A Lost Gamble on Enforcement of Electronic Terms and Conditions in a Browsewrap Agreement

On December 20, the Ninth Circuit affirmed the Washington district court’s decision that denied Huuuge, Inc.’s bid to arbitrate a proposed class action based on a browsewrap agreement. In Wilson v. Huuuge, Inc., No. 18-36017, 2019 U.S. App. LEXIS 37952 (9th Cir. Dec. 20, 2019), the Ninth Circuit held that “because Huuuge did not provide reasonable notice of its Terms of Use, the app user did not unambiguously manifest assent to the terms and conditions or the imbedded arbitration provision.” Instead, the arbitration agreement was so deeply buried that, according to the Ninth Circuit, “the user would need Sherlock Holmes’s instincts to discover the Terms.”

Huuuge owns and operates a mobile casino app that allows users to purchase chips to play casino games. Users can either gamble with a limited number of free chips or purchase chips through the app. Sean Wilson downloaded the app and filed a class action lawsuit alleging that Huuuge “violated Washington gambling and consumer protection laws by charging users for chips in its app.” Huuuge moved to compel arbitration, alleging that Wilson agreed to the arbitration provision in its terms and conditions. The arbitration provision included in the terms and conditions stated that all claims against Huuuge may only be brought in an individual capacity and that all disputes must be arbitrated individually.

The Ninth Circuit applied traditional contract principles, which requires mutual assent and an offer and acceptance. When they visit a website or download an app, the user may be bound by the terms and conditions through either a “clickwrap” agreement or a “browsewrap” agreement. The Ninth Circuit classified this as a browsewrap agreement.

The Ninth Circuit first looked for actual notice, then constructive notice. As to actual notice, the Ninth Circuit followed the district court’s conclusion that Wilson did not have actual notice because Huuuge did not present any evidence of actual knowledge. As to constructive notice, “Huuuge does not require users to affirmatively acknowledge or agree to the terms before downloading or while using the app.” Instead, users can access the terms and conditions either by reading the terms and conditions prior to downloading the app, or viewing the terms and conditions during game play – neither of which is required to play the game. Huuuge did not notify users that the app had terms and conditions, nor did Huuuge put the terms and conditions in a location easily accessible to the user. According to the Ninth Circuit, “[w]hen downloading the app, the terms are not just submerged – they are buried twenty thousand leagues under the sea.”

The Ninth Circuit affirmed the district court’s decision to deny Huuuge’s motion to compel arbitration. “Instead of requiring a user to affirmatively assent, Huuuge chose to gamble on whether its users would have notice of its terms. The odds are not in its favor.”