Hastings v. Unikrn, Inc.

Unikrn, Incorporated and Unikrn Bermuda, Ltd. (collectively, Unikrn) (defendants) conducted an online sale of digital tokens that could be used to play, bet on, and watch esports on Unikrn’s websites. Unikrn created a website for customers to register for the token sale and purchase the tokens. The website included several account-creation pages that required users to enter and verify information. On the address-verification page, users were required to type in a physical street address and also click a checkbox next to the statement, “I have read and understood Unikrn Token sale Terms of Service and the Privacy Policy, and hereby agree to them.” The words “Terms of Service” were in blue font and contained an embedded clickable hyperlink to a document entitled “UNIKRN BERMUDA LTD TERMS OF TOKEN SALE” (the UNIKRN BERMUDA terms). However, nothing on the page specifically indicated that the blue text contained a hyperlink, and clicking on the hyperlink was not a necessary prerequisite for clicking the checkbox or advancing to the next screen of the website. The UNIKRN BERMUDA terms began with a capitalized statement highlighting that the terms contained a binding-arbitration clause and class-action waiver and stated, “IF YOU DO NOT AGREE TO THESE TERMS OF SALE, DO NOT PURCHASE TOKENS.” In September 2017, John Hastings (plaintiff) accessed the Unikrn website, created an account, and purchased tokens. The following year, Hastings filed a putative class action against Unikrn, asserting that the token sale had violated federal securities law. Unikrn moved to compel arbitration pursuant to the arbitration clause in the terms of sale, but Hastings contended that he had never agreed to the terms of service. The trial court agreed with Hastings and denied Unikrn’s motion to compel arbitration. Among other things, the court found that (1) a reasonable internet user would not have understood that the words “Terms of Service” were a clickable hyperlink, and (2) the affirmation checkbox required users to agree to the “Unikrn Token sale Terms of Service,” rather than the hyperlinked UNIKRN BERMUDA terms. Unikrn appealed.