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November 23, 2015 Practice Points

North Carolina Federal Court Holds Clickwrap Terms Defeat UDTP and Fraud Claims

A federal court dismissed fraud and unfair and deceptive trade practices (UDTP) claims by buyers of construction services primarily because of online contract clickwrap disclaimer terms

by Gary Beaver

In Solum v. CertainTeed Corporation, Case No. 7:15-CV-114-D, 2015 WL 6505195 (E.D.N.C. Oct.27, 2015), the federal court dismissed fraud and unfair and deceptive trade practices (UDTP) claims by buyers of construction services primarily because online contract clickwrap disclaimer terms vitiated the claims.

The plaintiffs sought to put new vinyl siding on their home. They hired an installer based on its listing as a certified Master Craftsman on the website of CertainTeed, a manufacturer of vinyl siding. The plaintiffs alleged that CertainTeed represented on its website that it "examines the credentials of service professionals . . . it endorses;" "Master Craftsmen successfully complete a program course to become certified;" and, "only advanced building professionals who demonstrate a high level of knowledge and ability to install CertainTeed building products earn this Master Craftsman status." In actuality, all one had to do to become a Master Craftsman was download a 100-page workbook and pass a 25-question, 90-minute multiple-choice quiz. The plaintiffs claimed CertainTeed "purposely misleads consumers into believing that the Master Craftsman certification is more prestigious than in actuality" and that it does not examine credentials of service professionals that it lists as Master Craftsmen "in any meaningful way." The truth or falsity of those allegations never made it past CertainTeed's motion to dismiss.

To search the professionals listed on CertainTeed's website by name or by product in which they are certified, the plaintiffs and anyone else visiting the website, had to "Accept" the search tool's "Terms and Conditions," in which CertainTeed made this disclaimer:

Although we take certain steps to examine the credentials of our listed service professionals, CertainTeed makes no guarantees or representations regarding the skills or representations of such service professional or the quality of the job that he or she may perform for you if you elect to retain their services. CertainTeed does not endorse or recommend the services of any particular service professional.

The plaintiffs retained Superior Home Improvement, listed on CertainTeed's website, which proved not to be superior or masterful in installing the siding, and the plaintiffs had to hire a second installer to correct its mistakes.

The plaintiffs' fraud and UDTP claims were entirely based on CertainTeed's representations on its web pages. The court declined to consider the webpages CertainTeed attached to its motion to dismiss showing what was required to become a Master Craftsman because the plaintiffs did not review those pages until after hiring Superior Home Improvement.

The court noted that the plaintiffs had to prove detrimental reliance on their UDTP claim and, where the plaintiff could have discovered the truth upon inquiry to have alleged that it was denied the opportunity to investigate or that it could not have learned the true facts by exercise of reasonable diligence. Here the court held that the plaintiffs' reliance on the Master Craftsman certification was not reasonable because: (1) the representations about the certification and how an installer became certified were mere puffery; and (2) the plaintiffs could have learned the truth—that CertainTeed made no guarantees, representations, endorsements, or recommendations—by reading the clickwrap terms more closely. One of the alleged misrepresentations upon which the plaintiffs claimed they relied was based on language from the Terms of Use—an admission that the plaintiffs had read the terms.

The court also held that "with minimal research, plaintiffs could have discovered the Master Craftsman course requirements on CertainTeed's website" which means they "could have learned the truth about the Master Craftsman designation meant through reasonable diligence." It is not clear how the court could reach that decision in light of its refusal to consider the webpages showing what was required to become a Master Craftsman. (However, "no harm, no foul" because the court could eventually have found for CertainTeed on summary judgment on that basis.)

The court rejected the fraud claim on the same basis that it dismissed the unfair and deceptive trade claim—reliance upon the alleged misrepresentation of the Master Craftsman certification was unreasonable as a matter of law.

Keywords: clickwrap, commercial and business, consumer, disclaimer, fraud, puffery, reliance, terms of use, unfair and deceptive trade, website, litigation

Gary Beaver is with Nexsen Pruet, PLLC, in Greensboro, North Carolina.

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