On August 31, 2011, the Second Appellate District of the California Court of Appeal issued an opinion that while ostensibly discusses the validity of an arbitration provision, recites facts that are so bizarre, one can only wonder, “What were they thinking?”
In Duick v Toyota Motor Sales, USA, Inc. (Case No. B22483) (Duick v. Toyota), Amber Duick sued both Toyota and its advertising agency, Saatchi & Saatchi North America, Inc. for intentional infliction of emotional distress, negligence and false advertising, among other claims, seeking many millions in damages.
The facts are so bizarre, I must quote them in full:
Duick’s claims arise from her apparently unwitting participation in an internet-based advertising campaign launched by defendants in connection with Toyota’s Matrix automobile. The campaign, known as “Your Other You,” “consisted of sending an unwitting recipient emails from an unknown individual.” During the campaign, any visitor to the Toyota Matrix web site (“player 1”) could designate another person (“player 2”) for participation in the Your Other You “interactive experience.” Player 2 would then receive an email purportedly from player 1, inviting player 2 to click a hyperlink that was in some manner “identified with Toyota.” The link would direct player 2 to a web page entitled “Personality Evaluation,” which displayed a drawing of a door with the word “Begin” underneath. Clicking on the door would direct player 2 to a second web page entitled “Personality Evaluation Terms and Conditions.” In order to continue beyond that page, according to evidence introduced by defendants, player 2 was required to scroll through certain text (the “terms and conditions”) and, at the end of that text, click a box next to the following sentence: “I have read and agree to the terms and conditions.”
The first paragraph of the terms and conditions states, “You have been invited by someone who has indicated that he/she knows you to participate in Your Other You. Your Other You is a website provided by [Toyota] that offers you . . . an interactive experience.” The second paragraph further states, “If you review and agree to the Terms and Conditions detailed below . . . you may participate in a 5 day digital experience through Your Other You. . . . You may receive email messages, phone calls and/or text messages during the 5-day experience.” A subsequent paragraph also states, “You understand that by agreeing to these Terms, you are agreeing to receive emails, phone calls and text messages from Toyota during the 5-day experience of Your Other You.” The terms and conditions contain the following arbitration provision: “You agree that . . . any and all disputes, claims, and causes of action arising out of, or connected with, Your Other You . . . shall be resolved individually, without resort to any form of class action, and exclusively by arbitration to be held solely in Los Angeles, California under the auspices of the American Arbitration Association and pursuant to its Commercial Dispute Resolution Rules and Procedures.”
The record before us does not describe the further web pages (if any) to which player 2 would be directed after agreeing to the terms and conditions. Over the next several days, however, player 2 would receive emails of an unsettling nature from an “unknown individual” who appeared to have access to some personal information concerning player 2 (information that presumably was provided by player 1, without player 2’s knowledge, at the initial stage).
Duick was apparently cast in the role of player 2. She received “an unsolicited email asking [her] to take a personality test.” She does not remember clicking the box signifying her agreement to the terms and conditions, and she claims that for various technical reasons the text of the terms and conditions was impossible to read in its entirety.
In any event, Duick later began to receive emails from an individual identifying himself as “Sebastian Bowler.” The text of the first email reads, “Amber mate! Coming 2 Los Angeles Gonna lay low at your place for a bit. Till it all blows over. Bringing Trigger.” Duick received another email from Bowler the following day, accurately stating her previous home address, describing it as a “Nice place to hide out,” and advising her that “Trigger don’t throw up much anymore, but put some newspaper down in case.” The email also provided a link to Bowler’s MySpace page, which portrayed him as a 25-year-old Englishman and “a fanatical English soccer fan who enjoyed drinking alcohol to excess”; the page also displayed photographs of a pit bull dog.
Additional emails from Bowler to Duick over the next few days purported to describe his cross-country journey by car to visit her, including photos and videos of his travels and references to his efforts to evade law enforcement (“I seem to have lost the coppers for now, so I’m all good, mate”; “Had a brush with the law last night. Anyway, hopefully I’ll have lost them by the time I get to your place”). One message explained that Bowler “ran into a little problem at the hotel,” and Duick subsequently received an email from an individual identifying himself as “Jimmy Citro,” purporting to be the manager of a motel and billing Duick for the damage Bowler had done to the motel’s property. The final email included a link to a video revealing that Bowler was a fictional character and that the entire sequence of emails was an elaborate prank, all part of an advertising campaign for the Toyota Matrix. ( Id. at pp 2-4.).
Pursuant to the arbitration clause, the defendants moved to compel arbitration. The trial court denied the motion, and the appellate court affirmed on this appeal.
The appellate court agreed with Ms. Duick that the provision compelling arbitration was unenforceable because of “fraud in the inception or execution.” That is, “ “the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking and [the contract] is void. In such a case it may be disregarded without the necessity of recession.” “ (Id. at p.5.) (Emphasis original.)
The appellate court pointed out that the terms and conditions were drafted by defendants, not by Ms. Duick, and were given the misleading title of “Personality Evaluation Terms and Conditions”. In the court’s view, this title gave the impression to any reader that a personality evaluation test was involved and not the advertising prank that was about to descend onto Ms. Duick. Indeed, it certainly did not provide any sort of notice whatsoever of what was about to occur to Ms. Duick! (Id. at p.6). Moreover, as the appellate court noted, because the terms used in the agreement were so vague and opaque, it was impossible to fully understand what was about to occur, even after reading them. (Id.)
In sum, because “defendants deprived Duick of a reasonable opportunity to know the character of the proposed contract,” ( Id. at p.7), the appellate court found the contract void from its inception and thus unenforceable. Consequently, the defendants could not compel arbitration.
Notably, the appellate court took pains to note that it was not deciding the matter on the merits and was in no way addressing the merits of the case or its possible outcome.
So… I guess this case stands for the obvious proposition that one must have a valid, enforceable agreement (and not one induced by fraud) in order to then enforce its arbitration provision (or any of its other provisions for that matter.) But, I still wonder…. What were the defendants thinking when they dreamed up and approved this advertising campaign!
…. Just something to think about!