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NGUYEN v. BARNES & NOBLE, INC.
United States District Court, C.D. California.
August 28, 2012.
B. Choice of Law The parties, either explicitly or implicitly, agree that the dispute regarding the validity of the arbitration provision should be governed by the laws of the State of New York. (Mot. at 2-3; Opp'n at 7). However, any application of New York law stems from the as-yet-undetermined proposition that parties agreed to Defendant's Terms of Use2 The Court need not resolve this "chicken and egg" question. While the choice of law issue may have significance later in the litigation, the question of Plaintiff's assent to the Terms of Use, and, consequently, the validity of the arbitration provision, does not hinge on whether New York or California law applies.3 III. DISCUSSION At issue is a so-called "browsewrap" agreement. Browsewrap agreements, as opposed to clickwrap agreements, are defined as "terms and conditions, posted on a Website or accessible on the screen to the user of a CD-ROM, that do not require the user to expressly manifest assent, such as by clicking `yes' or `I agree.'" Sw. Airlines Co. v. Boardfirst, L.L.C., No. 3:06-CV-0891-B, 2007 WL 4823761 at *4, n.4 (N.D. Tex. Sept. 12, 2007) (citations omitted). Defendant argues that like clickwrap agreements, "[c]ourts . . . have consistently enforced browsewrap agreements against both businesses and consumers." (Reply at 6). The dispositive issue, however, is not the "browsewrap" or Case 8:12-cv-00812-JST-RNB Document 33 Filed 08/28/12 Page 7 of 10 Page ID #:655 "clickwrap" label; rather it is whether Plaintiff had constructive notice of the terms of the agreement and therefore agreed to be bound by them. See Sw. Airlines Co., 2007 WL 4823761 at *5 ("[T]he validity of a browsewrap license turns on whether a website user has actual or constructive knowledge of a site's terms and conditions."). Specht v. Netscape Commc'ns Corp., 306 F.3d 17 (2d Cir. 2002), is instructive. In Specht, the plaintiffs downloaded free software from Netscape's website. (Id. at 20.) The issue was whether plaintiffs were bound by the arbitration agreement contained in a License Agreement to which they had never expressly assented. (Id.) The court stated that the license terms were not "immediately displayed" and that "plaintiffs could not have learned of the existence of those terms unless, prior to executing the download, they had scrolled down the webpage to a screen located below the download button." (Id. ) The court held: "We disagree with the proposition that a reasonably prudent offeree in plaintiffs' position would necessarily have known or learned of the existence of the . . . license agreement prior to acting, so that plaintiffs may be held to have assented to that agreement with constructive notice of its terms." (Id. at 30.) The court concluded that "plaintiffs' bare act of downloading the software did not unambiguously manifest assent to the arbitration provision contained in the license terms." (Id. at 20.) The same is true here. Defendant did not position any notice even of the existence of its "Terms of Use" in a location where website users would necessarily see it, and certainly did not give notice that those Terms of Use applied, except within the Terms of Use. The case perhaps most directly on point is Hines v. Overstock.com, Inc., 668 F.Supp.2d 362 (E.D.N.Y. 2009). Similar to the instant case, Hines involved a consumer action with an arbitration clause contained in a browsewrap agreement accessible via hyperlink. In Hines, the plaintiff stated that "she was never advised of the Terms and Conditions and could not even see the link to them without scrolling down to the bottom of the screen-an action that was not required to effectuate her purchase." Id. at 367. The court held that the defendant "has not carried its burden of demonstrating the existence of a valid arbitration agreement because Defendant has shown neither that Plaintiff had notice of the Terms and Conditions, nor that a reasonable user of the website would have." Id. at 366. In conclusion, the Hines court aptly stated: Hines . . . lacked notice of the Terms and Conditions because the website did not prompt her to review the Terms and Conditions and because the link to the Terms and Conditions was not prominently displayed so as to provide reasonable notice of the Terms and Conditions. Very little is required to form a contract nowadays-but this alone does not suffice.
1. The relevant section states:
XVIII. DISPUTE RESOLUTION
Any claim or controversy at law or equity that arises out of the Terms of Use, the Barnes & Noble.com Site or any Barnes & Noble.com Service (each a "Claim"), shall be resolved through binding arbitration conducted by telephone, online or based solely upon written submissions where no in-person appearance is required. In such cases, the arbitration shall be administered by the American Arbitration Association under its Commercial Arbitration Rules (including without limitation the Supplementary Procedures for Consumer-Related Disputes, if applicable), and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
. . . .
Any Claim shall be arbitrated or litigated, as the case may be, on an individual basis and shall not be consolidated with any other party whether through class action proceedings, class arbitration proceedings or otherwise.
. . . .
Each of the parties hereby knowingly, voluntarily and intentionally waives any right it may have to a trial by jury in respect of any litigation (including but not limited to any claims, counterclaims, cross-claims, or third party claims) arising out of, under or in connection with these Terms of Use. Further, each party hereto certifies that no representative or agent of either party has represented, expressly or otherwise, that such a party would not in the event of such litigation, seek to enforce this waiver of a right to jury trial provision. Each of the parties acknowledges that this section is a material inducement for the other party entering into these Terms of Use.
(Rowland Decl., Exh. 1, at p. 8.)
2. Indeed, Defendant uses as a "binding judicial admission" Plaintiff's allegation in the Complaint that his breach of contract claim is governed by New York's UCC. (Reply at 8 (citing Compl. at ¶ 34).) Specifically, Defendant states that because Plaintiff seeks to benefit from the Terms of Use "by asserting the choice of law provision contained therein" (Reply at 11), he should be required to arbitrate his claims under the doctrine of equitable estoppel. (Reply at 10-11.) Defendant cites Washington Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 268 (5th Cir. 2004) for the proposition that a plaintiff cannot claim the benefit of an agreement and simultaneously avoid its burdens. (Mot. at 9; Reply at 11). Washington and the instant case are inapposite, however, because Washington involved a third party, namely the wife of one of the defendants, claiming the benefits of an agreement without the requisite obligation. Further, there was no dispute that an agreement had been made between the primary parties, but involved the issue of whether that agreement would apply to the third party. The Court therefore declines to extend the holding of Washington to the facts of this case and finds that Plaintiff is not equitably estopped from arguing that he is not bound by the arbitration agreement at issue.
3. "Federal courts sitting in diversity look to the law of the forum state when making choice of law determinations." Hoffman v. Citibank (S.D.), N.A., 546 F.3d 1078, 1082 (9th Cir. 2008) (per curiam). "When an agreement contains a choice of law provision, California courts apply the parties' choice of law unless the analytical approach articulated in § 187(2) of the Restatement (Second) of Conflict of Laws . . . dictates a different result." Id. Using the Restatement approach, the Court concludes that there is no fundamental conflict between California and New York law. Compare Nayal v. HIP Network Services IPA, Inc., 620 F.Supp.2d 566, 569 (S.D.N.Y. 2009) with Larian v. Larian, 123 Cal.App.4th 751, 759-60.
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