Ninth Circuit Affirms Barnes & Noble Can’t Use Browsewrap Agreement to Compel Arbitration

Published On August 20, 2014 | By Jeff Landis | Litigation
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On Monday, August 18, a three-judge panel of the Ninth Circuit struck a blow to browsewrap agreements, affirming a district court’s denial of Barnes & Noble’s motion to compel arbitration in Nguyen v. Barnes & Noble Inc., No. 12-56628 (9th Cir. August 18, 2014) a putative class action alleging that Barnes & Noble engaged in deceptive business practices and false advertising in connection with its sale of HP TouchPad tablets. Barnes and Noble had sought to compel arbitration based on a provision in its website Terms of Use requiring any claims against the company to be arbitrated (on an individual basis) before the American Arbitration Association (the “Arbitration Provision”). The Terms of Use on the Barnes & Noble website were part of a “browsewrap” agreement, where the terms were accessible via a hyperlink on each web page.

According to the panel, the issue before it was whether plaintiff “by merely using Barnes & Noble’s website, agreed to be bound by the Terms of Use, even though [plaintiff] was never prompted to assent to the Terms of Use and never in fact read them.” The court concluded he was not. First, pointing to general contract principles, the panel noted that the plaintiff did not receive actual notice of the arbitration provision and therefore did not manifest assent to it. In reaching this conclusion, the court differentiated between browsewrap agreements such as the one used by Barnes and Noble and “clickwrap” or “click through” agreements in which website users are, for example, required to click an “I agree” box after being presented with a list of terms and conditions of use. Specifically, the panel explained that “[w]ere there any evidence in the record that [plaintiff] had actual notice of the Terms of Use or was required to affirmatively acknowledge the Terms of Use before completing his online purchase, the outcome of this case might be different.”

After finding that there was no evidence that plaintiff had actual knowledge of the Arbitration Provision, the panel next evaluated whether Barnes & Noble’s website put “a reasonably prudent user on inquiry notice of the terms of the contract,” so as to render the Arbitration Provision enforceable. On that issue, the panel explained that “the conspicuousness and placement of the Terms of Use hyperlink, other notices given to users of the terms of use, and the website’s general design all contribute to whether a reasonably prudent user would have inquiry notice of a browsewrap agreement.” Barnes & Noble argued that the placement of the Terms of Use in the bottom left-hand corner of every page of the website, and its close proximity to the buttons a user must click to complete an online purchase was enough to place a reasonably prudent user on constructive notice. The panel rejected this argument, concluding that “where a website makes it terms of use available via a conspicuous hyperlink on every page of the website, but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even the close proximity of the hyperlink to relevant buttons the user must click on-without more-is insufficient to give rise to constructive notice.” The panel also disregarded Barnes & Noble’s argument that plaintiff’s familiarity with other websites governed by browsewrap agreements, including his personal website, gave rise to an inference of constructive notice. Finally, the panel affirmed the district court’s conclusion that plaintiff was not equitably estopped from avoiding the Arbitration Provision in the Terms of Use because he relied on the choice of law provision in those same terms in his complaint.

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About The Author

Jeff’s practice focuses on representing clients in litigation and government investigations, with a particular focus on defending companies in complex class action lawsuits. He also assists clients in responding to formal investigations and informal inquiries conducted by the FTC, DOJ and states’ Attorney General Offices. Jeff has extensive experience in all aspects of civil litigation, including serving as trial counsel for both plaintiffs and defendants in matters pending before judges, juries, and arbitration panels.