Ninth Circuit Opens Door For Consumers to Avoid Arbitration

August 25, 2014 by

Magnifying Glass Over Contract PapersOn August 18, 2014, the 9th Circuit Court of Appeals issued an opinion in Nguyen v. Barnes & Noble, in which the Court affirmed a district court order that denied the defendant’s motion to compel arbitration.

The plaintiff, Nguyen, filed a lawsuit in California Superior Court on behalf of himself and a putative class of consumers whose HP Touchpad orders had been cancelled.  Barnes & Noble removed the action to federal court and moved to compel arbitration under the Federal Arbitration Act (“FAA”) arguing that Nguyen was bound by the arbitration agreement on the Barnes & Noble website. The issue before the 9th Circuit was whether Nguyen, by merely using Barnes & Noble’s website, agreed to be bound by the Terms of Use, even though Nguyen was never prompted to agree to the Terms of Use and never in fact read them.

The Court ruled that “browsewrap” Terms of Use, in which a visitor to a website is not required to assent to the Terms of Use and indeed may never see the Terms of Use, did not create a binding agreement to arbitrate because there was no evidence Nguyen had sufficient notice of Barnes & Noble’s Terms of Use.  Indeed, the Court found that there was no evidence that Nguyen had “actual knowledge” of the agreement.  The Court explained that where a website makes its Terms of Use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on – without more – is insufficient to give rise to constructive notice.

Keith Dubanevich
Keith is an accomplished trial, appellate, and healthcare lawyer with over 30 years of experience in more than a dozen different jurisdictions around the country. With a focus on complex dispute resolution, with particular emphasis in the healthcare industry, Keith is adept at handling multi-state and internal antitrust cases, consumer litigation, and securities disputes. In healthcare, he has handled peer review disputes, partnership and incorporation matters, and billing investigations. Keith has led internal investigations for public entities as well as for not-for-profit organizations. Keith's clients value his keen instincts in court and his ability to delve into complex legal issues while never losing sight of the overall strategy of a case. During his time at the Oregon Department of Justice as Associate Attorney General and Chief of Staff, Keith led the creation of a civil rights unit, managed securities litigation including multiple cases against financial services companies, and supervised antitrust investigations and prosecutions. He was also involved with the adoption of legislation that expanded the Unlawful Trade Practices Act and legislation that imposed a mediation requirement prior to non-judicial foreclosures.

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