22-557-cv Najah Edmundson v. Klarna Inc.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

August Term 2022

(Argued: April 10, 2023 Decided: November 3, 2023)

Docket No. 22-557-cv

NAJAH EDMUNDSON, individually and on behalf of all others similarly situated,

Plaintiff-Appellee,

v.

KLARNA, INC.,

Defendant-Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT

Before: LEVAL, CHIN, AND SULLIVAN, Circuit Judges. Appeal from an order of the United States District Court for the

District of Connecticut (Nagala, J.), entered February 15, 2022, denying

defendant-appellant's motion to compel arbitration. In this putative consumer

class action, plaintiff-appellee brings claims for common-law fraud and

violations of the Connecticut Unfair Trade Practices Act against defendant-

appellant, a company offering "buy now, pay later" financial services.

Defendant-appellant moved in the district court to compel arbitration,

contending that the consumer agreed to a mandatory arbitration provision in the

company's terms on three occasions when she utilized defendant-appellant's

online services. The district court denied defendant-appellant's motion to

compel arbitration and stayed the underlying action pending this appeal.

REVERSED AND REMANDED.

LINNET DAVIS-STERMITZ (Matthew W.H. Wessler, on the brief), Gupta Wessler PLLC, Washington, DC, and Sophia Goren Gold, KalielGold, Berkeley, CA, for Plaintiff-Appellee.

ANTON METLITSKY (Leah Godesky and Kendall Turner, on the brief), O'Melveny & Myers LLP, New York, NY and Washington, DC, for Defendant-Appellant.

2 CHIN, Circuit Judge:

Defendant-appellant Klarna, Inc. ("Klarna") provides a "buy now,

pay later" service that allows shoppers to buy a product and pay for it in four

equal installments over time without incurring any interest or fees. App'x at 10-

11. In 2021, plaintiff-appellee Najah Edmundson paid for two online purchases

using Klarna. Shortly thereafter, Klarna automatically deducted partial

repayments for these purchases from Edmundson's checking account. Because

her account lacked sufficient funds to cover Klarna's deductions, Edmundson

incurred $70 in overdraft fees -- which were assessed not by Klarna, but by the

financial institution associated with her bank account.

Edmundson brought this action on behalf of herself and a class of

similarly situated consumers, alleging that Klarna misrepresents and conceals

the risk of bank-overdraft fees that consumers face when using its pay-over-time

service and asserting claims for common-law fraud and violations of the

Connecticut Unfair Trade Practice Act ("CUTPA"). Klarna moved to compel

arbitration on the grounds that Edmundson was presented with and assented to

its Services Terms, which include a mandatory arbitration provision, when she

(1) selected Klarna as her payment method for an online purchase; (2) used a

3 Klarna checkout "widget" to finalize this purchase; and (3) created an account

and logged into Klarna's software application for smartphones (the "Klarna

App"). The district court (Nagala, J.) denied Klarna's motion, concluding that at

no point did Edmundson have reasonably conspicuous notice of and

unambiguously manifest assent to Klarna's terms. See Edmundson v. Klarna, Inc.,

, 260 (D. Conn. 2022). The district court held that Edmundson

therefore was not bound by the mandatory arbitration provision contained in

Klarna's terms.

.

For the reasons set forth below, we REVERSE the district court's

order and REMAND with instructions to grant Klarna's motion to compel

arbitration.

STATEMENT OF THE CASE

I. The Facts

The facts are undisputed and are summarized as follows:

Klarna is one of the largest "buy now, pay later" services, reaching 90

million active customers across 17 countries. Klarna offers "point-of-sale loans

for online and in-store purchases" that allow shoppers to purchase products in

four installments without incurring any interest or fees. When making a

4 purchase from a merchant that offers Klarna's services, customers are asked at

checkout whether they would rather use a traditional upfront payment method

or Klarna's "Pay in 4" service. If the customer chooses to use Klarna, the

customer provides her name, address, date of birth, and debit card information

to Klarna, either through its checkout widget on a merchant's website or through

the Klarna App. Klarna then divides the total purchase price into four equal

installments. The first installment is charged to the customer at checkout. The

remaining three payments are automatically deducted from the customer's

checking account every two weeks until the balance is paid in full.

