Barnes & Noble’s Online Contract Formation Process Fails –Nguyen v. Barnes & Noble

[Post by Venkat Balasubramani]

Nguyen v. Barnes & Noble, 12-cv-0812-JST (RNBx) (C.D. Cal.; Aug. 28, 2012)

Plaintiff tried to purchase an HP “TouchPad” tablet that was on sale because the model was being discontinued by HP. According to plaintiff, he went to barnesandnoble[dot]com, put two HP tablets in his shopping cart, put in his credit card information, and proceeded to check out. Although he received email confirmation from B&N that they would ship the two tablets, they later emailed to cancel the order. Thus:

Plaintiff was unable to obtain an HP tablet during the liquidation for the discounted price [and] as a result, plaintiff was forced to rely on substitute tablet technology, which he subsequently purchased . . . at considerable expense.

Quelle horreur…what a tragic and sad story!

Anyway, he sued for himself and on behalf of a putative class, and B&N moved to compel arbitration based on an arbitration clause in its terms of service.

The court notes the familiar standard that its job is only to determine whether there is a valid and enforceable contract that contains an arbitration clause (and whether the dispute falls within the clause). The court notes the difference between so-called ‘browsewrap’ and ‘clickwrap’ agreements, and says that the dispositive issue is notice to consumers.

B&N’s terms fail on the notice front. Citing to Specht and Hines, the court says that B&N cannot definitively show that plaintiff had notice of the terms and assented to them. There was no check-the-box (leakproof) implementation. Moreover, according to the court, B&N did not position “even the notice” of the terms in a place where a website user would see it. Often sites provide notice in places other than just the link at the bottom of the website, but B&N took the latter approach. The checkout screen, for example, did not provide the purchaser of any specific notice that the purchase of products via the B&N website was subject to its terms and conditions (e.g., “Your purchase of products or services through this website is subject to the following terms and conditions. Click here to see a copy of the applicable terms.”).

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It’s tough to have much sympathy for B&N here. In the context of a purchase and sale transaction where the customer is at a minimum required to enter payment information, there’s zero excuse for not requiring the consumer to check the box and indicate assent to the terms as a condition of completing the transaction.

The broader question of whether terms should be enforced in a setting where there’s no affirmative act required to complete the transaction (such as when you’re just browsing a website) is interesting. (I blogged recently about the Slide dispute where the court sent consumer claims to arbitration. There acceptance of the terms wasn’t at issue.) It’s temping to see this case as a pushback on terms of service that contain arbitration clauses. However, it’s more likely an outlier in the sense that B&N’s terms of service implementation was so shoddy that it’s not likely representative of the typical terms of service case. If B&N had provided ample notice, the court would have probably enforced the terms and, as in the Slide and Zynga cases, required the consumer to arbitrate his claims.

Finally, the case hints at one of those classic contract law exam scenarios. Was B&N’s advertisement a firm offer? Was B&N’s confirmation of the offer acceptance of the offer? And finally, what were the plaintiff’s damages from B&N’s alleged breach? Could they have sourced an HP TouchPad tabled elsewhere?

Additional coverage:

Browsewrap fails to bind customer to individual arbitration” (Rebecca Tushnet)

Barnes & Noble Loses in Court for Lack of Notice on Terms of Service” (Eric Johnson)

Related posts:

Virtual (SuperPoke!) Pet Owners Must Arbitrate Their Claims Against Google and Slide — Abreu v. Slide

Users Can’t Sue Sony for Changing Online Terms to Require Arbitration – Fineman v. Sony Network Entertainment

Second Life Forum Selection Clause Upheld–Evans v. Linden

Zynga Wins Arbitration Ruling on “Special Offer” Class Claims Based on Concepcion — Swift v. Zynga

Another Ruling Challenging “Check the Website for Amendments” Contract Provisions–Roling v. E*Trade

Stop Saying “We Can Amend This Agreement Whenever We Want”!–Harris v. Blockbuster

Clickthrough Agreement With Acknowledgement Checkbox Enforced–Scherillo v. Dun & Bradstreet

Ninth Circuit Strikes Down Contract Amendment Without Notice–Douglas v. Talk America

Qwest Gets Mixed Rulings on Contract Arbitration Issue—Grosvenor v. Qwest & Vernon v. Qwest

Vendor Fails to Form Either an Online or Paper Contract With Customers–Kwan v. Clearwire

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