Summary
This Second Circuit opinion addresses whether a consumer had inquiry notice and implicitly assented to an arbitration provision included in a contract sent weeks after her initial electricity service enrollment. The court held that the subsequent terms were not presented in a clear and conspicuous manner, nor did the consumer's continued bill payments constitute assent under New York law. Consequently, the appellate court affirmed the district court's denial of the defendant's motion to compel arbitration.
Topics
Practice areas
Questions Presented
- Whether Sudakow had inquiry notice of arbitration terms sent by CleanChoice after the original electricity-supply agreement was formed.
- Whether Sudakow implicitly assented to the later arbitration terms by continuing to receive service and make monthly payments.
Holdings
- Sudakow was not bound by the later arbitration provision because CleanChoice failed to present it in a clear and conspicuous manner and did not provide a sufficient basis for a reasonable person to know that the later terms superseded the original agreement.
- Sudakow did not implicitly assent to the later arbitration terms by making scheduled service payments.
Key quotations
“The fact that “someone has received an email,” we explained, “does not without more establish that he or she should know that the terms disclosed in the email relate[d] to a service in which he or she had previously enrolled.”” (at 9)
“CleanChoice thus failed to “raise[] a red flag vivid enough to cause a reasonable person to anticipate the imposition of a legally significant alteration to the terms and conditions.”” (at 10)
“A reasonable person would not understand the act of mailing scheduled payments to constitute assent.” (at 13)
“So her “failure to act affirmatively” did not “carry a significance that reasonable people in the parties’ positions would understand to be assent.”” (at 14)
Factual background
In September 2021, Joanne Sudakow received CleanChoice's enrollment materials and entered an electricity-supply agreement that contained a New York venue clause, a limited unilateral-modification provision requiring thirty days' written notice of a regulatory change, and an integration clause, but no arbitration provision. About three weeks after enrollment became effective, CleanChoice mailed her a Welcome Package containing later terms with an arbitration clause; the package did not clearly identify the later terms or call attention to the arbitration provision, and Sudakow did not sign them. Sudakow continued receiving electricity and making payments until terminating service in August 2022.
Procedural history
Sudakow filed a putative class action alleging breach of contract and deceptive business practices. CleanChoice moved to compel arbitration under later-sent terms. The district court denied the motion as to Sudakow, concluding that she lacked sufficient notice of and an opportunity to assent to the arbitration clause. CleanChoice timely appealed under 9 U.S.C. § 16(a)(1)(B).