Geske v. American Wagering, Inc

Filing 44

MEMORANDUM Opinion and Order: For the reasons stated in the attached Memorandum Opinion and Order, Defendant's motion to compel arbitration 21 is denied. Defendant's motion to dismiss 21 is denied without prejudice, and Geske's mot ion to amend 25 is granted. Geske should file a new amended complaint by 2/20/2024. Defendant should answer or file a motion to dismiss by 3/12/2024, with Geske's response due 4/2/2024, and Defendant's reply due 4/16/2024. Signed by the Honorable Thomas M. Durkin on 2/5/2024. Mailed notice. (ecw, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CASSANDRA GESKE, individually and on
behalf of all others similarly situated,
Plaintiff,

No. 23 C 1665
Judge Thomas M. Durkin

v.
AMERICAN WAGERING, INC., d/b/a
William Hill and Caesars Sportsbook,
Defendant.

MEMORANDUM OPINION AND ORDER
Cassandra Geske brings fraud and misrepresentation claims regarding
Defendant’s online sports gambling service. Defendant has moved to compel
arbitration. R. 21. That motion is denied.
When a person signs a paper contract, the staple plays a far greater role than
is generally acknowledged. The signatories are held to have read and agreed to the
terms expressed on the pages stapled to the signature page. See Sgouros v.
TransUnion Corp., 817 F.3d 1029, 1034 (7th Cir. 2016) (“Generally, a party who signs
a written contract is presumed to have notice of all of the contract’s terms.”)
(emphasis added).
This motion is about the virtual equivalent of a staple. Geske does not dispute
that she intended to create an account with Defendant. And she does not dispute that
she reached an agreement with Defendant to create that account by clicking “submit”

on the screen of Defendant’s smart phone application (Defendant’s “app”). Here is the
relevant screen from the app:

R. 22 at 4.
The parties dispute, however, whether Defendant’s “Terms of Service” are part
of that agreement. Defendant argues Geske agreed to the “Terms of Service”
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referenced in the screen above, because she clicked the “submit” button under the
statement that “By submitting, I confirm that . . . I agree to the Terms of Service.” Id.
According to Defendant, this assent, and the fact that the Terms of Service were
available on a different screen on the app, constitute circumstances showing that
Geske received, “reasonable notice” of the terms of the agreement. See Sgouros, 817
F.3d at 1034-35 (explaining that court should “ask whether the web pages presented
to the consumer adequately communicate all the terms and conditions of the
agreement, and whether the circumstances support the assumption that the
purchaser receives reasonable notice of those terms”). Geske concedes that the Terms
of Service contain an arbitration clause that would require arbitration of her claims
in this case.
Geske argues, however, that because the agreement screen did not include a
hyperlink to the Terms of Service, they cannot have been part of the agreement. The
parties both cite Illinois law on this issue. With respect to “online contracts,” the
Illinois Appellate Court has held that contract terms hyperlinked to “Web pages the
plaintiffs completed in the ordering process . . . . should be treated the same as a
multipage written paper contract. The [hyperlink] simply takes a person to another
page of the contract, similar to turning the page of a written paper contract.” Hubbert
v. Dell Corp., 835 N.E.2d 113, 121 (Ill. App. Ct. 5th Dist. 2005). In other words, the
hyperlink performs the same function as a staple, which is to provide “reasonable
notice” to the signatories of the terms included in their agreement.

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A hyperlink, or a scroll box containing the agreement, placed “next to an ‘I
Accept’ button that unambiguously pertains to that agreement,” are the most
common ways of providing reasonable notice in an online contract. See Sgouros, 817
F.3d at 1036. But there “are undoubtedly other ways as well to accomplish the goal.”
Id. At a minimum, however, the locus of the act of agreement—i.e., the signature
block for a paper contract, or the check box or the button the signatory uses to indicate
agreement for an online contract—must be directly connected to the terms of the
agreement so as to prevent any ambiguity. Like a staple, a hyperlink or a scroll box
both provide this direct connection.
Here, however, there was nothing on the agreement page where Geske clicked
“Submit” defining the phrase “Terms of Service.” Defendant argues that a reasonable
person would understand that this phrase refers to the “Terms of Service” available
elsewhere on the app. See R. 37 at 4 (“A reasonable user would recognize that the
phrase ‘Terms of Service’ on the account registration screen directs them to the Home
screen button labeled with the same capitalized phrase.”). But this is an inferential
leap courts have rejected.
Courts generally categorize online contracts as “browsewrap,” “clickwrap,” or
some hybrid of the two. See Van Tassell v. United Mktg. Grp., LLC, 795 F. Supp. 2d
770, 790 (N.D. Ill. 2011); Gamboa v. Proctor & Gamble Co., 2022 WL 1639559, at *2
(N.D. Ill. May 24, 2022). The “wrap” portion of these terms alludes to agreements
consumer products manufacturers intend to impose on consumers when they open
the “shrinkwrap” of a product. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449 (7th