Edmundson is a former Klarna customer who resides in

Connecticut. In support of its motion to compel arbitration, Klarna submitted a

declaration from Senior Product Manager Erin Riffe, in which Riffe represented

that Klarna maintains records of each customer's transaction history, and

identified from those records the dates and methods by which Edmundson made

purchases using Klarna and logged into the Klarna App. Attached to the

declaration were screenshots of the three interfaces that Edmundson would have

seen when she first used Klarna to make a purchase and when she first logged

into the Klarna App.

5 On or about December 23, 2020, Edmundson arrived at the first

interface (hereinafter, the "Pay-with-Klarna Screen") when she was choosing

from six payment methods to make an online purchase on GameStop's website.

See Addendum A. Because GameStop is one of Klarna's merchant partners, all

consumers shopping on GameStop's website are offered the option of paying

with Klarna during the online checkout process. Once Edmundson selected to

pay with Klarna from a list of payment methods entitled "BUY NOW PAY

LATER," the interface displayed a schedule of four interest-free payments in the

amount of approximately $81 each. App'x at 23. Under the schedule, in a

smaller gray font were the words: "By continuing, I accept Klarna Services

terms, Privacy Policy, Pay Later in 4 terms and request electronic

communication."

These underlined phrases -- which were also bolded and in

black font on a white background -- were hyperlinks that, when clicked,

displayed the then-current versions of Klarna's Services Terms, Privacy Policy,

and "Pay Later in 4 Agreement," respectively. To continue purchasing the

GameStop item with Klarna, Edmundson selected the button marked "Pay with

Klarna." Addendum A.

6 Edmundson was thereafter prompted to enter her debit card

information. See Addendum B. After she clicked the button marked "Continue,"

Edmundson arrived at the second interface (hereinafter, the "Klarna Widget"),

where she was to finalize her purchase from GameStop. See Addendum C. From

top to bottom, the Klarna Widget instructed the user to "Review your plan" and

listed details about the "Payment plan," including the amount of the four equal

payments, the amount "Due today," and the total cost of the transaction. The

Widget then set forth the statement "I agree to the payment terms" and provided

a button marked "Confirm and continue."

The phrase "payment terms" was

underlined, bolded, and served as a hyperlink, which, when clicked, would

display the same "Pay Later in 4 Agreement" that was hyperlinked on the Pay-

with-Klarna Screen. Until the purchaser clicked on "Confirm and continue," she

was "free to exit the Klarna widget at any time . . . without incurring any fee or

penalty." App'x at 24. When Edmundson clicked on "Confirm and continue,"

she completed her purchase of the GameStop product. Addendum C.

On or about December 27, 2020, Edmundson interacted with the

third interface (hereinafter, the "App Login Screen") when she downloaded and

used the Klarna App for the first time. See Addendum D. This interface

7 presented Edmundson with the options to "Sign up," "Log in," or "Pay in-store."

Below those options, in white text on a black background were two

disclaimers: (1) "Message and data rates may apply"; and (2) "By clicking 'Sign

in' I approve Klarna's User Terms and confirm that I have read Klarna's Privacy

Notice. Links in the app are sponsored."

The phrase "Klarna's User Terms"

was a hyperlink that, if selected, displayed the same Services Terms that were

hyperlinked on the Pay-with-Klarna Screen. To continue into the Klarna App

from this interface, Edmundson had to select "Sign up," "even though she had

already created an account with Klarna . . . in connection with her December 23,

2020 [GameStop] purchase." App'x at 25. For each subsequent use of the Klarna

App, Edmundson selected "Log in" on the App Login Screen.

Edmundson interacted with these three interfaces on subsequent

occasions. On January 22, 2021, when completing another purchase on

GameStop's website using Klarna, Edmundson again viewed the contents of the

Pay-with-Klarna Screen and the Klarna Widget. And from February 4 through

April 22, 2021, Edmundson viewed the App Login Screen before initiating

several transactions in the Klarna App.

8 At all times that Edmundson used Klarna's "Pay in 4" service,

Klarna's Services Terms included the following mandatory arbitration provision

and prohibition on representative litigation:

You agree that any and all disputes or claims, including without limitation federal and state regulatory and statutory claims, common law claims, and those based in contract, tort, fraud, misrepresentation or any other legal theory, arising out of or relating to these Terms or the relationship between you and Klarna . . . shall be resolved exclusively through final and binding arbitration . . . rather than in court . . . .

....

YOU AGREE THAT EACH PARTY MAY BRING CLAIMS AGAINST THE OTHER ONLY ON AN INDIVIDUAL BASIS AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, CONSOLIDATED OR REPRESENTATIVE ACTION[.]

