Browsewrap Agreement Held Unenforceable – Website Designers Take Note!

Nghiem v Dick's Sporting Goods, Inc.

, No. 16-00097 (C.D. Cal. July 5, 2016), the Central District of California held browsewrap terms to be unenforceable because the hyperlink to the terms was "sandwiched" between two links near the bottom of the third column of links in a website footer. Website developers – and their lawyers – should take note of this case, part of an emerging trend of judicial scrutiny over how browsewrap terms are presented. Courts have, in many instances, refused to enforce browsewraps due to a finding of a lack of user notice and assent. In this case, the most recent example of a court's specific analysis of website design, a court suggests that what has become a fairly standard approach to browsewrap presentment fails to achieve the intended purpose.

In Nghiem, the plaintiff brought claims under the Telephone Consumer Protection Act (TCPA) seeking statutory damages and an order certifying a class action. The defendant Dick's Sporting Goods (DSG) moved to compel arbitration based upon the DSG's website terms of use. The court denied the defendant's motion, ruling that the plaintiff had no knowledge of the website terms and was not bound by the arbitration clause contained in DSG's browewrap agreement.

The terms of use on DSG's website were not presented in the typical clickthrough arrangement, where users are expressly presented with and required to assent to the terms before completing a purchase or registration. Rather, DSG's terms were presented as a browsewrap agreement, where a website's terms and conditions are posted on the website via a hyperlink at the bottom of the screen and users are presumed to manifest assent to the terms by use of the website.

The district court noted that browsewrap agreements are enforced with "reluctance," and only when a consumer has "actual or constructive knowledge of a website's terms and conditions." Interestingly, DSG argued that because the plaintiff was an attorney whose former firm handled TCPA cases (including litigation against DSG), he should be charged with knowledge of the terms and arbitration clause. The court rejected the argument that the plaintiff should be deemed to have actual knowledge of its terms based upon his vocation:

"[A]ctual knowledge is not something to be 'safely assumed,' as Defendants would have it, based on a plaintiff's occupation. Instead, Defendants were required to put forth 'evidence' that Plaintiff had 'actual knowledge of the agreement' at...