Federal District Court Declines to Enforce Browsewrap Arbitration Agreement

Arbitration

On August 28, the U.S. District Court for the Central District of California held that a retailer's so-called browsewrap agreement failed to provide the consumer with constructive notice of an agreement to arbitrate disputes and declined to enforce arbitration. Nguyen v. Barnes & Noble, Inc., No 12-0812, WL 3711081 (C.D. Cal. Aug. 28, 2012). The consumer filed suit under New York's and California's unfair competition and false advertising laws and other state statutes, alleging that the retailer canceled his online purchase of two sale items, causing him to have to later purchase substitute products at more expense. The retailer responded that by making the purchase through the company's website, the consumer accepted the website's Terms of Use, which contained an agreement to arbitrate any claims arising out of the use of that website. On the retailer's motion to compel arbitration, the court explained that the website's browsewrap agreement stated that any user of the site is deemed to have accepted its terms by, among other things, making a purchase. The court held that the retailer cannot show that the consumer had constructive notice of the Terms of Use because the site did not require that the consumer affirmatively assent to the terms. The court denied the retailer's motion to compel arbitration and allowed the litigation to proceed.