App'x at 49-50. This provision was also incorporated by reference in Klarna's

"Pay Later in 4 Agreement," which provided that users were, inter alia, subject to

the "Mandatory Arbitration of Disputes" and included a hyperlink to the

arbitration provision in Klarna's Services Terms. Id. at 28.

According to Klarna's records, Edmundson timely satisfied all her

installment payments and Klarna never charged Edmundson any interest or fees.

But Edmundson incurred other fees in connection with her use of Klarna's "Pay

9 in 4" service. On March 6 and March 7, 2021, Klarna deducted $15.83 and $9.31

from Edmundson's checking account at Nutmeg State Financial Credit Union as

partial repayments for Edmundson's earlier purchases with Klarna. But because

Edmundson lacked sufficient funds in her checking account to satisfy these

deductions, Nutmeg State Financial Credit Union assessed her two overdraft

fees, amounting to a total of $70.

II. The District Court Proceedings

On June 6, 2021, Edmundson brought this putative class action

against Klarna, seeking to represent a class of all persons who used Klarna's "Pay

in 4" service and incurred an overdraft fee from a third-party financial institution

"as a result of a Klarna repayment deduction." Id. at 14. The complaint asserts

claims for common-law fraud and violations of CUTPA. Specifically,

Edmundson alleges that Klarna "targets poor consumers and those struggling to

make ends meet" by falsely representing that its "Pay in 4" service is completely

free, with "[n]o interest" or "catch[es]," and failing to disclose that the users may

incur steep overdraft fees imposed by their own banks if their bank accounts lack

sufficient funds to cover the amount owed to Klarna. App'x at 8, 11.

Edmundson alleges that she "had no idea small, automatic Klarna repayments

10 could cause $35 bank fees," and that she would not have used Klarna "if she had

been adequately informed of the risks of bank fees." Id. at 13-14.

On August 16, 2021, Klarna moved to compel arbitration, arguing

that when Edmundson viewed each of the three interfaces discussed above, she

was presented with Klarna's Services Terms, including the mandatory arbitration

provision, and was instructed that continuing with the transaction would

constitute acceptance of those terms. Each time, according to Klarna,

Edmundson unambiguously manifested assent by choosing to transact with

Klarna. The district court denied the motion, analyzing all three interfaces and

concluding that none provided reasonably conspicuous notice of Klarna's terms

and that none supported the inference that Edmundson unambiguously

manifested assent to those terms. See Edmundson, 642 F. Supp. 3d at 267-74.

First, as to the Pay-with-Klarna Screen, the district court held that

notice of Klarna's terms was insufficiently conspicuous given the "clutter on the

screen." Id. at 268. The district court further held there was no manifestation of

assent to any terms at this point in the transaction because a reasonable user

could select "Pay with Klarna" and then choose, without consequence, to use

another payment method (or ditch the transaction altogether). Id. at 269.

11 As to the Klarna Widget and the App Login Screen, the district court

also concluded that these interfaces could not support an inference of

Edmundson's unambiguous assent to Klarna's terms. Because the Klarna Widget

simply stated "I agree to the payment terms," without indicating what action

would be sufficient to manifest such agreement, the district court held that

"[t]here is nothing anywhere on the screen that would alert a reasonable user to

the fact that clicking 'confirm and continue' has any contractual significance at

all, much less acceptance of a contract that includes an arbitration agreement."

Id. at 271. Similarly, because the App Login Screen instructed that a user assents

to Klarna's terms by clicking "Sign in" but only provided options for the user to

"Sign up" or "Log in," the district court held that a reasonable user could have

believed "that since she was not clicking a button labeled 'sign in,' she was not

bound" to any terms. Id. at 273-74. Finally, the district court rejected Klarna's

argument that the repeated references and hyperlinks to its terms across the

three interfaces provided inquiry notice, recognizing that each interface used

different labeling conventions, and therefore "it [was] likely that a reasonable

user would understand each of these links to lead to a different agreement." Id.

at 274.

12 Klarna timely appealed the district court's February 15, 2022 order

denying the motion to compel arbitration pursuant to

, which

permits interlocutory appeals from the denial of a motion to compel arbitration.

On March 18, 2022, Klarna moved to stay all district court proceedings pending

resolution of its appeal. The district court granted that motion on May 6, 2022,

and stayed the underlying action, recognizing, inter alia, "that there are serious

questions going to the merits of [Klarna's] appeal" and that Klarna's "motion to

compel arbitration presented a close question." App'x at 101.

