New Jersey Appellate Court Holds SmileDirectClub Member Must Arbitrate His Product Liability Claim

Court Holds SmileDirectClub Member Must Arbitrate: SmileDirectClub, LLC (SDC) offers a telemedicine platform that enables affiliated dentists and orthodontists to provide clear-aligner treatment as an alternative to traditional orthodontic braces. To receive treatment and aligners via the internet, a user must create and register an account with SDC through an online registration process. Before users can
create their account, they must affirmatively check a blank box that states, “I agree to SmileDirectClub’s Informed Consent and Terms & SmilePay Conditions,” clearly indicating each of the three phrases is a separate hyperlink.

Each hyperlink takes the user to a new webpage revealing the full terms of the corresponding documents. SDC’s hyperlinked “Informed Consent” document contained a mandatory arbitration agreement among other provisions.
Users must click and check the previously blank box indicating their agreement before they can click another button, “FINISH MY ACCOUNT,” to receive SDC’s services and products. Consumers are not required to submit any payment to register with SDC.

On March 4, 2020, plaintiff Jeffrey Santana purchased clear aligners from SDC using its telemedicine platform and registering an account on SDC’s website. Plaintiff later filed a products liability action against SDC alleging he had suffered personal injuries resulting from his use of the clear aligners. SDC filed an answer and, two months later, moved to dismiss the complaint, arguing plaintiff’s complaint was subject to the mandatory arbitration agreement. The plaintiff claimed the arbitration agreement “was hidden from [his] view.”

The judge found “[t]he arbitration clause was not clearly or conspicuously presented to [p]laintiff and is thus not enforceable.” SDC appealed.

The Superior Court of New Jersey Appellate Division (“New Jersey Appellate Court”) stated in its published opinion dated April 3, 2023: “Although none of SDC’s hyperlinks included the word “arbitration” or a phrase such as “waiver of right to sue” in their titles, a fact deemed important by the motion judge, the context in which the “I Agree” checkbox appeared is significant … The arbitration agreement was located within a clearly hyperlinked document—the very first hyperlinked document on the screen entitled “Informed Consent.” That document included not only the arbitration
agreement but also explanations of the benefits and risks of using the aligners, representations by plaintiff regarding his oral health, and his consent to the treatment. The title of the hyperlinked document clearly put plaintiff on reasonable inquiry notice that when he checked the “I Agree” box next to the link, he was agreeing to something that specifically asked for his informed consent. Moreover, within the hyperlinked “Informed Consent” document, the title of the arbitration provision—”AGREEMENT TO ARBITRATE”—was the only fully capitalized and emboldened text, which would have alerted a consumer to the importance of the provision in relation to all others.”

The New Jersey Appellate Court held: “We conclude that nothing in the structure of SDC’s website denied plaintiff reasonable inquiry notice of the arbitration agreement, the contents of which plaintiff has not challenged as deficient under Atalese or any of the Court’s other decisions involving consumer sales. Reversed and remanded for entry of an order compelling arbitration of plaintiff’s claims and staying any further action in the Law Division.”

Source Santana v. SmileDirectClub, LLC, Docket No. A-2433-21.

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