintiff, a member with a scheduled massage, was handed a tablet to check in at a physical location. Although MEF claimed that the hyperlink to the Terms of Use Agreement was conspicuous, it was actually inconspicuous, embedded in a sentence next to the check-box without clear instruction to review a new document. The hyperlink was not highlighted, contrasting with the boldface used for other parts of the General Consent document, further obscuring its significance.

The hyperlink to the 'Terms of Use Agreement' was presented inconspicuously at the end of the General Consent form, lacking prominence compared to other buttons in the check-in process. Plaintiff was not prompted to review any additional documents or informed that she would be bound by the Terms and Conditions by checking a box, which resembled other check-boxes previously encountered and did not indicate any distinct agreement. The check-in process did not highlight the Terms and Conditions, leading the plaintiff to believe her agreement pertained only to the General Consent. The court references previous cases to illustrate that consumers cannot be expected to seek out hidden hyperlinks or anticipate binding agreements in contexts where they do not expect an ongoing contractual relationship. The plaintiff's situation contrasts with cases involving ongoing interactions, where consumers would reasonably expect to be bound by terms. MEF's reliance on clickwrap agreement cases is deemed unpersuasive due to the differing contexts.

The plaintiff did not engage in downloading software or registering for a new service, as was the case in Net2Phone. Instead, she had an existing account with the San Rafael location when she checked in for her massage, and the check-in screen confirmed this. There was no indication that she was signing up for a new service with MEF or establishing a new account. Consequently, the court concluded that no contract existed between the plaintiff and MEF, which meant there was no binding agreement to arbitrate. As a result, the court did not address the other arguments regarding unconscionability, the arbitrability of the plaintiff’s claims, or the forum for arbitrability. The order denying Massage Envy’s motion to compel arbitration was affirmed, and the respondent was awarded costs on appeal.