Barnes & Noble Browsewrap Terms of Use Get Torched

Barnes & Noble, a bookseller with both an online presence and brick and mortar stores, tried to unload discontinued Hewlett-Packard Touchpad tablet computers through its website.  Barnes & Noble underestimated the demand, resulting in its cancellation of Kevin Khoa Nguyen’s order of two Touchpads.  Nguyen was forced to purchase substitute technology at a higher price.  Nguyen brought a class action suit against Barnes & Noble, alleging deceptive business practices and false advertising under both California and New York law. 

Barnes & Noble argued that its website’s Terms of Use required Nguyen to arbitrate his claim.  The district court ruled that Barnes & Noble did not provide reasonable notice of its Terms of Use to Nguyen and that Nguyen did not unambiguously consent to the arbitration provision.  The Ninth Circuit Court of Appeals agreed.  Website owners cannot rely on Terms of Use hyperlinks posted at the bottom of the page and near the checkout button to put consumers on notice of the content of the Terms of Use.

Website Terms of Use are either clickwrap or browsewrap.  For clickwrap agreements, the user clicks on an “I agree” box to consent to the Terms of Use.  For browsewrap agreements, the website’s Terms of Use are available through a hyperlink, which is usually posted at the bottom of the screen. 

The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.

(Opinion pdf page 10).

In this case, Nguyen did not click on the Terms of Use hyperlink.  He did not read the Terms of Use.  There was no evidence that he had actual knowledge of the Terms of Use.

Where, 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. 

On the other hand, where the website contains an explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound, courts have been more amenable to enforcing browsewrap agreements.  In short, the conspicuousness and placement of the ‘Terms of Use’ hyperlink, other notices given to users of the terms of use, and the website’s general design all contribute to whether a reasonably prudent user would have inquiry notice of a browsewrap agreement.

(Opinion pdf pages 12-13).

Barnes & Noble argued that by placing of its Terms of Use hyperlink at the bottom left corner of every page and near the checkout button, it put Nguyen on constructive notice of the Terms of Use.  The Ninth Circuit disagreed.

But the proximity or conspicuousness of the hyperlink alone is not enough to give rise to constructive notice, and Barnes & Noble directs us to no case law that supports this proposition.

In light of the lack of controlling authority on point, and in keeping with courts’ traditional reluctance to enforce browsewrap agreements against individual consumers, we 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, 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. 

(Opinion pdf pages 14 and 15).

This case is Nguyen v. Barnes & Noble Inc., No. 12-56628, Ninth Circuit Court of Appeals.

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