U.S. Court of Appeals for the Ninth Circuit
U.S. Court of Appeals for the Ninth Circuit (Jason Doiy / The Recorder)

SAN FRANCISCO — The U.S. Court of Appeals for the Ninth Circuit has refused to enforce a so-called “browsewrap” arbitration agreement incorporated into the website of Barnes & Noble Inc. against customers who claim the bookseller reneged on their purchases of discounted computer tablets.

Barnes & Noble did not take adequate steps to assure its customers were aware of an arbitration agreement tucked in the website’s terms of use, a unanimous three-judge panel ruled Monday. The panel affirmed the 2012 decision of the U.S. District Court for the Central District of California and denied Barnes & Noble’s motion to compel arbitration.

“The onus must be on the website owners to put users on notice of the terms to which they wish to bind consumers,” Judge John Noonan wrote for the circuit panel. “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.”

Cooley partner Michelle Doolin argued for Barnes & Noble. Gretchen Carpenter of Strange & Carpenter in Los Angeles argued for the plaintiffs.

The bookstore chain attempted to enforce the agreement after it was hit with a false advertising class action in 2012. Name plaintiff Kevin Nguyen sued the retailer for misrepresentation after he tried to purchase two discounted Hewlett-Packard Inc. Touchpads on the Barnes & Noble website and received email confirmation, only to be informed the following day that the retailer was out of stock. In response, Barnes & Noble argued its customers were bound to arbitration under terms of use available via hyperlink at the bottom of every page of the company’s website.

Such agreements, which do not require users to click an “I agree” box or otherwise indicate assent, are known as “browsewrap” agreements. Barnes & Noble argued its customers consented to arbitration simply by using the website.

The panel disagreed. Nguyen did not read the agreement, or even click on the link, Noonan noted. And Barnes & Noble did not give him reasonable notice to click simply by placing the hyperlink in close proximity to buttons required to complete the purchase, ruled the panel, which included Judge Kim Wardlaw and U.S. District Judge Roslyn Silver of Arizona sitting by designation.

“In light of the lack of controlling authority on point, and in keeping with courts’ traditional reluctance to enforce browsewrap agreements against individual consumers,” Noonan wrote, “we therefore hold that … even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.”

Contact the reporter at mkendall@alm.com.