DISCUSSION

I. Applicable Law

A. Standard of Review

We review de novo a district court's denial of a motion to compel

arbitration. Specht v. Netscape Commc'ns Corp.,

, 26 (2d Cir. 2002). The

determination of whether parties have contractually bound themselves to

arbitrate a dispute is likewise subject to de novo review, but the factual findings

upon which that legal determination is based are reviewed for clear error. Id.1

1 "Although determinations regarding mutual assent and reasonable notice usually involve questions of fact," when, as here, "the facts . . . are undisputed, and the district court determined as a matter of law that no reasonable factfinder could have

13 In deciding motions to compel, courts apply a "standard similar to

that applicable for a motion for summary judgment." Bensadoun v. Jobe-Riat,

(2d Cir. 2003). We must "consider all relevant, admissible evidence

submitted by the parties and . . . draw all reasonable inferences in favor of the

non-moving party." Nicosia v. Amazon.com, Inc.,

(2d Cir. 2016).

B. Arbitrability

The Federal Arbitration Act (the "Act") provides that "[a] written

provision in . . . a contract evidencing a transaction involving commerce to settle

by arbitration a controversy thereafter arising out of such contract . . . shall be

valid, irrevocable, and enforceable."

. The Act also requires federal

courts, upon application of a party to the contract, to stay adjudication of claims

covered by an enforceable arbitration agreement until such arbitration has been

had. See

§ 3. It is well-established that these statutory provisions reflect both

a "liberal federal policy favoring arbitration and the fundamental principle that

arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion,

, 339 (2011) (internal quotation marks and citations omitted). Accordingly,

found that the notice was reasonably conspicuous and the assent unambiguous," we review these conclusions from the district court de novo. Meyer v. Uber Techs., Inc.,

(2d Cir. 2017).

14 while the Act "place[s] arbitration agreements on an equal footing with other

contracts,"

it "is not a substitute for contractual assent, and we will not

enforce arbitration unless and until it is determined that an agreement [to

arbitrate] exists," Soliman v. Subway Franchisee Advert. Fund Tr., Ltd.,

(2d Cir. 2021).

Whether the parties have agreed to arbitrate is generally a question

of state contract law. See Specht, 306 F.3d at 27. The district court applied

Connecticut law on the question of contract formation, see Edmundson, 642 F.

Supp. 3d at 265-66, and the parties do not challenge that decision on appeal.

Nonetheless, as the parties acknowledge, traditional contract formation law does

not vary meaningfully from state to state, Appellant's Br. at 22 n.2; Appellee's Br.

at 25 n.8, and therefore, our precedents determining the enforceability of

arbitration provisions according to the contract-law principles of other states

may also be relevant to this dispute. See, e.g., Schnabel v. Trilegiant Corp.,

(2d Cir. 2012) (noting that "Connecticut and California apply

substantially similar rules for determining whether the parties have mutually

assented to a contract term."); Meyer v. Uber Techs., Inc.,

(2d Cir.

2017) (noting the same about New York and California). Accordingly, we need

15 not and do not limit ourselves to Connecticut law in resolving this question of

arbitrability.2

C. Formation of Web-Based Contracts

To form a contract, there must be "a manifestation of mutual assent

to the exchange between two or more parties" made by written or spoken word,

or by conduct. Ubysz v. DiPietro,

(Conn. 1981). These

principles are the "touchstone of contract" formation, Specht, 306 F.3d at 29, and

they apply with equal force to contracts formed online, see Register.com, Inc. v.

Verio, Inc.,

(2d Cir. 2004) ("While new commerce on the Internet

has exposed courts to many new situations, it has not fundamentally changed

the principles of contract.").

We have, nonetheless, recognized that an offeree's manifestation of

assent to an offeror's terms looks different for consumer contracts formed online,

in which terms are usually unnegotiated and consumers often proceed without

reading the fine print. See Meyer,

(discussing how a user

manifests assent to different types of web-based contracts, including "clickwrap,"

2 At the same time, we recognize that contract formation through the internet is a subject of recent development. It would not be surprising if the courts of different states developed differing approaches and arrived at different conclusions to questions regarding the formation of web-based contracts.

16 "browsewrap," and "sign-in-wrap" agreements); see also Berman v. Freedom Fin.

