On December 20, 2019, the Ninth Circuit affirmed a Washington district court’s order denying Huuuge Inc.’s bid to arbitrate claims brought on behalf of a putative class of all smartphone users of its casino gaming application. The court held that the plaintiff did not have actual or constructive notice of the app’s terms and conditions, including a binding arbitration provision and class action waiver.

• Huuuge’s casino gaming app allows smartphone users to gamble with a limited number of free chips or with chips purchased through the app. After downloading the app and playing it for over a year, Plaintiff Sean Wilson sued Huuuge on behalf of a putative class for alleged violations of Washington state gambling and consumer protection laws.
• Huuuge moved to compel arbitration, asserting that Wilson had constructive notice of the app’s terms. Both the district court and the Ninth Circuit disagreed.
• The Ninth Circuit noted that online contracts fall into two broad categories: (1) “clickwrap” agreements that require users to affirmatively assent to terms and conditions before they can access services; and (2) “browsewrap” agreements that do not. Huuuge’s app was an unambiguous browsewrap agreement, in which users could choose to review the terms before downloading the app (after scrolling through multiple screens of text) or during game play (by clicking through the app’s setting menu).
• Quipping that “the user would need Sherlock Holmes’s instincts” to discover the app’s terms, the Ninth Circuit concluded that the app did not give reasonably prudent users constructive notice of the arbitration provision. The court rejected Huuuge’s argument that Wilson’s repeated use of the app placed him on constructive notice, observing that “[o]nly curiosity or dumb luck might bring a user to discover the Terms” since “there is no reason to assume users will click on the settings menu simply because it exists.”
• The Ninth Circuit also denied Huuuge’s request for additional discovery on whether Wilson had actual notice of the arbitration provision. The court concluded that Huuuge’s two-line request in a footnote of its district court reply brief was “too little, too late,” noting that Huuuge “rolled the dice and chose not to pursue additional discovery at the outset, instead moving to stay discovery pending the motion to compel arbitration.”
• The Ninth Circuit’s decision reiterates the need to consider traditional contract principles when designing apps and other online products. Because the burden generally falls on app operators to place users on notice, companies that choose to forgo clickwrap agreements should carefully consider the conspicuousness and placement of their terms and conditions if they seek to bind users to arbitration and class waiver provisions.
• The case is Sean Wilson v. Huuuge Inc., case number 18-36017, and you can read more here.