• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

  • About
    • Events
  • Articles
    • Treaty Tips
    • Special Focus
    • Market
  • Contact
  • Exclusive Content
    • Blog Staff Picks
    • Cat Risks
    • Regulatory Modernization
    • Webinars
  • Subscribe
You are here: Home / Arbitration / Court Decisions / Illinois Federal Court Finds Shutterfly User Must Arbitrate Illinois Biometric Privacy Claim Even Though Shutterfly Unilaterally Amended Its Arbitration Clause

Illinois Federal Court Finds Shutterfly User Must Arbitrate Illinois Biometric Privacy Claim Even Though Shutterfly Unilaterally Amended Its Arbitration Clause

June 8, 2020 by Carlton Fields

Plaintiffs Vernita Miracle-Pond and Samantha Paraf, each Shutterfly users with a Shutterfly account, sued defendant Shutterfly Inc., on behalf of themselves and similarly situated Shutterfly users, under the Illinois Biometric Information Privacy Act (BIPA) claiming that Shutterfly violated BIPA by using facial-recognition technology to extract biometric identifiers for “tagging” individuals and by “selling, leasing, trading, or otherwise profiting from Plaintiffs’ and Class Members’ biometric identifiers and/or biometric information.” Shutterfly moved to compel arbitration for Miracle-Pond and to stay the litigation pending the outcome of the arbitration.

The court first analyzed whether Miracle-Pond agreed to the terms of use in 2014. Miracle-Pond argued that she did not assent to Shutterfly’s terms of use when she formed her Shutterfly account because the terms of use are a “browsewrap” agreement, and thus she merely agreed that her use of Shutterfly’s website and services would comply with the terms of use, not that she would be bound by them. The court rejected that argument, finding that Shutterfly’s agreement was a valid “clickwrap agreement” as Shutterfly’s page presented the terms of use for viewing, stated that clicking “accept” would be considered acceptance of the terms of use, and provided both an “accept” and “decline” button. “Because Shutterfly’s ‘app contained a clear and conspicuous statement that … a user agreed to the Terms of Service and Privacy Policy’ by clicking a link or pressing a button,” the court found that a reasonable user who completes that process would understand that he or she was manifesting assent to the terms. Miracle-Pond, therefore, agreed to be bound by Shutterfly’s terms of use.

Notably, the terms of use accepted by Miracle-Pond in 2014 did not contain an explicit arbitration provision. Rather, Shutterfly added an arbitration provision to its terms of use in May 2015. Thus, Miracle-Pond argued that even if a contract was formed between the parties, there was no valid agreement to arbitrate because: (1) arbitration clauses subject to unilateral modification are illusory; (2) Miracle-Pond could not have assented to the arbitration provision because Shutterfly failed to provide notice of the 2015 modification; and (3) arbitration clauses that apply retroactively are unenforceable.

The court found that in 2014, Miracle-Pond entered into a service contract that explicitly gave Shutterfly the right to modify the agreement unilaterally at any time and without notice, other than posting the modified terms on its website. Shutterfly posted the modified terms of use on its website in May 2015, and Miracle-Pond indicated her acceptance to the modified terms of use by continuing to use Shutterfly products. The court rejected Miracle-Pond’s arguments regarding lack of notice and held that Miracle-Pond was bound by the 2015 modifications to the terms of use.

In September 2019, about three months after Miracle-Pond filed this lawsuit, Shutterfly sent an email to all of its users nationwide, which notified Shutterfly users that the terms of use had been updated. Miracle-Pond argued that the September 2019 email “was an improper ex parte communication with Plaintiff and putative class members because it failed to advise them of the pending litigation while seeking to deprive them of their rights as plaintiffs or class members” and that a new agreement to arbitrate could not apply retroactively to her claims. The court rejected her argument and found that she was bound by the 2015 modification and therefore agreed to arbitrate her claims in 2015 – well before she filed this lawsuit.

Lastly, Miracle-Pond argued that even if the arbitration clause was valid, plaintiffs cannot waive their right to class arbitration of their claim for an injunction under California’s McGill rule, which provides that plaintiffs cannot waive their right to public injunctive relief in any forum, including in arbitration. But the court found that the plaintiffs’ substantive claim arose under an Illinois statute – BIPA – not under the consumer protection laws of California, making the McGill rule inapplicable to the arbitration agreement in this case.

Accordingly, the court granted Shutterfly’s motion to compel arbitration for Miracle-Pond and stay the proceedings.

Miracle-Pond v. Shutterfly, Inc., No. 1:19-cv-04722 (N.D. Ill. May 15, 2020).

Filed Under: Arbitration / Court Decisions

Primary Sidebar

Carlton Fields Logo

A blog focused on reinsurance and arbitration law and practice by the attorneys of Carlton Fields.

Focused Topics

Hot Topics

Read the results of Artemis’ latest survey of reinsurance market professionals concerning the state of the market and their intentions for 2019.

Recent Updates

Market (1/27/2019)
Articles (1/2/2019)

See our advanced search tips.

Subscribe

If you would like to receive updates to Reinsurance Focus® by email, visit our Subscription page.
© 2008–2025 Carlton Fields, P.A. · Carlton Fields practices law in California as Carlton Fields, LLP · Disclaimers and Conditions of Use

Reinsurance Focus® is a registered service mark of Carlton Fields. All Rights Reserved.

Please send comments and questions to the Reinsurance Focus Administrators

Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please contact us. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. This site may be considered attorney advertising in some jurisdictions.