To Click Or Not To Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

Kevin Khoa Nguyen v. Barnes & Noble Inc., 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bind a consumer to an arbitration clause found in an online terms of use agreement not affirmatively "click accepted" by the consumer but readily accessible through a hyperlink at the bottom left of each page on the subject website.

The case arose from a "fire sale" by defendant Barnes & Noble of certain discontinued Hewlett Packard TouchPads. Plaintiff Nguyen had ordered two of the TouchPads, but received a notice from Barnes & Noble the following day that his order had been cancelled due to unexpectedly high demand. Nguyen sued Barnes & Noble in California Superior Court on behalf of himself and a putative class, arguing that he was forced to buy a more expensive tablet instead.

Barnes & Noble, after removing the suit to federal court, moved to compel arbitration under the Federal Arbitration Act, arguing that, by using the Barnes & Noble website, Nguyen had agreed to an arbitration clause contained in Barnes & Noble's Terms of Use. Nguyen responded that he could not be bound to the arbitration clause because he had no notice of and did not consent to the Terms of Use. Barnes & Noble countered that the placement of the Terms of Use hyperlink on its website had given Nguyen constructive notice of the arbitration clause.

The district court agreed with Nguyen, Barnes & Noble appealed, and the Ninth Circuit affirmed.

We have previously surveyed the law in this area here (regarding the Nguyen district court decision) and here (regarding other decisions involving online arbitration clauses). The Ninth Circuit's opinion in Nguyen is generally consistent with the existing caselaw, which suggests that, absent evidence of affirmative consent, courts are reluctant to find that parties—especially consumers—are bound by arbitration clauses contained in online terms of use agreements.

In Nguyen, it was established that Barnes & Noble made available a hyperlink to its Terms of Use at the bottom left corner of each page on its website. Further, on each page of the website's online checkout process, Barnes & Noble presented, underlined and in green type, a hyperlink to its Terms of Use. However, it was apparently undisputed that Nguyen had neither clicked on the Terms of Use hyperlink nor actually read the Terms of Use.

To determine whether a valid arbitration clause exists, courts apply ordinary state...