Browsewrap Agreements Must Be Brought to Users’ Attention
In Online Terms can be Binding, even if You don’t have to Click!, I compared the enforceability of clickwrap and browsewrap agreements. This post discusses Nguyen v. Barnes & Noble, in which the U.S. Court of Appeals for the Ninth Circuit recently examined notice requirements for browsewrap agreements to be enforced.
Plaintiff Nguyen filed a class action lawsuit against Barnes & Noble because it had cancelled his online order for a Hewlett-Packard Touchpad tablet computer.
Defense Based on Arbitration Provision
B&N stated that plaintiff’s suit should be dismissed because the website’s Terms of Use, like many other browsewrap agreements, included a mandatory arbitration provision. Both the trial court and the Ninth Circuit held that the arbitration provision should not be enforced.
The Ninth Circuit noted the following.
- There was no evidence that the plaintiff had actual knowledge of the Terms of Use.
- There was a conspicuous link to the Terms of Use on each page of B&N’s website. However, B&N did not notify the plaintiff that he needs to agree to the Terms of Use. As a result, he did not have constructive notice of the Terms.
- Because there was neither actual knowledge nor constructive notice of the Terms of Use, they would not be enforced.
Notice Required to Enforce Browsewrap Agreements
The bottom line for website owners who want their online terms to be enforced:
- Clickwrap agreements (users must click to signify agreement with online terms) are routinely enforced.
- For browsewrap agreements to be enforced, they must be brought to users’ attention.
Update: California Court Adopts Nguyen Analysis
On March 17, 2016, in Long v. Provide Commerce, the California Court of Appeal for the Second District adopted the Ninth Circuit’s analysis in refusing to enforce a mandatory arbitration provision because Terms of Use hyperlinks were not sufficiently conspicuous to put a reasonably prudent Internet consumer on inquiry notice.
Update: Uber App Mandatory Arbitration Provision Not Enforced
On July 2, 2016, in Meyer v. Kalanick and Uber Technologies, the U.S. District Court for the Southern District of New York refused to enforce the mandatory arbitration provision included in Uber’s Android app Terms of Service in October 2014, holding that the parties had not entered into an agreement pursuant to those terms. The court’s opinion was based on the following characteristics of Uber’s “sign-in wrap” agreement, i.e., an agreement that ostensibly is made at the time a user signs in, rather than when a user browses site (browsewrap) or clicks to accept terms (clickwrap).
- After entering login credentials on the first sign-in screen, the user was sent to a second screen to provide payment information and register to use Uber.
- Beneath the registration and payment buttons, in a much smaller font, was a marginally-readable statement that “By creating an Uber account, you agree to the Terms of Service & Privacy Policy.” “Terms of Service & Privacy Policy” was hyperlinked.
- A user could complete the registration process without following the hyperlink (which is what the plaintiff did). And even if a user did follow the hyperlink, the user would need to follow another hyperlink to arrive at the Terms and Conditions.
- Furthermore, the Terms and Conditions were nine pages in length, and the mandatory arbitration provision did not appear until the bottom of the seventh page.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