Network, LLC,

(9th Cir. 2022) ("[C]ourts confronted with online

agreements such as those at issue here have devised rules to determine whether

meaningful assent has been given."). Courts have ruled that, where there is no

evidence that an internet or app user had actual knowledge of the contractual

terms, the user will still be bound if (1) a "'reasonably prudent' person would be

on inquiry notice" of the terms, Soliman,

(quoting Meyer,

), and (2) the user unambiguously manifests assent "through . . . conduct

that a reasonable person would understand to constitute assent," Schnabel,

; see also Specht, 306 F.3d at 35 ("Reasonably conspicuous notice of the

existence of contract terms and unambiguous manifestation of assent to those

terms by consumers are essential if electronic bargaining is to have integrity and

credibility."). Both inquiries, therefore, are generally measured by an "objective

standard," Specht, 306 F.3d at 30, and are "clearly. . . fact-intensive," Meyer,

.

Who is the "reasonably prudent" internet or smartphone user? The

standard does not require us to imagine a user who has "never before

encountered" a smartphone app or entered into an online contract. Meyer, 868

17 F.3d at 77. Nor are we to consider the perspective of a highly savvy and

sophisticated user, someone who spends all waking hours using some kind of

technology. See Berkson v. Gogo LLC,

(E.D.N.Y. 2015)

(referring to the "average internet user" as "one who does not necessarily conduct

much of her business online"). Courts have viewed the reasonably prudent user

as somewhere in between; such a user is not a complete stranger to computers or

smartphones, having some familiarity with how to navigate to a website or

download an app. See, e.g., Meyer,

("[A] reasonably prudent

smartphone user knows that text that is highlighted in blue and underlined is

hyperlinked to another webpage where additional information will be found.");

see also Selden v. Airbnb, Inc.,

, at *5 (D.D.C. Nov. 1, 2016) ("The

act of contracting for consumer services online is now commonplace in the

American economy."), aff'd,

(D.C. Cir. 2021); Small Just. LLC v. Xcentric

Ventures LLC,

(D. Mass. 2015) (noting that a "reasonably

prudent internet user . . . is conversant in the basic navigation tools required to

effectively utilize a website" and therefore, would be familiar with a "scroll bar"),

aff'd,

(1st Cir. 2017).

18 A reasonably prudent internet or smartphone user is on inquiry

notice of contractual terms where the terms are presented in a clear and

conspicuous way. See Specht, 306 F.3d at 30 ("Clarity and conspicuousness of

arbitration terms are important in securing informed assent."). "In the context of

web-based contracts, we look to the design and content of the relevant interface

to determine if the contract terms were presented to the offeree in [a] way that

would put her on inquiry notice of such terms." Starke v. SquareTrade, Inc.,

(2d Cir. 2019). For example, "when terms are linked in obscure

sections of a webpage that users are unlikely to see, courts will refuse to find

constructive notice." Nicosia,

(collecting cases). By contrast, when

terms are linked on an "uncluttered" interface and temporally and "spatially

coupled with the mechanism for manifesting assent," and the user does not need

to scroll beyond what is immediately visible to find the terms, we have

concluded, as a matter of law, that the interface provided reasonably

conspicuous notice of the existence of contractual terms. Meyer,

("That the Terms of Service were available only by hyperlink does not preclude a

determination of reasonable notice. . . . As long as the hyperlinked text was itself

19 reasonably conspicuous . . . a reasonably prudent smartphone user would have

constructive notice of the terms.").

As for the second requirement -- the unambiguous manifestation of

assent -- we have held that "acceptance need not be express, but where it is not,

there must be evidence that the offeree knew or should have known of the terms

and understood that acceptance of the benefit would be construed by the offeror

as an agreement to be bound." Schnabel,

. In other words, where

an internet or smartphone user does not explicitly say "I agree" to the contractual

terms, a court must determine whether a reasonably prudent user would

understand his or her conduct to constitute assent to those terms.

