District Court Enforces Hyundai's Clickwrap Arbitration Clause Rolled Out in an Update

John Tamburo sought to bring a class action against Hyundai Motor America Corporation (Hyundai) in connection with Blue Link and connected services.  When he bought his Hyundai vehicle in 2017, Mr. Tamburo agreed to certain terms and conditions relating to a Connected Services Agreement (CSA).  According to those terms, Mr. Tamburo agreed to the CSA by using the connected services in his car.  Nobody mentioned an arbitration agreement to him.

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His subscription to Hyundai's connected services lapsed in 2021, and Mr. Tamburo re-subscribed using Hyundai's web portal, again clicking boxes indicating that he agreed to terms and conditions, which included an arbitration provision.  He logged into the portal again in 2022 and once again agreed to updated terms and conditions.  In 2023, Mr. Tamburo initiated a putative class action against Hyundai.

In Tamburo v. Hyundai Motor Am. Corp., the District Court for the Northern District of Illinois addressed only Hyundai's motion to compel arbitration.  Mr. Tamburo made three arguments.  First, he claimed that he never agreed to arbitrate claims against Hyundai.  Second, Mr. Tamburo alleged that his agreement to Hyundai's terms was procured through duress.  Finally, he claimed that Hyundai's arbitration provision is unconscionable.

As to whether he agreed to Hyundai's terms, the court ignored Mr. Tamburo's arguments regarding his initial agreement in 2017, as it had unrebutted evidence that he had agreed to Hyundai's updated terms in 2021.  He agreed to the CSA, the court found, on three separate occasions through clickwraps.  That is, confronted with webpages that offered him hyperlinks through which he could read terms, he repeatedly clicked on boxes saying that he agreed to those terms.  That suffices as manifestations of assent, whether or not he clicked on the hyperlinks or read the terms.

The court spent very little time on Mr. Tamburo's duress claim.  He claimed that it was duress for Hyundai to require Mr. Tamburo to either agree to new terms or lose service.  The court found no unlawful threat that deprived Mr. Tamburo of his ability to exercise free will.  He could have elected to forego Hyundai's connected services. 

Similarly, because Mr. Tamburo was free to refuse Hyundai's connected services, there was nothing substantively unconscionable about requiring him to agree to arbitration should he elect to use the services.  The fact that Hyundai can change its terms at any time also does not render the CSA unconscionable, given that a buyer can cancel the service within thirty days of notice of changes.  It is not clear to me why the court is treating these matters as relating to substantive unconscionability rather than procedural unconscionability.  Without knowing more about the nature of the complaint, it is hard to know what allegations Mr. Tamburo is making as to the substantive unconscionability of the CSA.

The court granted Hyundai's motion and stayed the case pending arbitration.  At no point in the opinion does the court indicate the nature of Mr. Tamburo's claims, nor does the court discuss any changes in Hyundai's terms between the time that Mr. Tamburo bought the car and the time he accepted the updated terms.  There is nothing legally wrong with the opinion, but given the court's failure to recount potentially relevant facts, its scope is potentially alarmingly broad.  

What I would like to see in an opinion like this is an acknowledgment that there could be circumstances in which it would be unconscionable for a company providing services to change those services through terms that provide for acceptance of the changes through continued use.  The court could then explain why, in this case, the changes to the terms were not sufficiently substantial nor was it substantively unconscionable in these circumstances to treat continued use as acceptance of terms.