Rugs.com Arbitration Ruling: Ninth Circuit Says a 'Join Now' Email Sign-Up Did Not Bind Shoppers

The Ninth Circuit on Oct. 28, 2026 affirmed a Seattle federal judge's refusal to send two Rugs.com email subscribers to arbitration, holding in Perkins v. Rugs.com LLC that typing an email address and clicking a "Join Now" button next to a Terms of Use link did not show the shoppers agreed to those terms. The Rugs.com arbitration ruling keeps a putative class action over allegedly misleading promotional emails in court and adds another data point to a line of Ninth Circuit decisions that refuse to enforce online arbitration clauses when a website never tells users that a specific click equals agreement.

The disposition is short, unpublished, and grounded in ordinary Washington contract law rather than any doctrine special to arbitration. That is exactly why it matters to practitioners. For retailers that collect email addresses through pop-up sign-up boxes, the decision confirms that the sign-up flow itself is often the only contract-formation event a company can point to, and that a hyperlink sitting nearby is not enough. For claimants' counsel in consumer class actions and in mass arbitration, it is a reminder that formation is the first gate any arbitration agreement must pass, before delegation, scope, or unconscionability ever come up.

What did the Ninth Circuit decide in the Rugs.com arbitration case?

The Ninth Circuit affirmed the denial of Rugs.com's motion to compel arbitration because the company failed to prove the plaintiffs objectively manifested assent to its Terms of Use. The case is Perkins v. Rugs.com LLC, No. 25-4155, an interlocutory appeal from an order entered by U.S. District Judge John H. Chun of the Western District of Washington in No. 2:25-cv-00019-JHC.

Three holdings come out of the memorandum, as described in the disposition and in contemporaneous commentary:

• Washington law governs formation. The parties agreed that Washington contract law applied, and the panel analyzed the question under ordinary state-law principles of contract formation. Nothing in the analysis turned on the Federal Arbitration Act (FAA) beyond the familiar rule that a court must first decide whether an agreement to arbitrate was formed at all.
• The "Join Now" click was not assent. Rugs.com argued that the plaintiffs accepted its Terms of Use when they entered their email addresses and clicked "Join Now" to sign up for promotional emails. The panel found that the sign-up page did not disclose that clicking the button would constitute agreement to the Terms of Use, so the click could not be treated as an unambiguous manifestation of assent.
• Browsing the site was not assent either. The court rejected Rugs.com's alternative argument that the plaintiffs were bound simply because they used the website, the theory on which a pure browsewrap depends.

Berger Montague, one of the firms on the plaintiffs' side of the docket, announced the result on Oct. 29, 2026, describing it as a rejection of Rugs.com's effort to force consumers into arbitration through a browsewrap. Ballard Spahr's Consumer Finance Monitor followed on Nov. 2 with a defense-side reading that stressed how narrow the disposition is.

What is the Rugs.com email lawsuit about?

The Rugs.com email lawsuit is a putative class action in which two consumers, Sarah Perkins and Emily Wright, allege that the online rug retailer sent them false and misleading promotional emails. Both plaintiffs are email subscribers; according to the district court's order, Rugs.com's own records show Perkins signed up for marketing emails in March 2024.

The complaint was filed in the Western District of Washington in early 2025, and the litigation sits inside the wave of email-marketing suits brought under Washington's Commercial Electronic Mail Act (CEMA), the state anti-spam statute that bars false or misleading information in the subject line of a commercial email sent to a Washington resident. Plaintiffs' firms had been investigating whether Rugs.com marketed "limited-time" sales that were extended or never really ended, the same pattern alleged against dozens of national retailers.

The CEMA backdrop explains why arbitration was worth an appeal. In Brown v. Old Navy, decided in 2025, the Washington Supreme Court rejected the narrow reading that CEMA reached only subject lines that disguise an email's commercial nature, and instead read it to cover any false or misleading information in a subject line. Defense firms counted more than 100 CEMA suits filed in the 12 months after Brown, compared with roughly eight in the previous two decades. With statutory damages then set at $500 per email, a class of subscribers who each received dozens of promotional emails could translate into very large exposure. Individual arbitration with a class action waiver would have taken the aggregate number off the table.