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Cir. 1996) (“The ‘shrinkwrap license’ gets its name from the fact that retail software
packages are covered in plastic or cellophane ‘shrinkwrap,’ and some vendors . . . have
written licenses that become effective as soon as the customer tears the wrapping
from the package.”); see also Savetsky v. Pre-Paid Legal Servs., Inc., 2015 WL 604767,
at *3 (N.D. Cal. Feb. 12, 2015) (discussing the relationship among the three).
Similarly, manufacturers or service providers seek to impose terms of service
on consumers for merely “browsing” a website or app. Courts have found that
determining whether a “browsewrap” agreement is enforceable depends on whether
the location of the terms of service on the website or app was such that the user was
on “inquiry notice” or “constructive notice” of the terms. See Anand v. Heath, 2019
WL 2716213, at *3 (N.D. Ill. June 28, 2019). Courts have frequently held that if the
website or app is designed such that the user is required to “scroll down” to find the
terms of service, or the terms of service are otherwise “hidden” among other
information on the website or app, then the user will not be charged with the “inquiry
notice” or constructive notice” necessary to establish agreement to the terms of
service. See, e.g., Van Tassell, 795 F. Supp. 2d at 792. As discussed, the most common
and legally viable solution to the “browsewrap” dilemma are “clickwrap” agreements,
where the user is required to click a box or button stating that they agree to the terms
placed immediately next to the button in a scroll box contained the terms of service,
or a link to the terms of service.
In other words, most courts have found that the mere statement that the user
agrees to the terms of service is insufficient to establish agreement to those terms.

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The website or app must be designed such that it is readily apparent what terms the
statement of agreement is referring to. Without this direct connection, the phrase
“Terms of Service” retains an unacceptable level of ambiguity.
Defendant would argue that there is no ambiguity here because there is only
one “Terms of Service” available on its app. There is some merit to this argument.
But as discussed, the majority of courts have rejected it. This is because there is
nothing in the user’s assent to the statement that they agree to the terms of service
that establishes that the user had ever been shown, let alone read, the terms of
service. When the terms are included in a scroll box or hyperlinked, and the user
clicks a box or button demonstrating assent to a statement of agreement to those
terms, it is reasonable to find that the user read and understood the terms because
they are immediately present or directly linked on the equivalent of another page.
But when the terms are not present or directly linked to the statement of agreement,
the user is forced to go find the terms. In such circumstances, there is insufficient
evidence that the user was actually aware of the terms. Without this awareness
created by directly presenting or linking to the terms, there is insufficient evidence
of “reasonable notice” necessary to establish a legally binding agreement.
Conclusion
For these reasons, Defendant’s motion to compel arbitration [21] is denied.
Defendant also filed a motion to dismiss, see R. 21, to which Geske did not
respond, in part due to ambiguity in a Court order. And Geske filed a motion to amend
her complaint, see R. 25, which Defendant opposes. Even if the Court were to grant

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Defendant’s motion to dismiss without the benefit of a response from Geske, the Court
would generally as a matter of course permit Geske to replead. See Luevano v. WalMart Stores, Inc., 722 F.3d 1014, 1024 (7th Cir. 2013) (“Under Rule 15(a), fee-paying
plaintiffs enjoy leave to amend whenever ‘justice so requires’ and, as a matter of
course, almost always get an opportunity to amend their complaints at least once. . .
. even after a court grants a motion to dismiss.”). Therefore, Defendant’s motion to
dismiss [21] is denied without prejudice, and Geske’s motion to amend [25] is granted.
The Court’s denial of Defendant’s motion to compel arbitration has changed the
landscape of the case, so Geske should file a new amended complaint by 2/20/2024.
Defendant should answer or file a motion to dismiss by 3/12/2024, with Geske’s
response due 4/2/2024, and Defendant’s reply due 4/16/2024.
Lastly, over the past year, the parties filed several letters on the docket. The
parties are ordered to stop filing letters concerning contested issues. Any request for
Court action regarding the substance of the case must be made by motion. Scheduling
and other logistical issues can be addressed in a joint status report when appropriate
or by email to the Court’s Deputy.
ENTERED:
______________________________
Honorable Thomas M. Durkin
United States District Judge

Dated: February 5, 2024

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