. In

making this determination in the context of web-based contracts, we have

considered (1) whether the interface clearly warned the user that taking a specific

action would constitute assent to certain terms, see Meyer,

("[T]he

text on the [interface] not only included a hyperlink to the Terms of Service, but

expressly warned the user that by creating an . . . account, the user was agreeing

to be bound by the linked terms."); (2) whether notice of the contractual terms

was presented to the consumer in a location on the interface and at time when

the consumer would expect to receive such terms, see Nicosia,

20 (finding no "manifest[ation] [of] assent to [] additional terms" where "the

presentation of terms [was] not directly adjacent to the . . . button so as to

indicate that a user should construe clicking as acceptance"); Schnabel,

("[T]he presentation of these terms at a place and time that the consumer will

associate with the initial . . . enrollment, or the use of . . . [the] services from

which the recipient benefits at least indicates to the consumer that he or she is . . .

employing such services subject to additional terms and conditions that may one

day affect him or her."); and (3) the "course of dealing between the parties,"

Schnabel,

, including whether the contract terms were

conspicuously presented to the consumer at each use of the offeror's service and

the consumer's conduct in response to the repeated presentation of conspicuous

terms, see Starke,

(noting that although the consumer transacted

with the offeror "on six prior occasions," he was never given "clear and

conspicuous notice that the transaction would subject him to binding

arbitration," and therefore, did not manifest assent); Register.com,

(finding assent to contract terms in part because consumer's use of service was

not "sporadic and infrequent," but daily, and consumer received notice of terms

with each use).

21 II. Analysis

There is no dispute that Klarna's terms include a mandatory

arbitration provision, and that Edmundson's claims fall within the scope of that

provision. Indeed, Edmundson concedes that if the arbitration provision is

deemed enforceable as to her, she would be prohibited from adjudicating her

claims against Klarna before the district court. Therefore, the only issues on

appeal are whether (1) notice of Klarna's terms (and thus the arbitration

provision contained therein) was reasonably clear and conspicuous such that a

reasonable internet or smartphone user would be on inquiry notice of them, and

(2) Edmundson objectively and unambiguously manifested assent to the terms.

Because we conclude that Edmundson's interaction with the Klarna Widget

satisfied these requirements, we conclude, as a matter of law and pursuant to this

Court's precedents, that Edmundson agreed to arbitrate her claims against

Klarna.3

3 We do not address whether the Pay-with-Klarna Screen or the App Login Screen provided inquiry notice of Klarna's terms. Because we find that the Klarna Widget provided Edmundson with inquiry notice, we need not engage further with the Pay- with-Klarna Screen or the App Login Screen.

22 A. Reasonably Conspicuous Notice

Several factors weigh in favor of finding that the Klarna Widget

provided "reasonably conspicuous notice" of Klarna's terms. Specht, 306 F.3d at

32.

To start, the Klarna Widget interface is "uncluttered" and bears close

resemblance to the interface we endorsed in Meyer, which presented the user

with fields with which to enter credit card details, one link to the terms at issue,

and three buttons to select either to register for a new account or to connect to

two types of pre-existing accounts. Meyer,

(Addendum B). On

the Klarna Widget, the only link provided is to Klarna's terms, and the user is

presented with only one button to click -- that is, selecting "Confirm and

continue." See Addendum C. This content is "visible at once, and the user does

not need to scroll beyond what is immediately visible to find notice" of Klarna's

terms. Meyer,

; cf. Specht, 306 F.3d at 23, 31-32 (holding that a

reasonably prudent user would not have known of terms that were visible only if

user "happen[ed] to scroll down" to the bottom of webpage).

Given the relative lack of clutter on the Klarna Widget, this interface

differs sharply from those in prior cases that we deemed insufficient, as a matter

23 of law, to provide inquiry notice. For example, in Soliman, we held that an

arbitration provision would not have been conspicuous to a reasonably prudent

consumer in part because notice of the terms "was buried within a fine-print

paragraph with over eighty other words [and] was not set off in any way within

that paragraph (by color, emphasis, etc.)."

. In Nicosia, we held

that "reasonable minds could disagree on the reasonableness of notice" where the

interface in question contained "between fifteen and twenty-five links," "various

text . . . in at least four font sizes and six colors (blue, yellow, green, red, orange,

and black), alongside multiple buttons and promotional advertisements," and

"the customers' personal address, credit card information, shipping options, and

purchase summary."

(Addendum B). And finally, the

overall clutter of the interface in Starke led us to conclude that it was "[l]ike the

interface in Nicosia, and in sharp contrast with the screen in Meyer," and we

similarly held there was no reasonably conspicuous notice of the terms at issue.

Starke,

.

Although the hyperlinks to Klarna's terms are in a smaller font

relative to other text on the Klarna Widget, they are set apart from surrounding

information by being underlined and in a color that stands in sharp contrast to

24 the color of the interfaces' backgrounds. See Addendum C (black text on white

background). And because the interface does not include a plethora of clutter or

extraneous information, the notice to Klarna's terms -- even if in a smaller font --

appears sufficiently "conspicuous in light of the whole [interface]." Nicosia,

.

