For that reason, the appeals court in Nguyen v. Barnes & Noble, Inc. affirmed the district court’s denial of the company’s motion to compel individual arbitration of the named plaintiff’s class action claims. This ruling demonstrates that, even though the U.S. Supreme Court has affirmed the enforceability of class action waivers in arbitration agreements, proof of a contractual agreement to arbitrate is still required.
The Ninth Circuit agreed with the plaintiff. It characterized the company’s terms as a “browsewrap” agreement, where the terms and conditions of use are posted on the website through a hyperlink at the bottom of the screen. It contrasted this with a “clickwrap” agreement, in which website users are required to click on an “I agree” box after being presented with the terms.
The appeals court acknowledged the longstanding general principle that failure to read a contract does not relieve a party of its terms, but ruled that “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.” The court emphasized that “consumers cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.”
The Nguyen opinion is a potent reminder that even after the Supreme Court upheld the validity of class action waivers in AT&T Mobility LLC v. Concepcion and American Express Co. v. Italian Colors Restaurants, courts still require proof that an agreement to arbitrate was formed contractually. Even the Concepcion majority noted that “[s]tates remain free to take steps addressing the concerns that attend contracts of adhesion—for example, requiring class-action waiver provisions in adhesive agreements to be highlighted,” as long as such steps do not conflict with the FAA or frustrate its purpose of ensuring that arbitration agreements are enforced according to their terms.