Recently, the Ninth Circuit denied a website owner’s motion to enforce the website’s Terms of Use because the website did not provide reasonable notice of its Terms of Use, the user was never prompted to assent to the Terms of Use and never in fact read them.

In August 2011, Kevin Nguyen tried to buy two HP Touchpads from Barnes & Noble.  At that time, the Touchpad had been discontinued and retailers across the country were selling off their remaining stock at fire sale prices.  Nguyen ordered his touchpads from Barnes & Noble’s website and received email confirmation of the sale. The following day, however, Barnes & Noble sent another email citing unexpectedly high demand and cancelling the order.

Nguyen responded to his cancelled order by filing a putative class action lawsuit. Nguyen claims he missed his chance to get his bargain Touchpads elsewhere because he thought he was getting them from Barnes & Nobles.  As a result, he was “forced” to buy a more expensive substitute tablet.

Barnes & Noble moved to have the case sent to arbitration, pursuant to its website’s Terms of Use.  The website’s Terms of Use are available via a “Terms of Use” hyperlink which appears underlined and set in green typeface located in the bottom left-hand corner of every page on the Barnes & Noble website.

This type of “browsewrap” agreement is generally enforceable, although courts are reluctant to enforce them against individual consumers.  A user must have actual or constructive knowledge of a website’s terms and conditions in order for the agreement to be valid in the absence of an affirmative manifestation of assent by the user (e.g., when the user doesn’t have to click an “I Agree” button).

Barnes & Noble’s website could have given Nguyen actual notice of the Terms of Use by, for example, including a check box confirming that users both read and agreed to the website’s Terms of Use as part of the check-out process, or including a notice that submitting an order indicated agreement to the Terms of Use.

In the absence of such actual notice, Nguyen may have had constructive notice if the design and content of the website and the Terms of Use webpage made the “Terms of Use” hyperlink conspicuous and visibly located.  In this case, even though the contrasting text of the hyperlink was considered conspicuous, the absence of an explicit notice referencing the Terms of Use during the check-out process or elsewhere on the website led to the denial of Barnes & Noble’s motion to enforce its Terms of Use.

The court placed the burden on website owners to give users notice of the site’s terms and conditions, especially if the users are individual consumers.  Thus, website owners should ensure that users of their site are at least given explicit notice of such terms, or better still, required to affirmatively click a button or check a box indicating agreement to the terms.

The full opinion can be found here: http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/18/12-56628.pdf.