Insufficient Notice from Website Terms and Conditions Agreement Prevents Arbitration

It is likely that you have encountered a webpage terms and conditions agreement if you have used the internet.  Some are prompted upon visiting the site, while others are hidden in small text off in the bottom corner.  In Nguyen v. Barnes & Noble (763 F.3d 1171), the Ninth Circuit addressed the sufficiency of notice through Barnes & Noble’s “browsewrap” terms and conditions agreement and whether the plaintiff was bound by the arbitration agreement contained within. In 2011, B&N offered to sell their Touchpad tablets at a highly discounted price due to the model being discontinued.  Nguyen purchased two, but his order was cancelled because of the unexpected high demand.  He filed a class action against B&N alleging violations of deceptive business practices and false advertising under both California and New York law.  B&N moved to compel arbitration pursuant to the Federal Arbitration Act, arguing that Nguyen was bound by the website’s use agreement.

The website Nguyen visited used a “browsewrap” agreement.  It did not require assent, but defined assent as use of the site.  A hyperlink located at the bottom of B&N’s webpage brought the user to the agreement, but Nguyen neither clicked on the hyperlink, nor read the agreement.

The Ninth Circuit explained the validity of a browsewrap agreement depends on notice.  Without actual notice, inquiry notice can be present determined by: (1) the design and content of the website, and (2) the specific agreement’s webpage.  Inconspicuous links hiding agreements will not be enforced, while explicit textual notice is more likely to be.  B&N argued the proximity and conspicuous of the hyperlink, the fact the link was on every B&N webpage and located next to purchase buttons, would place a reasonably prudent user on constructive notice.  The Court disagreed and held that the agreement will not be enforced against individual users unless it provides notice or requires affirmative action for assent.

B&N also argued that Nguyen should be equitably estopped because he ratified the agreement by relying upon the choice of law provision.  The Court rejected this argument, finding no precedent to support it.  The Court stated that B&N reaped the benefit of the choice of law provision it unilaterally adopted, not the plaintiff.

The Ninth Circuit affirmed the district court order denying the motion to compel arbitration.