Nicosia v. Amazon.com, Inc.
834 F.3d 220 (2016)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
For an online agreement to be binding, a user must have reasonably conspicuous notice of the terms and manifest assent; where the notice is provided via hyperlink on a cluttered webpage, the question of whether a reasonably prudent user would be on notice is a fact-intensive inquiry that may preclude dismissal.
Facts:
- Dean Nicosia was an Amazon.com customer.
- In January and April 2013, Nicosia purchased a weight loss product called '1 Day Diet' on Amazon's website.
- The product contained sibutramine, a controlled substance that the FDA had withdrawn from the U.S. market in 2010 due to cardiovascular risks.
- Sibutramine was not listed as an ingredient for '1 Day Diet' on Amazon's website or on the product's packaging.
- In November 2013, the FDA publicly revealed that '1 Day Diet' contained undisclosed sibutramine.
- At the time of purchase, Amazon's order page stated in small font: 'By placing your order, you agree to Amazon.com’s privacy notice and conditions of use.'
- The phrase 'conditions of use' was a hyperlink to a separate webpage that contained a mandatory arbitration provision.
- The notice and hyperlink were located on a busy webpage that included the customer's personal information, shipping details, promotional advertisements, and numerous other links in various colors and fonts.
Procedural Posture:
- Dean Nicosia filed a putative class action lawsuit against Amazon.com, Inc. in U.S. District Court (trial court).
- Amazon informed the court of its intent to file a motion to dismiss, and the court stayed discovery.
- Nicosia moved for a preliminary injunction to stop Amazon from selling similar products.
- Amazon moved to dismiss the complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6), arguing Nicosia's claims were subject to a mandatory arbitration provision in its Conditions of Use.
- The district court granted Amazon's motion to dismiss, finding that Nicosia was on constructive notice of the arbitration clause and had assented to it.
- The district court also denied Nicosia's motion for a preliminary injunction, finding he lacked standing.
- Nicosia (as appellant) appealed the dismissal and the denial of the injunction to the U.S. Court of Appeals for the Second Circuit, with Amazon as the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a consumer's act of clicking a 'Place your order' button on a website bind them to the website's 'Conditions of Use,' including a mandatory arbitration clause, when notice of those conditions is provided via a hyperlink that is not prominently displayed amidst numerous other links, text, and promotional material?
Opinions:
Majority - Chin, J.
No. A consumer is not necessarily bound by the terms contained in a hyperlink on a website's order page where reasonable minds could disagree on whether the notice of those terms was conspicuous. To form a valid online contract, there must be an objective manifestation of mutual assent, which requires that a user has actual or constructive notice of the agreement's terms. The court found that Amazon's order page presented a 'hybrid' between a 'clickwrap' and 'browsewrap' agreement. Unlike a clickwrap agreement, the user was not required to check an 'I agree' box. The court determined that the notice of the Conditions of Use was not necessarily conspicuous enough to provide constructive notice because it was in small font, not bolded or capitalized, and surrounded by a significant amount of other information, links, and visually distracting advertisements. Because a reasonably prudent user might not have been put on inquiry notice of the terms, the court could not conclude as a matter of law that Nicosia had assented to the arbitration clause, making dismissal of his claim improper at this stage.
Analysis:
This decision clarifies the standard for enforcing 'browsewrap' and 'hybrid' online agreements, emphasizing that the conspicuousness of notice is a highly fact-specific inquiry dependent on the overall website design. It serves as a caution to e-commerce companies that merely including a hyperlink to terms of use on a cluttered page may be insufficient to form a binding contract. The ruling protects consumers from unknowingly waiving rights, such as the right to a jury trial, and encourages businesses to adopt more explicit 'clickwrap' mechanisms to ensure the enforceability of their online terms. Future litigation in this area will likely involve detailed examinations of webpage layouts to determine if a 'reasonably prudent user' would have been aware of the terms.
Unlock the full brief for Nicosia v. Amazon.com, Inc.