Reported / Citable
Background
Gino Wilkins worked for Cruise, LLC — the autonomous vehicle ride-hailing service backed by General Motors — and was injured as a passenger in one of Cruise’s self-driving cars. Critically, he was off duty and riding as a paying customer, not as an employee, at the time of the accident. He sued Cruise LLC, GM Cruise Holdings LLC, and General Motors LLC in San Francisco Superior Court, asserting claims ranging from common carrier liability and negligence to strict product liability and breach of implied warranty.
Defendants moved to compel arbitration based on two agreements: (1) an arbitration clause in Wilkins’s employment contract, and (2) an arbitration clause in Cruise’s consumer Terms of Service, which Wilkins had assertedly accepted when he signed up for a Cruise riding account. The trial court denied the motion, finding that the Cruise app sign-up screen failed to give users reasonably conspicuous notice of the Terms of Service, and independently invoking the “third-party exception” of Code of Civil Procedure section 1281.2(c) — a provision allowing a court to decline arbitration when a non-signatory third party is also named in the suit and parallel proceedings would risk inconsistent rulings.
Defendants appealed. The question on appeal was whether the mobile app sign-up flow created an enforceable sign-in wrap agreement and whether the CCP §1281.2(c) exception applied to GM’s related entities.
The Court’s Holding
The First District reversed and ordered the trial court to compel arbitration. On the contract-formation question, the court classified Cruise’s signup flow as a “sign-in wrap” agreement — a hybrid between a clickwrap and browsewrap that notifies users of applicable terms while asking them to take some affirmative action (here, pressing a large orange arrow button). The court found the screen’s language — “By continuing, you agree to our Terms & Privacy Policy” — plus the orange hyperlinked text and the proceed button together gave Wilkins reasonably conspicuous notice of the Terms of Service, satisfying both prongs of the enforceability test: conspicuous notice and affirmative manifestation of assent. The trial court’s reliance on Herzog v. Superior Court (2024) was misplaced because that case involved materially less conspicuous disclosures.
On the §1281.2(c) third-party exception, the court held that the exception simply did not apply because Wilkins himself had alleged that every defendant — Cruise LLC, GM Cruise Holdings LLC, and General Motors LLC — acted as owner, agent, servant, employee, or joint venturer of each other, and that all causes of action were asserted identically against all defendants on the same operative facts. Under established authority, nonsignatory defendants who are alleged to be agents, alter egos, or affiliates of the signatory are entitled to enforce the arbitration clause and are not “third parties” for §1281.2(c) purposes. Wilkins’s attempt to dismiss his own agency allegations as mere boilerplate was unavailing — a party cannot disavow pleading choices that become inconvenient.
Key Takeaways
- A mobile app sign-in wrap screen is enforceable in California when it provides reasonably conspicuous, hyperlinked notice of Terms of Service and requires the user to take an affirmative action to proceed — even without a separate “I agree” checkbox.
- The Code of Civil Procedure §1281.2(c) third-party exception does not shield a plaintiff who pleads all defendants as agents, alter egos, or joint venturers of each other; those defendants can enforce the arbitration clause as intended third-party beneficiaries or under equitable estoppel principles.
- Companies that deploy “sign-in wrap” designs rather than explicit clickwrap checkboxes still face litigation risk under California law, but a clear, prominent disclosure on screen with a visible hyperlink — like Cruise’s orange-circle button with the Terms notice directly above it — will likely survive scrutiny.
- Employees who use an employer’s consumer-facing product off-duty may be bound by the consumer arbitration agreement in addition to any employment arbitration clause.
- Once a plaintiff forfeits an argument by failing to raise it in the trial court, it cannot be pressed on appeal — even an argument about what the defendant actually showed the user at the time of sign-up.
Why It Matters
California courts have wrestled for years with when an internet user is fairly bound by terms they were never asked to read. This decision is a significant win for companies that use sign-in wrap agreements — particularly in the ride-hailing and autonomous vehicle sectors — because it confirms that a prominent, colored notice paired with a forward-action button can establish the “reasonably conspicuous” threshold without requiring a separate assent checkbox. At a time when Cruise’s autonomous vehicle operations remain under regulatory and litigation scrutiny, the ruling also demonstrates how broad agency allegations in a complaint can have unintended consequences, locking plaintiffs into arbitration with every related corporate entity they chose to name.
For California practitioners, the case is a reminder that the §1281.2(c) third-party exception is narrower than it looks: it protects plaintiffs from being forced into arbitration with genuine strangers to the agreement, but it does not help when the plaintiff’s own complaint alleges that every named defendant is an agent or affiliate of the arbitration signatory. Transactional lawyers structuring ride-hailing, delivery, or autonomous technology platforms — where a consumer app might share corporate DNA with a fleet operator or OEM — should review how their entity structure maps onto their arbitration-clause language to ensure all related entities are captured as intended third-party beneficiaries.