The Ninth Circuit Court of Appeals has ruled that simply downloading an app onto your smartphone does not constitute constructive notice of the app’s terms and conditions. The case may have a significant impact on many app developers, who do not always put their terms and conditions in an easily accessible spot, but nevertheless hold their customers to those terms. As a result, app developers may be more legally exposed than they realize.
The ruling concerns the case of Wilson v. Huuuge, Inc., in which the plaintiff sued the defendant app developer in a class action lawsuit over alleged violations of gambling laws. The developer, in response, attempted to compel the plaintiff to resolve the case in private arbitration, in accordance with the mandatory arbitration clause the app’s Terms of Use. However, the district court denied the defendant’s effort to move the case to arbitration, and the Ninth Circuit has affirmed the district court’s decision.
The decision rested on whether simply downloading an app was sufficient notice of the app’s terms and conditions, such as those that might bind a user to mandatory arbitration. Under the common law principle of mutual assent, a person cannot be bound to the terms of an agreement that they were not aware of and were not given notice about. Because the app never presented its terms and conditions to the user before allowing them to use the app, the Ninth Circuit ruled no mutual assent was manifested and, thus, the app’s Terms of Use could not be considered binding.
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