Moreover, as in Meyer, the hyperlink to Klarna's terms on the Klarna

Widget is spatially and temporally coupled with the user's transaction with

Klarna. See

; cf. Starke,

(holding that terms of service

were not spatially or temporally coupled when provided only after user's

purchase of service). Spatially, the hyperlink to Klarna's terms appears directly

adjacent to the "button intended to manifest assent to the terms." Meyer,

. The statement "I agree to the payment terms" is directly above the

"Confirm and continue" button, which a user must click to complete the purchase

using Klarna. App'x at 24. See Addendum C. A reasonable internet user,

therefore, could not avoid noticing the hyperlink to Klarna's terms when the user

selects "Confirm and continue" on the Klarna Widget.

Temporally, a reasonably prudent internet or smartphone user

would expect terms of service to be presented when the user has navigated to the

25 Klarna Widget. We have held that "the presentation of these terms at

. . . purchase or enrollment . . . indicates to the consumer that he or she is taking

such goods or employing such services subject to additional terms and

conditions that may one day affect him or her." Schnabel,

. Here,

users only arrive at the Klarna Widget when they are about to finalize a purchase

using Klarna's "Pay in 4" service. See Addendum C. Accordingly, at this instance

of purchase -- when the user is about to receive a benefit from Klarna -- a

reasonably prudent user would understand that the terms presented on the

interface govern the user's future relationship with Klarna.

Finally, the interface includes language signaling to users that they

will be agreeing to Klarna's terms through their conduct. As discussed, included

on the Klarna Widget is the statement "I agree to the payment terms."

Addendum C. This language is more akin to the warning provided in Meyer

than to the vague references to "terms and conditions" used in other cases, which

we deemed to undermine the conspicuousness of notice. Compare Meyer,

("By creating an Uber account, you agree to the TERMS OF SERVICE &

PRIVACY POLICY."), with Soliman,

("Terms and conditions at

subway.com/subwayroot/ TermsOfUse.aspx"), and Starke,

("Terms

26 & Conditions"). Moreover, we look at the "totality of the circumstances" to

determine whether notice was reasonably conspicuous, Soliman,

,

and therefore, the "particular language used in relation to the hyperlinked or

otherwise-referenced terms and conditions,"

, is just one factor to

consider. Here, in light of the totality of the circumstances -- the overall lack of

clutter on the Klarna Widget, the conspicuousness of the notice of Klarna's terms

in relation to the interface as a whole, the spatial and temporal proximity of the

terms to the mechanisms for manifesting assent, the obvious fact that there

would be a continuing relationship involving the payment of installments over

time, and the language advising users that they are agreeing to Klarna's terms --

we conclude that a reasonably prudent internet or smartphone user would have

been on notice that the hyperlinked terms were connected to finalizing a

purchase on the Klarna Widget.

To be sure, the Klarna Widget has some deficiencies. For example, it

could be argued that blue font is a better signal to consumers that text contains a

hyperlink. Meyer, 868 F.3d at 77–78. But, as we have previously emphasized,

there are "no particular features that must be present to satisfy the reasonably

conspicuous standard," Soliman,

, "there are infinite ways to design

27 a website or smartphone application," Meyer,

, and "the format used

in Meyer is [not] the only effective way to" form an online contract, Starke,

. And most importantly, none of these deficiencies are fatal to our

finding that, under the totality of the circumstances, the Klarna Widget provided,

as a matter of law, reasonably conspicuous notice of Klarna's terms, including the

mandatory arbitration provision.

B. Unambiguous Manifestation of Assent

Although Edmundson's assent to arbitration was not express, we

conclude that Edmundson unambiguously manifested assent "through

. . . conduct that a reasonable person would understand to constitute assent."

Schnabel,

. Edmundson unambiguously manifested assent to

Klarna's terms when, on December 23, 2020, she selected "Confirm and continue"

to finalize her GameStop purchase using Klarna's "Pay in 4" service. App'x at 23.

Reasonable internet users would understand that selecting "Confirm

and continue" on the Klarna Widget constitutes their confirmation that they

"agree to the payment terms" and continues the user's transaction using Klarna's

"Pay in 4" Service. As described above, a reasonable user could not avoid the

notice of Klarna's terms, which were hyperlinked in the statement, "I agree to the

28 payment terms." Indeed, this statement was placed directly above the "Confirm

and continue" button, the interface was, as a whole, uncluttered, and the terms

were presented at a time when a reasonable user would expect to receive them.

