Source: https://h2o.law.harvard.edu/collages/14145
Timestamp: 2019-04-26 13:45:04+00:00

Document:
This short case note is a recent rejection of an unconsented to agreement. What could the seller have done differently?
BARNES & NOBLE INC., Defendant–Appellant.
Argued and Submitted May 16, 2014.
Michelle C. Doolin (argued), Leo P. Norton, and Erin E. Goodsell, Cooley LLP, San Diego, CA, for Defendant–Appellant.
Gretchen Carpenter (argued), and Brian R. Strange, Strange & Carpenter, Los Angeles, CA, for Plaintiff–Appellee.
Appeal from the United States District Court for the Central District of California, Josephine L. Staton, District Judge, Presiding. D.C. No. 8:12–cv–00812–JST–RNB.
We therefore affirm the district court's denial of Barnes & Noble's motion to compel arbitration and to stay court proceedings.
The underlying facts are not in dispute. Barnes & Noble is a national bookseller that owns and operates hundreds of bookstores as well as the website . In August 2011, Barnes & Noble, along with other retailers across the country, liquidated its inventory of discontinued Hewlett–Packard Touchpads ("Touchpads"), an unsuccessful competitor to Apple's iPad, by advertising a "fire sale" of Touchpads at a heavily discounted price. Acting quickly on the nationwide liquidation of Touchpads, Nguyen purchased two units on Barnes & Noble's website on August 21, 2011, and received an email confirming the transaction. The following day, Nguyen received another email informing him that his order had been cancelled due to unexpectedly high demand. Nguyen alleges that, as a result of "Barnes & Noble's representations, as well as the delay in informing him it would not honor the sale," he was "unable to obtain an HP Tablet during the liquidation period for the discounted price," and was "forced to rely on substitute tablet technology, which he subsequently purchased ... [at] considerable expense."
"We review the denial of a motion to compel arbitration de novo." Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir.2008). Underlying factual findings are reviewed for clear error, Balen v. Holland Am. Line Inc., 583 F.3d 647, 652 (9th Cir.2009), while "[t]he interpretation and meaning of contract provisions" are reviewed de novo, Milenbach v. Comm'r, 318 F.3d 924, 930 (9th Cir.2003).
 The FAA, 9 U.S.C. § 1 et seq., requires federal district courts to stay judicial proceedings and compel arbitration of claims covered by a written and enforceable arbitration agreement. Id. § 3. The FAA limits the district court's role to determining whether a valid arbitration agreement exists, and whether the agreement encompasses the disputes at issue. See Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir.2000). The parties do not quarrel that Barnes & Noble's arbitration agreement, should it be found enforceable, encompasses Nguyen's claims. The only issue is whether a valid arbitration agreement exists.
In determining whether a valid arbitration agreement exists, federal courts "apply ordinary state—law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Federal courts sitting in diversity look to the law of the forum state—here, California—when making choice of law determinations. Hoffman v. Citibank (S.D.), N .A., 546 F.3d 1078, 1082 (9th Cir.2008) (per curiam). Under California law, the parties' choice of law will govern unless section 187(2) of the Restatement (Second) of Conflict of Laws dictates a different result.Id.
For the reasons that follow, we hold that Nguyen did not enter into Barnes & Noble's agreement to arbitrate.
"While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract." Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir.2004). One such principle is the requirement that "[m]utual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract."Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 29 (2d Cir.2002) (applying California law).
But the proximity or conspicuousness of the hyperlink alone is not enough to give rise to constructive notice, and Barnes & Noble directs us to no case law that supports this proposition.The most analogous case the court was able to locate is PDC Labs., Inc. v. Hach Co., an unpublished district court order cited by neither party. No. 09–1110, 2009 WL 2605270 (C.D.Ill. Aug. 25, 2009). There, the "Terms [and Conditions of Sale] were hyperlinked on three separate pages of the online ... order process in underlined, blue, contrasting text."Id. at *3. The court held that "[t]his contrasting text is sufficient to be considered conspicuous," thereby placing a reasonable user on notice that the terms applied. Id. It also observed, however, that the terms' conspicuousness was reinforced by the language of the final checkout screen, which read, " 'STEP 4 of 4: Review terms, add any comments, and submit order,' " and was followed by a hyperlink to the Terms. Id. (emphasis added).
 Second, we are unable to find any case law holding that reliance on a contract's choice of law provision in itself constitutes a "direct benefit." The closest case is HD Brous & Co., Inc. v. Mrzyglocki, an unpublished district court decision, in which the court compelled arbitration against a nonsignatory petitioner in part because the non-signatory had sought to limit the respondent's choice of substantive law by relying on the agreement's choice of law provision. No. 03 Civ.8385 (CSH), 2004 WL 376555, at *8 (S.D.N.Y. Feb. 26, 2004). But HD Brous is distinguishable because the agreement there served as the foundational document for the business relationship between the parties and explicitly named the petitioner as the intended beneficiary. Id. It can hardly be said here that the choice of New York law—chosen unilaterally by Barnes & Noble—was intended to benefit Nguyen. Any benefit derived by Nguyen under New York law—whether it be the possibility of statutory or treble damages on Nguyen's nationwide class claims—is merely incidental.
In light of these distinguishing facts, the district court did not abuse its considerable discretion in rejecting Barnes & Noble's estoppel argument.
[*] The Honorable Roslyn O. Silver, Senior District Judge for the U.S. District Court for the District of Arizona, sitting by designation.
 Indeed, in cases where courts have relied on the proximity of the hyperlink to enforce a browsewrap agreement, the websites at issue have also included something more to capture the user's attention and secure her assent. See, e.g.,5381 Partners LLC v. Sharesale.com, Inc., No. 12–CV–4263 JFB AKT, 2013 WL 5328324, at *7 (E.D.N.Y. Sept. 23, 2013) (in addition to hyperlink that appeared adjacent to the activation button users had to click on, website also contained a text warning near the button that stated "By clicking and making a request to Activate, you agree to the terms and conditions in the [agreement]"); Zaltz, 952 F.Supp.2d at 451–52 (users required to check box confirming that they had reviewed and agreed to website's Terms and Conditions, even though hyperlink to Terms and Conditions was located on the same screen as the button users had to click on to complete registration).
Original Item: "Nguyen v. Barnes & Noble Inc."

References: v. 
 v. 
 v. 
 § 1
 § 3
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.