Ninth Circuit Nixes “Browsewrap” Arbitration Agreement, Even Where Link Appeared Near Buttons

Yesterday the Ninth Circuit affirmed the denial of a motion to compel arbitration where the arbitration agreement was part of a “browsewrap” agreement.  Nguyen v. Barnes & Noble Inc., No. 12-56628, __ F.3d __ (N.D. Cal. Aug. 18, 2014). The motion arose in a putative class action relating to a cancelled order for a Hewlett-Packard Touchpad on the Barnes & Noble website.  Id. at *4.  The browsewrap agreement was contained in the site’s Terms of Use, which was available via a link at the bottom left-hand corner of every page of the website.  Id. at *5.  The Terms of Use link also appeared either directly below the relevant button a user must click on to proceed in the checkout process or just a few inches away.  Id. at *13.  (“Unlike a clickwrap agreement, a browsewrap agreement does not require the user to manifest assent to the terms and conditions expressly . . . [a] party instead gives his assent simply by using the website.”  Id. at *9-10 (citing Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362, 366–67 (E.D.N.Y. 2009).)

The panel held that the plaintiff had insufficient notice of the terms of use, and thus did not enter in an agreement to arbitrate. 

[W]here, as here, there is no evidence that the website user had actual knowledge of the agreement, the validity of the browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract. . . . Whether a user has
inquiry notice of a browsewrap agreement, in turn, depends on the design and content of the website and the agreement’s webpage. . . . Where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce the browsewrap agreement.

Id. at *11-12 (internal citations omitted). 

The court noted that there was no evidence that the plaintiff had actual knowledge of the agreement.  “[T]he proximity or conspicuousness of the hyperlink alone is not enough to give rise to constructive notice . . . .”  Id. at *14. 

[W]e therefore hold 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. While failure to read a contract before agreeing to its terms does not relieve a party of its obligations under the contract, Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 11 (1988), the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.  Given the breadth of the range of technological savvy of online purchasers, consumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.

Id. at * 15-16. 

Judges and Attorneys:

Before Circuit Judges John T. Noonan and Kim McLane Wardlaw and Senior District Judge Roslyn O. Silver, Senior District
Judge.  Judge Noonan delivered the opinion. 

Appeal from the Central District of California, Judge Josephine L. Staton presiding. 

Michelle C. Doolin (argued), Leo P. Norton, and Erin E. Goodsell, of Cooley LLP, San Diego, California, for Defendant-
Appellant.

Gretchen Carpenter (argued), and Brian R. Strange, of Strange & Carpenter, Los Angeles, California, for Plaintiff-Appellee.

By CHARLES H. JUNG

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