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Nguyen v. Barnes & Noble Inc.

United States Court of Appeals, Ninth Circuit

August 18, 2014

KEVIN KHOA NGUYEN, an individual, on behalf of himself and all others similarly situated, Plaintiff-Appellee,
v.
BARNES & NOBLE INC., Defendant-Appellant

Argued and Submitted May 16, 2014, Pasadena, California

Page 1172

Appeal from the United States District Court for the Central District of California. D.C. No. 8:12-cv-00812-JST-RNB. Josephine L. Staton, District Judge, Presiding.

SUMMARY[**]

Arbitration

The panel affirmed the district court's denial of Barnes & Noble, Inc.'s motion to compel arbitration and to stay court proceedings pursuant to an arbitration agreement contained in Barnes & Noble's website's Terms of Use, arising from a putative class action brought by a plaintiff whose order on the Barnes & Noble website for a Hewlett-Packard Touchpad was cancelled.

The Terms of Use on the Barnes & Noble website was part of a " browsewrap" agreement, where the website's terms and conditions of use were generally posted on the website via a hyperlink at the bottom of the screen.

The panel held that the plaintiff website user had insufficient notice of Barnes & Noble's Terms of Use, and thus did not enter into an agreement with Barnes & Noble to arbitrate his claims. The panel held that there was no evidence that the website user had actual knowledge of the agreement. The panel further held 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. The panel also held that the district court did not abuse its discretion in rejecting Barnes & Noble's estoppel argument.

Michelle C. Doolin (argued), Leo P. Norton, and Erin E. Goodsell, Cooley LLP, San Diego, California, for Defendant-Appellant.

Gretchen Carpenter (argued), and Brian R. Strange, Strange & Carpenter, Los Angeles, California, for Plaintiff-Appellee.

Before: John T. Noonan and Kim McLane Wardlaw, Circuit Judges, and Roslyn O. Silver, Senior District Judge.[*]

OPINION

Page 1173

NOONAN, Circuit Judge.

Barnes & Noble, Inc. (" Barnes & Noble" ) appeals the district court's denial of its motion to compel arbitration against Kevin Khoa Nguyen (" Nguyen" ) pursuant to the arbitration agreement contained in its website's Terms of Use. In order to resolve the issue of arbitrability, we must address 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 assent to the Terms of Use and never in fact read them. We agree with the district court that Barnes & Noble did not provide reasonable notice of its Terms of Use, and that Nguyen therefore did not unambiguously manifest assent to the arbitration provision contained therein.

We also agree with the district court that Nguyen is not equitably estopped from avoiding arbitration because he relied on the Terms of Use's choice of law provision.

We therefore affirm the district court's denial of Barnes & Noble's motion to compel arbitration and to stay court proceedings.

I. Background

A.

The underlying facts are not in dispute. Barnes & Noble is a national bookseller that owns and operates hundreds of bookstores as well as the website < www.barnesandnoble.com> . In August 2011, Barnes & Noble, along with other retailers across the country, liquidated its inventory of discontinued Hewlett-Packard Touchpads (" Touchpads" ), an unsuccessful competitor to Apple's iPad, by advertising a " fire sale" of Touchpads at a heavily discounted price. Acting quickly on the nationwide liquidation of Touchpads, Nguyen purchased two units on Barnes & Noble's website on August 21, 2011, and received an email confirming the transaction. The following day, Nguyen received another email informing him that his order had been cancelled due to unexpectedly high demand. Nguyen alleges that, as a result of " Barnes & Noble's representations, as well as the delay in informing him it would not honor the sale," he was " unable to obtain an HP Tablet during the liquidation period for the discounted price," and was " forced to rely on substitute tablet technology,

Page 1174

which he subsequently purchased . . . [at] considerable ...


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