Leslie Cruz purchased merchandise through the Kate Spade Outlet website, which was operated by Kate Spade LLC and Coach Services, Inc., both subsidiaries of Tapestry, Inc. On February 2, 2024, she placed an online order for in-store pickup for a $79.00 pair of shoes. On March 4, 2024, she placed another order for home delivery of approximately $150.00 of merchandise.
On April 12, 2024, Cruz sued Tapestry, Kate Spade, and Coach in Los Angeles County Superior Court, claiming they engaged in false advertising and unfair competition under California Business and Professions Code sections 17200 et seq. and 17500 et seq. She alleged that the companies advertised “falsely inflated” discounts, displaying markdowns from prices at which the merchandise was never or almost never offered for sale. She alleged that her February 2, 2024 and March 4, 2024 purchases fell under this “false advertising scheme.” Cruz sought restitution and disgorgement of all unjust enrichment.
Tapestry and its affiliates responded by filing a motion to compel arbitration, arguing that Cruz had agreed to arbitrate her claims when she made her online purchases. They relied on an arbitration provision embedded in the website’s Terms of Use. During checkout, there was a large pink button that either said “PLACE MY ORDER” if a customer chose a pickup order, or “FINAL: PLACE ORDER” if they chose delivery. The trial court referred to these collectively as the “action button.” Underneath the action button, a sentence in smaller gray font read, “BY CLICKING SUBMIT YOUR ORDER, YOU ARE AGREEING TO OUR TERMS OF USE AND PRIVACY POLICY.” The words “Terms of Use” and “Privacy Policy” were underlined hyperlinks, but they were not a separate color. Customers were not required to click the links or check a box indicating that they had reviewed the Terms of Use or Privacy Policy.
The trial court denied Tapestry’s motion to compel arbitration. The trial court found that Cruz had not assented to the arbitration clause because the notice was too inconspicuous and overshadowed by more prominent elements on the checkout page, such as the large pink action button, advertisements, and payment fields. The trial court concluded that Cruz had no reason to expect that a one-time retail purchase would subject her to an ongoing contractual relationship governed by extensive terms. Tapestry appealed, contending that the trial court erred and that Cruz had implicitly agreed to arbitration by completing her purchases.
On appeal, the Second District Court of Appeal reviewed the order de novo. The appellate court explained that a party seeking to compel arbitration must show that the other party consented to the arbitration agreement. In an online setting, whether a consumer is bound by an arbitration agreement depends on notice. The business must show that its website presented the terms of the agreement in a way that would make a reasonably prudent user aware that they were agreeing to the terms.
The appellate court agreed with the trial court that Tapestry’s checkout process used what is known as a “sign-in wrap” agreement. Sign-in wrap agreements include a textual notice indicating that the user will be bound by terms, but they do not require that the consumer review the terms or expressly manifest their assent by checking a box or clicking an “I agree” button. Instead, they are purportedly bound by the agreement when they click some other button that is needed to complete the transaction, such as a sign-in button or, in this case, a purchase button.
Because this type of assent is largely passive, the validity of the agreement turned on whether the website gave users reasonably conspicuous notice. The appellate court explained that in the context of online purchases, consumers would not typically expect that they are entering into an ongoing contractual relationship bound by extensive terms and conditions. The appellate court rejected Tapestry’s argument that the high dollar value of the goods should have alerted Cruz to look for contractual terms.
The appellate court conducted a detailed examination of the website’s checkout pages and concluded that Tapestry failed to provide reasonably conspicuous notice that submitting an order would bind a customer to its Terms of Use, which contained the arbitration clause. The checkout pages had a two-column layout with multiple visual elements. The appellate court found that the notice text was small, gray, and difficult to read against an off-white background. The notice text was in the left column and sat beneath a bright pink action button that drew the user’s focus. Meanwhile, the right column contained promotional messages and colorful graphics advertising gift wrap options, shipping details, and customer support. The appellate court concluded that the combination of these design features drew the user’s attention away from the notice text. It noted that Tapestry could easily have required customers to affirmatively acknowledge the Terms of Use, such as by clicking a checkbox, but chose not to do so.
The appellate court affirmed the trial court’s denial of the motion to compel arbitration, concluding that Cruz never agreed to arbitrate her claims.
Note:
Public education agencies, such as community college districts and school districts, school often collect online consents for policies, programs, or data use. Cruz v. Tapestry underscores that the enforceability of digital consent depends on whether users receive clear, conspicuous notice and actively agree to the terms. Districts should design online forms so that consent is intentional, such as requiring a checkbox, signature, or other affirmative acknowledgment, especially when parents, students, or employees are waiving rights.
Cruz v. Tapestry, Inc. (2025) 113 Cal.App.5th 943.