Ninth Circuit Affirms Decision Not To Enforce Browsewrap Arbitration Agreement

Arbitration Digital Commerce

On August 18, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s decision not to enforce a retailer’s online “browsewrap” arbitration agreement because the retailer failed to provide adequate constructive notice. Nguyen v. Barnes & Noble Inc., No. 12-56628,2014 WL 4056549 (9th Cir. Aug. 18, 2014). The consumer filed suit alleging that the retailer’s cancellation of his online purchase of two sale items caused him to buy substitute products at a greater expense. The retailer responded that by making the purchase through the company’s website, the consumer accepted the website’s Terms of Use, which contained an agreement to arbitrate any claims arising out of use of the website. Although this “browsewrap” agreement provided that any user of the website was deemed to have accepted the agreement’s terms by, among other things, making a purchase, the district court held that the consumer did not have constructive notice of the Terms of Use because the site did not require that the consumer affirmatively assent to them. The Ninth Circuit agreed, holding that “where a website makes its 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 close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.” The court also rejected the retailer’s argument that the customer had constructive notice of the browsewrap terms based on his prior experience with browsewrap agreements found on other sites, including some popular social media sites.