First Circuit Concludes App User Is Bound by Arbitration Clause in App’s Terms and Conditions

The First Circuit Court of Appeals recently concluded that an app user had sufficient notice of and was bound by an arbitration clause in the app’s terms and conditions. The court rejected the user’s arguments that, among other things, she was not bound by the clause because she had to scroll down to see it. The court concluded that the user was bound by the arbitration clause.

Handy Technologies Inc. operates an application that enables users to retain house cleaners and other home services. Maisha Emmanuel, a nanny and housekeeper, signed up to offer her services through Handy’s app. As part of that process, Emmanuel submitted an application that required her to click a checkbox next to the statement: “I agree to Handy’s Terms of Use.” The phrase “terms of use” was a hyperlink that, if clicked, would have taken the user to Handy’s terms, which include a mandatory arbitration clause. Emmanuel, however, clicked the checkbox, submitting her application, without accessing or reviewing the terms of use. After an interview, background check, and orientation session, Emmanuel gained access to the Handy app, which contained a screen stating: “I understand that the Handy Service Professional Agreement has changed and that I need to carefully read the updated agreement on the following screen before agreeing to the new terms.” When Emmanuel clicked through to the next screen, she saw the initial portion of Handy’s independent contractor agreement. The visible portion noted that Emmanuel was agreeing to be bound by the agreement but did not display language regarding arbitration. Had Emmanuel scrolled down, she would have seen the mandatory arbitration clause. Emmanuel, however, did not scroll through the screens or terms when using the app.

Emmanuel subsequently filed a putative class action alleging that Handy had misclassified her and other similarly situated users as independent contractors when it should have classified them as employees and that Handy had therefore violated, inter alia, the FLSA by failing to pay her and similarly situated users minimum wage. Handy moved to compel arbitration.

The district court granted Handy’s motion, and Emmanuel appealed.

The First Circuit affirmed. The court applied Massachusetts law on notice to app users regarding arbitration agreements, concluding that Emmanuel had “reasonable notice of the term in the Agreement concerning arbitration” and that a valid contract to arbitrate therefore existed. Handy’s app was clear that Emmanuel was agreeing to a contract. Although the arbitration clause was not visible without scrolling, the app was clear that the entirety of the agreement could be viewed by scrolling down. Emmanuel’s onboarding process, which included an interview, orientation, and background check, also supported the conclusion that Emmanuel knew she was entering into a significant contractual relationship by signing up for Handy’s app.

The First Circuit also declined to consider Emmanuel’s contention that Handy’s agreement was unconscionable. Emmanuel’s argument regarding unconscionability, that Handy allegedly had a unilateral right to modify the agreement, was not directed to the agreement’s arbitration clause and was therefore for the arbitrator to address, not the court.

Emmanuel v. Handy Technologies, Inc., No. 20-1378 (1st Cir. Mar. 22, 2021).