## Facts

- Cynthia Hines, a New York consumer, bought a vacuum cleaner from Overstock.com through its website in January 2009.
- After returning the product, she received a refund minus a $30 restocking fee, which she alleged was not disclosed before purchase and conflicted with representations that returns would be cost-free.
- Hines filed a putative class action in federal court alleging breach of contract, fraud, and violations of New York General Business Law §§ 349 and 350.
- Overstock contended that all purchases were governed by website “Terms and Conditions” stating that site use constituted acceptance and requiring confidential arbitration in Salt Lake City, Utah, for disputes.
- The Terms and Conditions were presented in browsewrap form via a hyperlink located near the bottom of webpages; users were not required to click “I agree” or otherwise affirmatively accept the terms during checkout.
- Hines submitted an affidavit stating she did not see the Terms and Conditions or arbitration provision before purchase and learned of them only after the dispute arose.

## Issues

1. Whether a consumer formed an enforceable agreement to arbitrate and accept a Utah forum-selection clause when the terms were presented as browsewrap on a website.
2. Whether the website’s design provided the consumer actual or constructive notice sufficient to infer assent to the online Terms and Conditions.
3. If no agreement was formed, whether the court should stay or dismiss the action under the Federal Arbitration Act or transfer venue based on the asserted forum-selection clause.

## Decision

- The court denied Overstock’s motion to dismiss or stay the case pending arbitration.
- The court denied Overstock’s alternative motion to transfer venue to Utah.
- The court held Overstock failed to establish that Hines had actual or constructive notice of the browsewrap terms, so no mutual assent to arbitration or the forum-selection clause existed.
- On appeal, the Second Circuit affirmed the denial of arbitration (and denial of reconsideration) in a summary order.

## Legal Principles

- Contract formation requires mutual assent; online terms bind a user only if the user had actual or constructive notice and manifested assent.
- Clickwrap agreements (affirmative “I agree” type assent) are commonly enforceable; browsewrap terms are enforceable only when the user is given reasonable notice of the terms.
- A hyperlink to terms placed such that a reasonably prudent user can complete a transaction without seeing it does not provide constructive notice.
- Without proof of assent to an arbitration clause, the Federal Arbitration Act does not require a stay, dismissal, or compelled arbitration.
- A forum-selection clause in online terms is not enforceable against a user absent a showing that the user agreed to the underlying terms containing the clause.

## Conclusion

The court refused to enforce Overstock’s browsewrap arbitration and Utah forum-selection provisions because the site’s presentation did not provide reasonable notice and there was no showing of assent; the action therefore proceeded in federal court rather than arbitration or transfer to Utah.


Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009)