On August 9, 2022, the Eastern District of California held that an arbitration clause incorporated by reference in an order form was valid, even though the link to the terms of the clause did not work. Camp 1 Truckee LLC v. Daxko LLC, No. 2:21-cv-02064 (E.D. Cal. 2022).
Camp 1 Fitness (Camp 1) is a fitness facility in California. Club Automation (Automation) sells management software and is headquartered in Alabama. On June 29, 2020, Automation sent Camp 1 an order form for software management services via a document platform service. The order form was valid until June 30, and Camp 1 was advised that it would receive substantial discounts if the contract were accepted immediately. The order form contained a clause that incorporated by reference terms and conditions found on Automation’s website. Those terms were provided by a URL link that did not work. Amongst the online terms and conditions was an arbitration clause. A few months later, Camp 1 terminated the contract asserting substandard service.
Automation filed a claim for breach of contract in arbitration. Camp 1 brought suit in federal court seeking to enjoin the arbitration on the grounds that the arbitration clause was unenforceable and unconscionable. Camp 1’s argument centered around the non-working link to additional terms. Camp 1 also argued that the order form was a contract of adhesion, especially given that substantial discounts required acceptance within a 24-hour window.