The terms and conditions of an electronically signed account agreement were “reasonably conspicuous” and thus binding on the customer even though she had to scroll down the page to see the relevant terms.
Valelly vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 19-CV-7998 (S.D. N.Y., 6/3/20).
Plaintiff files this putative class action alleging claims relating to the “sweep” feature of her Merrill Lynch accounts under which uninvested cash is automatically swept into a money market account. She alleges breach of contract, quasi-contract, lack of suitability, negligence, and breach of the Massachusetts Consumer Protection Law. The Court grants Merrill Lynch’s motion to dismiss. As an initial matter, even though this is a motion to dismiss, the Court is entitled to consider documents not attached to the complaint where those documents are integral to plaintiff’s claims. The Court thus may rely on the account agreements plaintiff electronically signed when opening her accounts.
Those agreements are fatal to plaintiff’s quasi-contract claim. A plaintiff cannot pursue a quasi-contract claim where she has signed a contract. Plaintiff seeks to avoid this rule by challenging the execution of the contracts, which she signed electronically on an iPad in the Merrill Lynch branch office. But those agreements -- which the Court characterizes as clickwrap -- are binding. A clickwrap agreement is enforceable where the key terms are reasonably conspicuous. The Merrill Lynch agreements contained clear disclosures that uninvested cash would be swept into a money market account. “The fact that a user might need to scroll down to read all of the attestation terms does not render them unenforceable any more than the fact that a paper contract has more than one page renders it unenforceable.”
The Court also makes quick work of her breach of contract claim. Plaintiff alleges the client relationship agreement expressly required Merrill Lynch to pay her a “reasonable” rate. Though true, she fails to allege any facts indicating that the rates she received were not reasonable. The Court likewise dismisses her suitability claim. There is no private right of action for violation of the suitability standards imposed by SEC regulations. The Court dismisses her claim for negligence, which it characterizes as simply a reconfiguration of her suitability claim. Finally, for the same reasons, her claim under the Massachusetts consumer protection statute is dismissed as being duplicative of her suitability claim. Accordingly, the Court grants the motion to dismiss without prejudice.
(J. Komie: This case has holdings that may be useful to firms defending sales practice claims. While the claims are hardly novel, the relevant case law is comparatively modest since most sales practice disputes are heard in arbitration.)
(SOLA Ref. No. 2020-27-07)
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