Beware the Scrollable Window: The Seventh Circuit Strikes Down an Internet Contract

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If you’re like us—and most others, we’ll venture to guess—you’ve never read all the terms and conditions of the iTunes end-user license agreement.

We doubt that it’s a scintillating read, but, regardless, most consumers don’t slog through these contractual tomes because they have better things to do.

Apple and others in the world of e-commerce know this, but they need to rely on some form of contract for their services, so the struggle begins to create a binding contract (where a purchaser “receives reasonable notice of those terms”) when the purchaser doesn’t devote the time or attention to reading the essential terms.

The Seventh Circuit’s recent decision in Sgouros v. TransUnion Corp., No. 15-1371 (7th Cir. March 25, 2016), decided under Illinois law, is a cautionary tale for those that operate in this digital realm. The court declined to enforce an arbitration provision because that term was buried at the bottom of a scrollable window (and not immediately visible on the page), with no prompt directing the user to scroll to the bottom. Chief Judge Diane Wood wrote for the court, in an instructive opinion that included screenshots from TransUnion’s webpage.

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Seventh Circuit Reinforces the Importance of Memorializing Agreements in Mediation

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Put it in writing.

How many times have those four words been uttered in the course of commerce?

Many more than we care to count, to be sure. For the fact remains that the act of putting pen to paper, ribbon to page, or transmitting bits in a particular fashion (the complicated subsurface of modern technology foils us here), all to memorialize the meeting of the minds, is a significant—and consequential—step.

That is the essence of the Seventh Circuit’s decision in Beverly v. Abbott Laboratories, No. 15-1098 (7th Cir. Mar. 16, 2016), a case in which the court upheld the district court’s decision to enforce a handwritten agreement reached in mediation. Judge Ann Claire Williams wrote for the court. The case, decided under Illinois law, is a notable exhibition of the court’s pro-enforcement attitude on these issues.

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Seventh Circuit Applies Strong Business Judgment Rule to Reject Assertion of Demand Futility

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In a recent decision in a diversity case, the Seventh Circuit deferred to a state legislature’s “strongly pro-management version of the business judgment rule,” rejecting a derivative claim filed by shareholders in an Indiana corporation who had failed to make a demand on the corporation’s board of directors. In re: Biglari Holdings, Inc. Shareholder Derivative Litigation, No. 15-1828 (Feb. 17, 2016). The case is instructive for Wisconsin practitioners as to the Seventh Circuit’s deference to the business judgment rule embodied in many states’ corporations statutes. As emphasized in our Supreme Court’s decision in Data Key Partners v. Permira Advisers LLC, 2014 WI 86, Wisconsin, too, has a strong business judgment rule, see Wis. Stat. § 180.0828(1). And, like Indiana, Wisconsin looks for guidance to Delaware corporate-governance law when applying it.

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In re Sentinel Management: The Seventh Circuit Considers Equitable Subordination

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Equitable subordination in bankruptcy can be a powerful tool, providing a court with considerable latitude to set things right insofar as the estates of the penniless and the rights of their creditors are concerned.

But it’s also a doctrine more frequently discussed than applied (even 11 U.S.C. § 510(c)(1), the statute authorizing the remedy’s use, offers no hint as to what justifies its use), which is what makes the Seventh Circuit’s recent decision in In re Sentinel Management Group, Inc., No. 15-1309 (7th Cir. Jan. 8, 2016), worth remembering. Judge Richard Posner wrote for the court.

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Wisconsin Supreme Court Kicks Open Records Case to the Curb

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When Rebecca Bradley was appointed to the Wisconsin Supreme Court in October, the question arose what role she would play in cases argued this term before her appointment. Specifically, if the Court were otherwise split 3-3 on a case, would Justice R. Bradley participate in order to break the tie? The Court answered “No” in New Richmond News v. City of New Richmond, 2015 WI 106.

New Richmond involves the interplay between Wisconsin’s Public Records Law, Wis. Stat. ch. 19 subch. II, and the federal Driver’s Privacy Protection Act, 18 U.S.C. §§ 2721-25, which protects from disclosure “personal information” and “highly restricted personal information” in motor vehicle records (ranging from street address to social security numbers). The Court thought the question to be one of state-wide importance when it accepted the case last April through its “bypass” procedure, which is one of the ways a case can skip the court of appeals. Nevertheless, the Court sent the case back to the court of appeals when the supreme court was deadlocked 3-3 after Justice N. Patrick Crooks passed away between argument and the release of an opinion. It explained that vacating its bypass allows the court of appeals to decide it and preserves the supreme court’s ability to take it up later, under the usual review process.
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