Sean Wilson v. Huuuge, Inc.
United States Court of Appeals for the Ninth Circuit, December 20, 2019 (2019)
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Rule of Law:
For a smartphone app's browsewrap terms of use to be contractually binding, the app operator must provide conspicuous notice of the terms that a reasonably prudent user would see; hiding the terms through an obscure, multi-step process is insufficient to establish the user's unambiguous assent.
Facts:
- In early 2017, Sean Wilson downloaded the 'Huuuge Casino' smartphone application, which allows users to play casino games using chips that can be purchased with real money.
- Wilson played the game for over a year.
- To find the Terms of Use before downloading the app, a user had to click a 'more' button on the app's profile page, scroll through several screens of text, locate a paragraph mentioning the terms, and then manually type a non-hyperlinked URL into a web browser.
- Within the app, the Terms of Use could only be accessed by clicking a three-dot 'kebob' menu icon, and then selecting 'Terms & Policy' from a pop-up menu of seven options.
- At no point during the download, account creation, or gameplay process was Wilson required to affirmatively acknowledge, check a box, or otherwise agree to the app's Terms of Use.
Procedural Posture:
- Sean Wilson filed a class action lawsuit against HUUUGE Inc. in the U.S. District Court for the Western District of Washington, a federal trial court.
- HUUUGE Inc. filed a motion to compel arbitration and stay the court proceedings, arguing Wilson was bound by an arbitration clause in its Terms of Use.
- The district court denied HUUUGE Inc.'s motion to compel arbitration, finding that no valid agreement was formed.
- HUUUGE Inc., as the appellant, appealed the district court's denial to the U.S. Court of Appeals for the Ninth Circuit. Sean Wilson is the appellee.
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Issue:
Does a smartphone app user unambiguously manifest assent to an app's terms of use, including a binding arbitration clause, when the terms are not required to be viewed or acknowledged before download and are accessible only by scrolling through multiple screens of text in the app store or by navigating a multi-level settings menu within the app?
Opinions:
Majority - Judge McKeown
No. A user does not unambiguously manifest assent to an app's terms of use when the operator fails to provide reasonable notice of those terms. Under Washington contract law, mutual assent is required to form a contract, and in the context of online browsewrap agreements, assent can only be inferred if the user has actual or constructive notice of the terms. Here, Huuuge failed to provide any evidence of Wilson's actual notice and the design of its app failed to provide constructive notice. The court found that the methods for accessing the terms, both before download and during gameplay, were so obscure and convoluted that a 'reasonably prudent user' could not be expected to find them. The placement of the terms was analogized to being 'buried twenty thousand leagues under the sea' and a 'hide-the-ball exercise,' placing the onus on Huuuge, the app operator, to make its terms conspicuous, which it failed to do. The court, citing precedents like Nguyen v. Barnes & Noble, concluded that without reasonable notice, Wilson's use of the app did not constitute acceptance of the arbitration agreement contained within the hidden terms.
Analysis:
This decision extends the principles governing online browsewrap agreements, previously applied to websites, directly to the mobile application environment. It reinforces the judicial disfavor of such agreements by setting a high bar for what constitutes 'constructive notice,' placing a significant burden on app developers to design their user interfaces to be transparent. The ruling signals that hiding terms in obscure settings menus or behind multiple non-intuitive clicks is legally insufficient to bind users. Consequently, this case will likely push app developers to adopt clickwrap or hybrid 'sign-in-wrap' agreements that require an affirmative act of assent, like checking a box, to ensure the enforceability of their terms, particularly for critical provisions like arbitration clauses and class action waivers.
