## Facts

- Barnes & Noble ran an online “fire sale” of discontinued Hewlett–Packard Touchpads in August 2011.
- Kevin Khoa Nguyen ordered two Touchpads through Barnes & Noble’s website and received an email confirmation.
- Barnes & Noble later emailed Nguyen that the order was cancelled due to unexpectedly high demand.
- Nguyen alleged the cancellation and delayed notice prevented him from buying the tablets at the discounted price and caused him to purchase substitute technology at added cost.
- Nguyen filed a putative class action alleging deceptive business practices and false advertising under California and New York law.
- Barnes & Noble’s website used a browsewrap design: a “Terms of Use” hyperlink appeared in the bottom left corner of pages, including checkout pages, but users were not required to click, view, or affirmatively accept the terms.
- The Terms of Use included an arbitration clause and a New York choice-of-law provision.
- After removal to federal court, Barnes & Noble moved to compel arbitration under the FAA; the district court denied the motion, and Barnes & Noble appealed.

## Issues

1. Whether a consumer assented to an arbitration clause in browsewrap Terms of Use when the terms were available only through a footer hyperlink and the user was not prompted to assent and did not read them.
2. Whether the consumer was equitably estopped from avoiding arbitration because the complaint relied in part on New York law consistent with the Terms of Use choice-of-law clause.

## Decision

- The Ninth Circuit affirmed the order denying Barnes & Noble’s motion to compel arbitration and stay proceedings.
- Barnes & Noble failed to show Nguyen had actual or constructive notice of the Terms of Use sufficient to infer assent to arbitration.
- A conspicuous hyperlink on every page, without additional notice or any affirmative action tied to assent, did not create constructive notice even if near checkout controls.
- Nguyen was not equitably estopped from avoiding arbitration merely because he referenced New York law; his claims arose from consumer-protection statutes and the transaction, not from enforcement of the Terms of Use.

## Legal Principles

- Online arbitration provisions are enforceable only if ordinary contract formation requirements are met, including adequate notice and manifestation of assent.
- For browsewrap terms, when actual knowledge is absent, enforceability depends on whether the website places a reasonably prudent user on inquiry notice of the terms.
- Mere placement of a terms hyperlink (including in close proximity to purchase buttons) is insufficient to establish constructive notice when the site provides no textual warning that use or purchase signifies agreement and requires no affirmative assent.
- Equitable estoppel does not compel arbitration where the plaintiff’s claims do not depend on the contract containing the arbitration clause and the plaintiff has not sought to enforce that contract’s benefits.

## Conclusion

The Ninth Circuit held that Barnes & Noble could not compel arbitration because its browsewrap design did not provide sufficient notice of the Terms of Use or show unambiguous assent, and the plaintiff’s invocation of New York law did not estop him from contesting arbitration.


Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014)