Litigation

Illinois Court Upholds Unilateral Amendment to Shutterfly Arbitration Provision

Published: May. 20, 2020

Last Updated: Oct. 05, 2020

In a recent opinion, an Illinois federal judge determined that a user’s biometric privacy claims must be arbitrated according to Shutterfly’s 2015 arbitration clause, despite the fact that plaintiff never assented to any version of the terms containing that arbitration clause. The decision, which is consistent with Illinois’ preference for enforcing arbitration agreements, suggests that at least under Illinois law, companies can unilaterally modify their terms of use without getting new assent, as long as both parties agree in advance to allow such unilateral modifications. 

In 2014, plaintiff clicked “Accept” upon creating a Shutterfly account, thereby agreeing to the company’s then existing terms of use, which did not include an arbitration provision but stated that the company may amend its terms “from time to time by posting a revised version.” Shutterfly subsequently added an arbitration provision to those terms in 2015. In June 2019, plaintiff filed a class action lawsuit alleging Shutterfly’s undisclosed use of facial recognition technology to scan the faces of both users and non-users appearing in photographs uploaded to Shutterfly’s website to facilitate “tagging” individuals violated Illinois’ Biometric Information Privacy Act (BIPA). Three months after plaintiff filed her lawsuit, Shutterfly emailed users notifying them of a change in the terms of use—disputes would be subject to mandatory individual arbitration unless users closed their Shutterfly account within the month. Plaintiff did not close her account within the one month period, and subsequently contended that she should not be bound by the modified mandatory arbitration provision. She claimed that no valid contract was formed between the parties, and in the alternative, even if a contract was formed, there was no valid agreement to arbitrate because 1) unilateral modifications are illusory, 2) she did not assent to the arbitration provisions because Shutterfly failed to provide notice of the 2015 modification, and 3) retroactive arbitration clauses are unenforceable. 

The court rejected each of plaintiff’s arguments and ordered the matter to arbitration. First, the court found that as long as the parties agreed that one party may unilaterally modify the terms of the contract, any subsequent modification by that party is not illusory. Second, it found that a valid arbitration agreement was entered into when the plaintiff initially clicked “Accept” in 2014 as it related to Shutterfly’s Terms of Use, through which she consented to the unilateral change in terms provision. The court also pointed to plaintiff’s continued use of Shutterfly’s services after the terms were updated as an indication of her acceptance of the company’s arbitration provision. Third, the court did not consider the email to be an attempt to retroactively force plaintiff into arbitration, as she was already bound to the 2015 arbitration modification by entering the 2014 agreement permitting future unilateral changes. Lastly, the court concluded that Shutterfly was only required post notice of modification to the Terms of Use on its website—no individual email notice to users was required.

The decision suggests that at least in the context of arbitration provisions, companies have more discretion to amend their terms without providing individual notice to, or obtaining new assent from, users. But to the extent companies are inclined to do so, they will want to make sure that their terms expressly authorize such a unilateral amendment.