Barnes and Noble Loses Huge Motion in Federal False Advertising Lawsuit

barnes and noble false advertising lawsuit.jpg
Bookselling giant doesn't want a jury to ponder its online sales tactics
A federal judge in Orange County ruled today against bookselling giant Barnes and Noble in its efforts to force a false advertising lawsuit plaintiff from the public courthouse and into private arbitration.

In a 10-page opinion, U.S. District Court Judge Josephine Staton Tucker sided with Kevin Khoa Nguyen who filed an April 2012 class action suit after he bought a 16GB HP TouchPad Tablet from barnesandnoble.com for the advertised price of $102 in August 2011.

The company sent Nguyen, a California resident, a confirmation of the sale and charged his American Express account, but later reneged on the deal, claimed demand exceeded stock and refunded his money.

According to his lawsuit, the company's tactic "significantly increased website traffic" as well as boosted advertising exposure, generated new collections of consumer personal contact information and served as a bait and switch tool for other items sold on the website.

In their defense, Barnes and Noble officials claimed that neither Nguyen nor any other allegedly abused online customer is entitled to force the company to face a jury because customers who purchase online products at the company's website automatically agree they will submit any dispute to arbitration, a move that almost always favors the business.

But Judge Tucker determined that Nguyen had not affirmatively consented to arbitration.

Some business website post a notice that the consumer automatically agrees with the company's rules when he or she buys a product while other sites make the consumer click a box specifically acknowledging the company's terms.

In Tucker's view, the issue of "browsewrap" or "clickwrap" wasn't the key point, but rather "whether [Nguyen] had constructive notice of the terms of the agreement and therefore agreed to be bound by them . . . [Barnes and Noble] did not position any notice even of the existence [her emphasis] of its 'Terms of Use' in a location where website users would necessarily see it, and certainly did not give notice that those terms applied."

Based on her court minutes, Tucker won't be shocked if the company challenges her decision to the Ninth Circuit court of appeals.

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4 comments
ageofknowledge
ageofknowledge

It's a tricky topic in theory because while companies shouldn't be deliberately creating demand for products by advertising them below market when they don't have the means to fill that demand there's also the genuine issue that occasionally occurs when companies simply run out of stock on a sale item for various reasons ranging from unanticipated demand to reasons outside of their control (e.g. the manufacturer <fill in the blank>, natural disaster, IT infrastructure issues/hackers, etc...) and simply have to issue a refund if the customer does not want a store credit.

 

This article doesn't mention whether or not Nguyen received a refund but to the best of my knowledge HP's SOP is to issue refunds if they are unable to deliver a product that was ordered so I'm assuming Nguyen received a full refund and chose to sue them anyways for false advertising.

 

If my assumptions are correct, then in my opinion, Nguyen appears to me to be overly litigious.

BillxT
BillxT topcommenter

 @anon  @ageofknowledge

Plausible but there's no evidence.

 

Other questions I've had:

Was it clearly stated that there were a limited number available at tyhe price?

Were there more than 3 available at the price?

 

Teaser sales to perform bait-and-switch is not all that unusual, famously by some car dealers. If the item I'm looking for isn't available, I will not buy another item from that seller at a higher cost.

 

Advertising a price then saying "well, we didn't know that people would actually buy them at the price" is unscrupulous at best. It's stupid business and short-sighted. But then accountants aren't able to put a number to customer loyalty so they see no value to it.

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