SDNY Sends Proposed Class Action over Customers’ Digital Privacy to Arbitration

The Southern District of New York recently upheld the arbitration clause of Barnes & Noble’s online terms of use, finding that class action plaintiffs had adequate notice of the terms of use and the arbitration provision. The plaintiff’s class action alleged that Barnes & Noble’s e-commerce website, with its built-in social media plugins, shared the plaintiff’s DVD order information with social media partners without the plaintiff’s written consent, in violation of the Video Privacy Protection Act and the New York Video Consumer Privacy Act.

Barnes & Noble sought to enforce its online terms, which mandate non-class arbitration. Although plaintiff contended that she never agreed to the terms of use, nor was she aware of its existence, the court found that plaintiff was adequately on notice of Barnes & Noble’s terms of use, in light of evidence showing that the “submit order” button had nearby language saying: “By making this purchase you are agreeing to our terms of use and privacy policy.” Further, the court declined to invalidate the arbitration clause as procedurally or substantively unconscionable even where Barnes & Noble gave itself a one-sided right to waive the mandatory arbitration provision if it so chose, holding that such a provision was not grossly unreasonable or fundamentally unfair.

TIP: Companies that want to rely on mandatory arbitration clauses in general consumer terms should ensure that consumer terms are conspicuously visible to the consumer, including in any transaction process, and that arbitration provisions are prominently displayed near the beginning of the terms.