Barnes & Noble ‘Browsewrap’ Terms of Use Bites the Dust

Consumers are not bound to arbitrate claims against companies, in this case Barnes & Noble bookstores, which use online “browsewrap” terms of use agreements to spell out arbitration agreements that consumers may never read.

The 9th U.S. Circuit Court of Appeals Monday rejected Barnes & Noble Inc’s motion to compel arbitration by Kevin Nguyen, who tried to buy two deeply discounted its Nook Touchpads in 2011 after the bookseller dropped the discontinued HP product as a failed competitor to Apple’s iPad.  Nguyen simply had insufficient notice of the terms of his attempted purchase.

Barnes & Noble liquidated its Touchpads at “fire sale” prices and Nguyen ordered two but the bookseller cancelled his order due to overwhelming demand.  Nguyen sued in 2012 in a consumer class action, claiming unfair and deceptive business practices.

Barnes & Noble moved the state case to federal court and sought to compel Nguyen to arbitrate his claim, pointing to its arbitration agreement terms in its website’s Terms of Use.

But Nguyen said he never read or clicked on the terms of use agreement, no was he asked to confirm his agreement.  Instead, Barnes & Noble stated on the site that by creating an account or making a purchase, consumers are deemed to have accepted the terms.

“Nguyen did not enter into Barnes & Noble’s agreement to arbitrate,” wrote Judge John Noonan.  Use of the browsewrap gave him insufficient notice of the terms of use agreement, Noonan said.

Contracts on the internet come in two basic forms: “clickwrap,” which requires consumers to click an “I agree” box when presented with terms and conditions, while a “browsewrap” agreement posts a hyperlink to the agreement and does not require consumer assent.

“Were there any evidence in the record that Nguyen had actual notice of the Terns of Use or was required to affirmatively acknowledge the Terms of Use before completing his online purchase, the outcome of this case might be different,” Noonan said.

Case:  Nguyen v. Barnes & Noble, No. 12-56628


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