Hard-to-find terms of use unenforceable and arbitration clause was of no effect

A US appeals court summarily dismissed an appeal related to the browsewrap terms of use agreement in a mobile gambling app. In Wilson v. Huuuge, Inc., the app developer was appealing a decision of a district court that refused to enforce an arbitration clause in the terms of use for the app.

The plaintiff brought a suit as an intended class action, alleging that the app and its developer violated Washington state gambling and consumer protection laws. The defendant brought a motion trying to have the action stayed and requiring the plaintiff to arbitrate any dispute. The app's terms of use contained an arbitration clause, but the district court found that these terms (or the terms of use, generally) were not brought to the user's attention either in fact or constructively. The developer did not require users to affirmatively acknowledge or agree to the terms of use before downloading, installing or using the app.

The United States Court of Appeal for the Ninth Circuit colourfully described the positioning of the terms of use:

Once a user has downloaded the app, the user can play games immediately. During gameplay, a user can view the Terms by accessing the settings menu. The settings menu can be accessed by clicking on a three dot “kebob” menu button in the upper right-hand corner of the home page (Figure D).

If a user clicks on the button, a pop-up menu of seven options appears (Figure E). The fifth option is titled “Terms & Policy” and reveals the Terms, including the arbitration agreement.

To enforce an arbitration agreement under US federal law, the person asserting the agreement must prove there exists a valid agreement by reference to ordinary contract law. The court wrote:

As we have acknowledged many times, although online commerce has presented courts with new challenges, traditional principles of contract still apply. A contract is formed when mutual assent exists, which generally consists of offer and acceptance. Like many states, Washington does not allow parties to shirk contract obligations if they had actual or constructive notice of the provisions. In the context of online agreements, the existence of mutual assent turns on whether the consumer had reasonable notice of the terms of service agreement. [references omitted]

The court found that it was a "browsewrap" agreement and amusingly described the adventure that may be required to encounter the terms of use in the app:

… When downloading the app, the Terms are not just submerged—they are buried twenty thousand leagues under the sea. Nowhere in the opening profile page is there a reference to the Terms. To find a reference, a user would need to click on an ambiguous button to see the app’s full profile page and scroll through multiple screen-lengths of similar-looking paragraphs. Once the user unearths the paragraph referencing the Terms, the page does not even inform the user that he will be bound by those terms. There is no box for the user to click to assent to the Terms. Instead, the user is urged to read the Terms—a plea undercut by Huuuge’s failure to hyperlink the Terms. This is the equivalent to admonishing a child to “please eat your peas” only to then hide the peas. A reasonably prudent user cannot be expected to scrutinize the app’s profile page with a fine-tooth comb for the Terms.

Accessing the terms during gameplay is similarly a hide-the-ball exercise. A user can view the Terms through the “Terms & Policy” tab of the settings menu. Again, the user is required to take multiple steps. He must first find and click on the three white dots representing the settings menu, tucked away in the corner and obscured amongst the brightly colored casino games. The “Terms & Policy” tab within the settings is buried among many other links, like FAQs, notifications, and sound and volume. The tab is not bolded, highlighted, or otherwise set apart.

Huuuge argues Wilson’s repeated use of the app places him on constructive notice since it was likely he would stumble upon the Terms during that time period. However, just as “there is no reason to assume that [users] will scroll down to subsequent screens simply because screens are there,” there is no reason to assume the users will click on the settings menu simply because it exists. The user can play the game unencumbered by any of the settings. Nothing points the user to the settings tab and nowhere does the user encounter a click box or other notification before proceeding. Only curiosity or dumb luck might bring a user to discover the Terms.

At the end of the day, Huuuge took a risk and lost:

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. Wilson did not have constructive notice of the Terms, and thus is not bound by Huuuge’s arbitration clause in the Terms. We affirm the district court’s denial of Huuuge’s motion to compel arbitration.

The appeal was dismissed.