See Addendum C. Aside from the "Confirm and continue" button, the only other

selections a user could make on the Klarna Widget were to "change" the debit

card associated with the purchase, or to exit the purchase altogether, neither of

which objectively constitute assent to Klarna's "payment terms." But selecting

"Confirm and continue" clearly does constitute such assent.

In these circumstances, it would be unreasonable for an internet user

to read the conspicuous and clear statement, "I agree to the payment terms," with

the button marked "Confirm and continue" directly below it, and not understand

that the "Confirm and continue" button is the mechanism by which the user

"[c]onfirm[s]" his or her "agree[ment] to the payment terms" and "continue[s]" the

transaction with Klarna. See id.; see also Meyer,

("The fact that

clicking the register button had two functions -- creation of a user account and

assent to the Terms of Service -- does not render [the user's] assent ambiguous.").

"The transactional context of the parties' dealings reinforces [this]

conclusion." Meyer,

. Edmundson navigated to the Klarna Widget

29 only after (1) selecting Klarna from a list of six payment methods to purchase an

item from the GameStop website, see Addendum A, and (2) entering her debit

card information with the intention of receiving the benefits of Klarna's "Pay in 4"

service, see Addendum B. When Edmundson arrived at the Klarna Widget, she

knew well that purchasing the GameStop item with Klarna meant that she was

entering into a continuing relationship with Klarna, one that would endure at

least until she repaid all four installments. The Klarna Widget provided clear

notice that there were terms that would govern this continuing relationship. A

reasonable internet user, therefore, would understand that finalizing the

GameStop transaction, entering into a forward-looking relationship with Klarna,

and receiving the benefit of Klarna's service would constitute assent to those

terms.

We recognize that some of Edmundson's arguments are not

unreasonable. To be sure, Klarna could have chosen to include clearer

instructions, such as "By selecting 'Confirm and continue,' I agree to the terms set

forth under this hyperlink: payments terms." Moreover, the Klarna Widget's

statement "I agree to the payment terms" appears just below a specification of

what may reasonably be considered payment terms -- including the specification

30 that there would be four payments of equal specified amount, the amount of the

payment that was "due today," and the total cost of the purchase. Addendum C.

Nonetheless, upon full consideration of Edmundson's arguments,

we are not convinced. Contrary to Edmundson's assertion, we have never held

that "a company must 'explicitly advise[]' the user 'that the act of clicking will

constitute assent to [its] terms and conditions.'" Appellee's Br. at 55 (quoting

Berman,

). Rather, we have only required that the interface "make

clear" to the reasonable internet user that a specific "click" signifies assent. See

Specht, 306 F.3d at 29-30 ("[A] consumer's clicking on a download button does not

communicate assent to contractual terms if the offer did not make clear to the

consumer that clicking on the download button would signify assent to those

terms[.]" (emphasis added)); Schnabel,

("[T]here must be evidence

that the offeree knew or should have known of the terms and understood that

acceptance of the benefit would be construed by the offeror as an agreement to

be bound."). The Klarna Widget satisfies this burden.

Furthermore, Edmundson could not have reasonably believed that

the information set forth on the Klarna Widget above the hyperlinked "payment

terms" represented all the terms governing her use of Klarna's service. The

31 Klarna Widget set forth some "payment terms," but it did not mention, for

example, when future payments would be due, how payments would be

collected, and what would be the consequences for failing to make timely

payments. Accordingly, Edmundson was on inquiry notice that her

"agree[ment] to the payment terms," Addendum C, necessarily encompassed

more than the information provided on the Klarna Widget, and the burden was

then on her to find out to what terms she was accepting, see Meyer,

-

78.

Accordingly, we conclude on the undisputed facts of this case that

Edmundson unambiguously manifested her assent to Klarna's terms, and hold,

as a matter of law, that Edmundson agreed to arbitrate her claims against Klarna.

CONCLUSION

For the reasons set forth above, the order of the district court is

REVERSED, and the case is REMANDED with instructions to grant Klarna's

motion to compel arbitration.

32 ATTACHMENTS

Addendum A (App'x at 36) Addendum B (App'x at 61)

Addendum C (App'x at 62)

34 Addendum D (App'x at 64)

35