Can someone be required to arbitrate—and waive any right to proceed as a class action in arbitration—merely by using a web site? No, according to the Ninth Circuit in Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (Aug. 18, 2014).
Barnes & Noble launched an online “firesale” of discontinued Hewlett Packard tablet computers. Kevin Nyugen ordered two through the Barnes & Noble web site and received an e-mail confirmation of his transaction. After Barnes & Noble realized it had sold far more of the tablets that it had available, it sent e-mails to purchasers, including Nyugen, informing them that their orders had been cancelled. Nyugen filed suit in California under various state law theories on behalf of himself and a putative class of others whose orders were canceled. Barnes & Noble removed the case to federal court and moved to compel arbitration and to enforce a purported class action waiver.
The Ninth Circuit summed up its view with this common-sense principle: “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.”
One of the fairly remarkable aspects of the Nyugen case is the acknowledgment of the Ninth Circuit that the outcome might have been different if Nyugen had actual notice of the terms or if Barnes & Noble had done enough to put Nyugen on inquiry notice of the terms. In other words, Barnes & Noble could have forced Nyugen to arbitrate and could have procured a class action waiver merely by using a clickwrap agreement—or even, perhaps, by using a browsewrap agreement coupled with explicit notice that the user would be bound by the terms.
The lesson here is that it may not take much for companies engaged in internet commerce to obtain a potentially big benefit. Obtaining a web site user’s affirmative, active consent to terms may allow companies to steer disputes into arbitration and keep out of court, while avoiding class actions. One mouse click could make a huge difference.