Arbitration, if done right, is an effective, speedy, and low-cost alternative to civil litigation of all kinds, which is why the other side (or at least the lawyers representing them) hates it. Unfortunately, with prescription medical products − and their necessary learned intermediary physicians – arbitration doesn’t come up very often in our line of work, although nothing inherent in personal injury litigation precludes mandatory arbitration.
But it might happen more, in the future. In a think piece we published a couple of years ago, on software liability, we identified arbitration as one of the consequences in litigation where intermediaries (“learned” or otherwise) were out of the picture. “In direct-to-consumer contexts, providers routinely seek to use contracts such as click-wrap licenses to allocate software-related liability including limitations on liability, forum selection clauses, compulsory arbitration and similar protective measures.”
But our clients might, at least in certain situations, be able to enjoy both the learned intermediary rule as well as mandatory arbitration.
That just happened in New Jersey medical device case. Santana v. SmileDirectClub, LLC, ___ A.3d ___, 2023 WL 2746270 (N.J. Super. App. Div. April 3, 2023), involved telemedicine and dentists why use 3D printing to create “clear-aligner treatment as an alternative to traditional orthodontic braces.” Id. at *1. These dental aligners, and the dental services using them, were sold directly to consumers over the internet – but through a network of prescribing dentists (thereby, we expect, preserving the learned intermediary rule). Id. To obtain them, customers “must create and register an account . . . through an online registration process.” Id.
That’s where arbitration came into the picture in Santana. The website included the aforementioned “clickwrap.” No account could be created without accepting, inter alia, a hyperlinked “informed consent” document that “contained a mandatory arbitration agreement.” Id. The Santana decision – reversing an adverse trial court decision − found the arbitration agreement valid and enforceable, and sent the plaintiff’s product liability lawsuit to mandatory arbitration.
First, New Jersey, like many states, “has a long-standing policy favoring arbitration as a means of dispute resolution.” Santana, 2023 WL 2746270, at *2 (citations omitted).
Second, “clickwrap,” – as opposed to lesser forms of internet contracting, such as “browsewrap” − provided the plaintiff with “reasonable notice of its existence.” Id. Web-based contracts have become routine, so their enforceability is not, as a general matter, in any way unexpected. Id. at *3. The defendant’s “clickwrap” contracts “requir[ing] user consent to any terms or conditions by clicking on a dialog box on the screen in order to proceed with the internet transaction” was sufficiently conspicuous to “provide notice to the reasonably prudent internet user of the defendant’s terms and conditions,” and, in particular, the mandatory arbitration provision. Id. at *3-4 (citations and quotation marks omitted).
“Courts have generally found clickwrap agreements enforceable because by requiring a physical manifestation of assent, a user is . . . put on inquiry notice of the terms assented to. . . . [R]eceipt of a physical document containing contract terms or notice thereof is frequently deemed, in the world of paper transactions, a sufficient circumstance to place the offeree on inquiry notice of those terms. These principles apply equally to the emergent world of online product delivery, pop-up screens, hyperlinked pages, [and] clickwrap licensing. . . .
Id. at *4 (citations and quotation marks omitted).
Third, the protestations of the plaintiff in Santana not to have been aware of the online contractual terms (including the arbitration agreement) rang hollow. Plaintiff could not create the online registration without “the opportunity to view and assent to the . . . agreement.” Id. at *5 (citation and quotation marks omitted). “Plaintiff was “free to scroll through” the available online contract” and could “click ‘I Agree’ or ‘I Don’t Agree’ at any point.” Id. “[B]y clicking on and checking the “I Agree” box, plaintiff manifested his assent to the contents of all [the] hyperlinked documents.” Id.
Fourth, it was not necessary, for a mandatory arbitration agreement to be enforceable, for any of the “hyperlinks [to] include the word ‘arbitration’ or a phrase such as ‘waiver of right to sue’ in their titles.” Id. The agreement was in no way hidden.
The arbitration agreement was located within a clearly hyperlinked document. . . . The title of the hyperlinked document clearly put plaintiff on reasonable inquiry notice that when he checked the “I Agree” box next to the link, he was agreeing to something that specifically asked for his informed consent. Moreover, within the hyperlinked . . . document, the title of the arbitration provision − “AGREEMENT TO ARBITRATE” − was the only fully capitalized and emboldened text, which would have alerted a consumer to the importance of the provision in relation to all others.
Fifth, that, “had plaintiff left the ‘I agree’ box unchecked, the ‘Finish My Account’ bar . . . would not have functioned,” id., contributed to the contract’s enforceability, as opposed to creating some sort of contract of adhesion. Plaintiff could not “make a purchase, advance on the website to other pages, and never see [a] “submerged” . . . clause.” Id. “[R]egistration . . . could only proceed after the potential subscriber had the opportunity to view the membership agreement and signal his or her assent to its forum selection clause.” Id.
For all these reasons, the online arbitration clause, concerning the purchase of a medical device prescribed through telemedicine, was valid and enforceable, thereby requiring “an order compelling arbitration of plaintiff’s claims and staying any further action.” Id. at *6.
This could well be a first nationwide, since the Santana opinion was richly sourced, but none of the citations mentioned any sort of prescription medical product liability litigation. Thus, we strongly recommend that any drug, device, or vaccine manufacturer, whose products are being prescribed through telemedicine, consider the creation of online contractual arrangements that include “clickwrap” mandatory arbitration provisions.
Finally, Santana is also significant to us, as product liability lawyers, because the same document that provided significant notice “of its existence” to the plaintiff, also included “explanations of the benefits and risks of using the aligners” – that is to say, the product’s warnings. Id. at *5. Thus, online product labeling, made available in “clickwrap” form, should not be subject to attack on grounds of insufficient prominence.