Nguyen v. Barnes & Noble

In 2011, Barnes & Noble discontinued selling HP TouchPad which was a competing product to Apple's iPad. This ensuing fire sale led to the lawsuit Nguyen v. Barnes & Noble, Inc.

In August 2011, Barnes & Noble announced that it was liquidating its inventory of HP TouchPads. Mr. Nguyen immediately ordered 2 TouchPads from his computers & received e-mail confirmations.

The next day, Barnes & Nobles notified Nguyen via e-mail that his order had to be cancelled because of sold inventory.

Nguyen sued in California Superior Court. Nguyen accused Barnes & Nobles of deceptive business practices & false advertising.

Barnes & Noble moved to compel arbitration under the Federal Arbitration Act. The company argued that Nguyen was bound by agreement in accordance with the "Terms of Use" (ToU) hyperlink on the Barnes & Noble website.

The California district court decided in favor of Nguyen.

Does the presence of a hyperlink on a webpage create a valid arbitration agreement?

No. The presence of a link without some obvious prompt to take affirmative action isn't enough to bind a user to an arbitration agreement described in the terms & conditions (T&C).

Judge Noonan: "Consumers cannot be expected to ferret out hyperlinks to terms & conditions [browse-wrap] to which they have no reason to suspect they will be bound."

Click-wrap is an online contract that requires the user the click "I agree" after being presented with terms & conditions (T&C).

Browse-wrap is an online agreement linked to T&C somewhere on the screen. The user is presumed to have consented to the T&C by using the website.