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Schnabel v. Trilegiant Corporation

United States Court of Appeals for the Second Circuit
697 F.3d 110 (2012)


Brian Schnabel (coplaintiff) clicked on a hyperlink offering “cash back” when making an internet purchase, which enrolled him in a third-party discount program called “Great Fun.” Trilegiant Corporation (defendant) operated the program, offering discounted goods and services on other retailers’ websites. Had Brian clicked another button labelled “see details” or “learn more,” he would have seen all Trilegiant’s standard terms and conditions, including an arbitration clause. However, customers could enroll just by clicking “cash back,” entering credit card information on an enrollment page that briefly said membership was free the first month and $14.99 thereafter, and clicking “yes,” purportedly acknowledging reading the standard terms and conditions. Trilegiant sent follow-up emails containing standard terms and conditions, but Brian said he did not realize he signed up for a monthly membership program and never read the email. Two years later, Brian’s father Edward Schnabel (coplaintiff) did the same thing. Edward noticed the monthly charges after five months; by that time, Trilegiant had charged Brian for 27 months. Neither ever used the discount except for the first purchase. The Schnabels sued, asserting that Trilegiant used deceptive trade practices. Trilegiant moved to compel arbitration, arguing the follow-up email was binding because the Schnabels did not cancel their memberships after receiving it. Importantly, Trilegiant did not argue that the Schnabels had inquiry notice of the terms and conditions because of the “see details” or “learn more” buttons. The district court refused to compel arbitration, and Trilegiant appealed.

Rule of Law


Holding and Reasoning (Sack, J.)

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