The Northern District of Illinois has denied Vimeo’s motion to compel a proposed class action lawsuit alleging its recently acquired Magisto mobile web application violated the 12-year-old Illinois Biometric Information Privacy Act (“BIPA”) to arbitration.  In Acaley, et al. v. Vimeo, Inc., No. 19-CV-07164 (N.D. Ill., June 1, 2020), a man, Acaley, signed up for a Magisto account using a mobile app.  Later, he signed up for another account using the Magisto website.  He also subscribed to a paid account and edited his subscription on several occasions.

At various times throughout the sign-up and subscription process, Magisto’s Terms of Service (the “Terms”) were made available to Acaley.  Unfortunately, the app sign-up screen was designed in such a way that a link to the Terms could be covered at times by other pop-up screens.  The website also offered the Terms in a drop-down menu that was available to users only if clicked.  Users were not required to click on the Terms or the drop-down menu, nor were they required to check a box indicating agreement.  Despite this, the sign-up page stated “By continuing I agree to the terms.”

Magisto’s Terms included an agreement to arbitrate any disputes between users and the company.  The Terms also included an “Exceptions to Arbitration” provision that stated:

You and Magisto agree that the following Claims are not subject to the above provisions concerning negotiations and binding arbitration: (a) any Claim seeking to enforce or protect, or concerning the validity of, any of your or Magisto’s intellectual property rights; (b) any Claim related to, or arising from, allegations of theft, piracy, invasion of privacy or unauthorized use; and (c) any claim for equitable relief. In addition to the foregoing, either party may assert an individual action in small claims court for Claims that are within the scope of such court’s jurisdiction in lieu of arbitration.

In October 2019, Acaley filed a putative class action lawsuit against Vimeo alleging the company’s Magisto product “violated BIPA by using facial recognition technology to scan, collect, and store his and other users’ face geometries from videos and photographs they uploaded to Magisto without satisfying the statute’s requirements.”  In response, Vimeo filed a motion to compel arbitration based on Magisto’s Terms.

In a memorandum opinion, the Northern District of Illinois first addressed whether an agreement to arbitrate was formed.  Although neither party disputed the existence of the arbitration clause that was included in Magisto’s Terms, they disagreed regarding whether Acaley ever assented to the Terms.  According to the court:

The Court turns to the question of whether the parties formed an agreement to arbitrate. The parties do not dispute that Magisto’s terms of service contained an arbitration clause, but they dispute whether Acaley assented to the terms of service. “Illinois contract law requires that a website provide a user reasonable notice that his use of the site or click on a button constitutes assent to an agreement.” Sgouros v. TransUnion Corp., 817 F.3d 1029, 1036 (7th Cir. 2016). In determining whether a user has received reasonable notice, courts “ask whether the web pages presented to [the user] adequately communicate[d] all the terms and conditions of the agreement, and whether the circumstances support the assumption that the [user] receive[d] reasonable notice of those terms.” Id. at 1034. “This is a fact-intensive inquiry.” Id. at 1034–35.

Courts “cannot presume that a person who clicks on a box that appears on a computer screen has notice of all contents not only of that page but of other content that requires further action (scrolling, following a link, etc.).” Id. at 1035. Thus “[w]here the terms are not displayed but must be brought up by using a hyperlink, courts . . . have looked for a clear prompt directing the user to read them.” Id. at 1036; see, e.g., Johnson, 2018 WL 4503938, at *1 (agreement formed where purchase page conspicuously included the following language: “[b]y creating an [] account, you agree to the Terms of Service & Privacy Policy.”).

Although Vimeo offered no evidence to establish that Acaley accessed, reviewed, or affirmatively agreed to the company’s Terms despite several opportunities for him to do so, the Northern District of Illinois ruled:

Because Magisto provided reasonable notice of its terms of service to users of its app and people who signed up for its accounts and subscription plans, the Court concludes that Acaley and Magisto made an agreement to arbitrate.

Next, the federal court addressed whether Acaley’s BIPA claims fell within the scope of the parties’ agreement to arbitrate.  After considering Vimeo’s arguments to the contrary, the court ultimately held the “Exceptions to Arbitration” clause included in Magisto’s Terms applied not only to common law invasion or privacy claims, but to all claims related to invasion of privacy.  As a result, the court ruled the “Exceptions to Arbitration” clause excluded Acaley’s BIPA claims from arbitration.

Because Magisto’s Terms excluded Acaley’s BIPA claims from arbitration, the Northern District of Illinois denied Vimeo’s motion to compel arbitral proceedings and directed Vimeo to answer Acaley’s complaint by June 23, 2020.

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