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Valparaiso Univ. Law School

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Monday, August 25, 2014

Browsewrap Decision out of the Ninth Circuit

HP_TouchPad
http://www.flickr.com/photos/
traftery/5532966191/ 

Towards the end of 2011, Barnes & Nobles (B & N) decided to liquidate its inventory of HP Touchpads (left), by offering them for sale at deep discounts at a "fire sale."  Kevin Khoa Nguyen (Nguyen) acted quickly to take advantage of this opportunity and purchased two units through the B & N website.  He first received an e-mail confirmation of the transaction and then an e-mail cancellation of the transaction due to unexpectedly high demand.

Nguyen sued and attempted to do so on behalf of a class of plaintiffs who had had their HP Touchpad purchases cancelled.  B & N responded in the now-expected it manner.  Pointing to the link to its Terms of Use, visible on multiple pages visited by Mr. Nguyen, B & N moved to compel arbitration, which in accordance with its Terms of Use (the familiar story continues), requires that claims be adjudicated on an individual basis with no possibility of class actions or class arbitration.

Nguyen argued that he did not read or otherwise have notice of B & N's terms and did not assent to them.  The District Court agreed and denied B & N's motion to compel arbitration.  In Nguyen v. Barnes & Noble Inc., the Ninth Circuit affirmed.  In so doing, the Ninth Circuit began by explaining the difference between clickwrap and browsewrap contracts:

Contracts formed on the Internet come primarily in two flavors: “clickwrap” (or “click-through”) agreements, in which website users are required to click on an “I agree” box after being presented with a list of terms and conditions of use; and “browsewrap” agreements, where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen. 

Wrap ContractsHere, we are dealing with a browsewrap agreement, which the Ninth Circuit subjects to a more searching inquiry than clickwrap.  According to the Ninth Circuit, clickwrap requires consumers to affirmatively consent to an agreement, whereas with browsewrap, they are simply given notice that their transaction is subject to an agreement.  Whether or not that notice is effective, says the Court, depends on the facts of the case.  But in cases such as this one, where Nguyen never clicked on the links or otherwise had an opportunity to see B & N's terms of use, he had neither actual nor constructive notice of the terms and thus could not have agreed to them.  

Over on the Technology and Marketing Law Blog, Venkat Balasubramani has a great post on this case called "What's a Browsewrap? The Ninth Circuit Sure Doesn't Know -- Nguyen v. Barnes & Noble.  The post is less snarky than it might appear (or much more so), for as Eric Goldman's contribution to the post makes clear, nobody is able to draw sufficiently clear distinctions between clickwrap and browsewrap.  Goldman suggests that the time has come to retire the clickwrap/browsewrap language entirely.  Fortunately, our readers are far better informed than most courts about wrap contracts!

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Comments

I feel like I am missing something - how was this not 12b(6)'d instead of bothering with whether or not the case should go to arbitration?

Posted by: Confused | Aug 25, 2014 10:22:27 AM

Dear Confused,

Why 12(b)(6)? Plaintiff clearly states a claim, so a motion to dismiss would fail, and if B & N had filed a motion to dismiss, it would likely be accepting jurisdiction in federal court, waiving its right to file a motion to compel arbitration and perhaps also its objections to class litigation.

Posted by: Jeremy Telman | Aug 25, 2014 4:00:23 PM

Good point Jeremy, and hence the "Confused" moniker. I apparently was mistaking a motion for summary judgment, which would be appropriate, with a 12(b)(6). Your point on accepting jurisdiction is well made.

Posted by: Confused | Sep 5, 2014 9:27:22 AM

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