MONTH-IN-BRIEF (Dec 2019)
Data Privacy
Gaming App Operator Rolls the Dice on Arbitration and Loses
By John Ottaviani
A recent case from the Ninth Circuit addresses the question of under what circumstances does the download or a mobile application by a smartphone user establish constructive notice of the app’s terms and conditions. In Wilson v. Huuuge, Inc., No. 18-36017, 2019 U.S. App. LEXIS 37952 (9th Cir. Dec. 20, 2019) (link: https://cases.justia.com/federal/appellate-courts/ca9/18-36017/18-36017-2019-12-20.pdf?ts=1576865078 ), the Ninth Circuit affirmed the district court’s decision to deny Huuuge’s motion to compel arbitration based on terms of use that the user did not have to read or to which the user did not have to affirmatively agree.
The Ninth Circuit applied traditional contract principles (“a contract is formed when mutual assent exists”) and followed its precedent in the website context in Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir 2014), to find that mutual assent to the terms of use turns on whether the consumer had reasonable notice of the terms of use. After presenting various screenshots of the app, the Court decided that the terms were so obscure that the user did not have actual notice or constructive notice of the terms. In particular, there was no reference to the terms in the opening profile page of the app, to find the terms the user would have to click on an ambiguous button to see the app’s full profile page and scroll through multiple screens to find the paragraph referencing the terms, and even then there was no box for the user to click to assent to the terms or any other indication that the user would be bound by the terms. Instead, there was just a request for the user to read the terms, with no hyperlink to the terms. The Court concluded that “… the user would need Sherlock Holmes’s instincts to discover the terms.”
