Illinois Court Upholds Shutterfly’s Unilateral Amendment to its Arbitration Provision

Post Authored by Yara Mroueh

The Northern District of Illinois recently held that users’ biometric privacy claims must be arbitrated according to Shutterfly’s 2015 arbitration clause, even though Plaintiffs never expressly assented to any version of the terms containing that clause.[1] In June 2019, Plaintiffs Vernita Miracle-Pond and Samantha Paraf filed their lawsuit on behalf of themselves and similarly situated Shutterfly users in the Circuit Court of Cook County. Then, on July 12, 2019, Shutterfly removed the case to the Northern District of Illinois. Plaintiffs allege that Shutterfly violated the Biometric Privacy Information Act (“BIPA”) by using facial recognition technology to extract biometric identifiers for “tagging” individuals, and by selling and/or profiting from their and other class members’ biometric identifiers and/or biometric information. Plaintiffs wanted to litigate their claims in court, while Shutterfly argued that its 2015 arbitration provision subjected Plaintiffs’ claims to mandatory arbitration.

Specifically, in 2014, the Plaintiffs clicked “Accept” upon creating a Shutterfly account. As a result, they agreed to Shutterfly’s then-existing terms of use, which did not include an arbitration provision. However, Shutterfly’s terms of use stated that the terms could be amended “from time to time by posting a revised version.” Shutterfly subsequently added an arbitration provision to those terms in 2015. Three months after Plaintiffs filed their lawsuit, Shutterfly emailed users and notified them of a change in their terms of use–disputes would be subject to mandatory individual arbitration unless users closed their account within the month. Users did not receive notice of the new provision when it was enacted in 2015, so plaintiffs did not close their accounts within the month. Plaintiffs argued that they should not be bound by the modified arbitration provision because there was no valid contract formed between the parties. In the alternative, even if a contract was formed, the Plaintiffs argued that retroactive arbitration clauses are unenforceable.

The Court rejected Plaintiffs’ arguments and held that their claims fell under Shutterfly’s 2015 arbitration clause. When Plaintiffs initially accepted the terms and clicked “Accept” in 2014, they included the provision allowing Shutterfly to post revisions on its website. Because of this provision, the Court held that the 2015 change in terms was valid and that the Plaintiffs’ continued use of Shutterfly’s services after the 2015 update was an acceptance of the new terms.

The decision is consistent with Illinois’ preference for enforcing arbitration agreements. It also suggests that, at least under Illinois law, companies have the discretion to unilaterally modify their terms of use without obtaining new assent from users and without providing individual notice to each user, as long as both parties agree to allow such unilateral modifications in advance.

[1] The case is Vernita Miracle-Pond et al. v. Shutterfly Inc., 1:19-cv-04722 (N.D. Ill. 2019).

About the Author:

Yara MrouehYara Mroueh is an associate attorney at Gordon & Rees, where she focuses her practice primarily in the areas of products and premises liability, insurance defense, toxic tort, and commercial litigation. Yara is active in all phases of litigation, from investigating the facts, settlement negotiations, and pre-trial preparation. As part of her practice, Yara enjoys taking depositions and drafting complex motions in state and federal matters. Yara’s bilingual skills provide her a unique opportunity to connect with clients and achieve the best possible outcome.

 

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