Unreported / Non-Citable
Background
Plaintiffs Sarah Perkins and Emily Wright filed a putative class action against Rugs.com, LLC in the Western District of Washington. Rugs.com moved to compel arbitration based on its online Terms of Use, which contained an arbitration clause. The district court denied the motion, finding that Rugs.com failed to demonstrate the plaintiffs had agreed to arbitrate. Rugs.com appealed.
The Ninth Circuit exercised jurisdiction under 9 U.S.C. § 16(a)(1) and reviewed the denial de novo, applying Washington contract law to determine whether a valid agreement to arbitrate was formed. This is a nonprecedential Ninth Circuit memorandum. The decision is dated 2026-10-28 and concerns docket 25-4155. The account below is limited to the issues and relief actually resolved in this document; it does not treat allegations as established facts or convert a recommendation into a final district-court judgment.
The Court’s Holding
The Ninth Circuit affirmed the district court’s denial of the motion to compel arbitration. The court held that Rugs.com failed to meet its burden of proving the plaintiffs unambiguously manifested assent to the Terms of Use. The webpage where plaintiffs entered their email and clicked “Join Now” lacked any disclosure that doing so constituted agreement to the Terms of Use.
Under Ninth Circuit precedent (Berman, Nguyen, Godun), a user’s click manifests assent only if explicitly advised that the act constitutes agreement. Rugs.com’s alternative argument—that the hyperlinked Terms of Use stated that “use” of the website constituted assent—was rejected as an unenforceable browsewrap agreement, which does not require express manifestation of assent. Because no enforceable agreement to arbitrate existed, the district court’s order was affirmed.
Key Takeaways
- Under Washington law and Ninth Circuit precedent, a website must explicitly advise users that a specific action (e.g., clicking a button) constitutes assent to terms; mere proximity of a hyperlink to a button is insufficient.
- A browsewrap agreement—where assent is inferred merely from website use via a hyperlink—is consistently unenforceable in the Ninth Circuit.
- The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement by a preponderance of the evidence.
- Context of the transaction does not substitute for explicit advisement of what actions signify assent.
- An arbitration clause within Terms of Use is unenforceable if the underlying contract formation fails.
Why It Matters
This memorandum disposition reinforces the Ninth Circuit’s strict requirements for online contract formation, particularly the “unambiguous manifestation of assent” standard articulated in Berman v. Freedom Financial Network and Godun v. JustAnswer. It clarifies that a company cannot cure a deficient sign-up flow (lacking explicit advisement) by pointing to a browsewrap provision buried in hyperlinked terms stating that “use” constitutes acceptance.
The decision underscores that businesses must design user interfaces with clear, explicit call-to-action language linking specific user actions to contractual assent to enforce arbitration agreements or other online terms. Practitioners should read the ruling for its stated procedural posture and remedy, especially any deadline, burden of proof, or opportunity to amend. The distinction matters: an appellate affirmance or dismissal ends the appeal addressed, a district judge’s order supplies operative relief, and a magistrate judge’s recommendation remains subject to objections and adoption. Because unpublished dispositions and magistrate-judge recommendations have limited procedural force, the result should be used as a practical illustration rather than overstated as a new generally binding rule.