Nguyen v. Barnes & Noble, Inc.

Contract Law: Unless there is evidence that a user of a website obtained actual knowledge of the Terms of Use via the use of the website, the validity of notice provided by a browsewrap agreement is based on whether the use of the website would put a “reasonably prudent user” on notice, where sufficiency of notice will depend on the content and design of the website.

Kevin Nguyen (“Nguyen”) and two others attempted a purchase of two HP Touchpads from Barnes & Noble, Inc. however Nguyen’s and the others orders were canceled by Barnes & Noble due to higher than expected demand. Barnes & Noble successfully removed the action to federal court and moved to compel arbitration, arguing that arbitration was bound by the Terms of Use of the Barnes & Noble website. Barnes & Noble’s Terms of Service were available to website visitors via a “browsewrap agreement,” which made the Terms of Use available for the plaintiffs to have read via a hyperlink at the bottom of each page of the Barnes & Noble website. Nguyen contended that he never read the Terms of Use and cannot therefore be compelled into arbitration. The district court agreed with Nguyen and Barnes & Nobel appealed. The Ninth Circuit held that Nguyen was not provided with effective notice of Barnes & Noble’s Terms of Use. In its reasoning the panel stated that validity of notice provided by a browsewrap agreement is based on whether the use of the website would put a “reasonably prudent user” on notice, where sufficiency of notice will depend on the content and design of the website. As such, Nguyen was not provided with sufficient notice of Barnes & Noble’s Terms of Use and never created an agreement to arbitrate his claims. Therefore the district court is AFFIRMED.