Rugs.com should not be confused with RugsUSA, a different retailer that has faced its own fake-sale suits, or with an earlier Rugs.com reference-pricing settlement on the West Coast. Neither is part of Perkins.

Why did the court refuse to enforce Rugs.com's arbitration clause?

The court refused to enforce the clause because nothing on the sign-up page told users that clicking "Join Now" meant they were agreeing to the Terms of Use, so Rugs.com could not carry its burden of proving mutual assent. The arbitration provision itself was never evaluated for fairness.

The analysis follows the two-step framework the Ninth Circuit set out in Berman v. Freedom Financial Network (2022), which applies whenever a user lacks actual knowledge of the terms. The proponent must show both:

1. Reasonably conspicuous notice of the terms to which the user will be bound; and
2. An unambiguous manifestation of assent, typically a click on a button or checkbox, where the user is told that the action signals agreement.

The Rugs.com commentary indicates that the case failed on the second requirement. Even assuming a Terms of Use hyperlink was visible near the email field, the page did not connect the act of clicking to acceptance of those terms. A "Join Now" button tells a reasonable user that clicking will subscribe them to marketing emails. It does not tell them that they are also signing a contract containing an arbitration clause and whatever else sits in the Terms of Use. Under Berman, a click that the website has not framed as assent is not assent.

The website-use theory fared no better. Terms that announce "by using this site you agree to these terms" are the defining feature of a browsewrap, and Ninth Circuit law since Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014), has refused to bind consumers on that basis without evidence of actual knowledge. The panel also relied on Godun v. JustAnswer LLC, 135 F.4th 699 (9th Cir. 2025), which held that a "Connect now" or similar button did not create an agreement where the page did not explain that the click would be treated as acceptance.

Ballard Spahr's write-up emphasized what the court did not do: it did not find the arbitration provision unfair or unconscionable, did not announce any new rule for arbitration agreements, and did not suggest that electronically presented arbitration terms are inherently suspect. The holding is a contract-formation holding applied to one company's sign-up design.

What is a browsewrap agreement, and is it enforceable?

A browsewrap agreement is a set of online terms that a website discloses only through a hyperlink, usually at the bottom of the page, and treats as accepted by continued use of the site; it is generally unenforceable against a consumer unless the company proves the consumer actually knew of the terms. Courts distinguish it from three other designs:

• Clickwrap: the user must check a box or click "I agree" after being presented with the terms. Courts routinely enforce these.
• Sign-in wrap (or hybrid): the user clicks a button such as "Sign up" or "Place order," and text near the button says that doing so constitutes agreement to linked terms. Enforceability depends on the conspicuousness of the notice and the clarity of the statement linking the click to assent.
• Scrollwrap: the user must scroll through the terms before an accept button activates. Usually enforced.

Rugs.com's sign-up box sat in the gap between a browsewrap and a sign-in wrap. It required an affirmative click, but the click was not labeled as acceptance. The Ninth Circuit treated that gap as fatal. The table below places Perkins alongside the leading Ninth Circuit cases.

Case	Year	Interface	What the user clicked	Result
Nguyen v. Barnes & Noble Inc., 763 F.3d 1171	2014	Terms of Use link at bottom of pages and near checkout	Checkout button, no assent language	Not enforced: browsewrap, no actual or constructive notice
Berman v. Freedom Financial Network	2022	Promotional sign-up pages with small gray terms text	"Continue" button	Not enforced: notice not conspicuous and no clear statement that clicking meant assent
Patrick v. Running Warehouse	2024	Checkout flow with assent language at order placement	Order button	Enforced: notice conspicuous and tied to the click
Chabolla v. ClassPass	2025	Multi-screen sign-up; gray links on first screen	Continue/sign-up buttons	Not enforced (2-1): notice inadequate on the only screen offering assent
Godun v. JustAnswer LLC, 135 F.4th 699	2025	Trial sign-up page	"Connect now" / start-trial button	Not enforced: page did not explain the click equaled assent
Perkins v. Rugs.com LLC, No. 25-4155	2026	Email sign-up box with nearby Terms of Use link	"Join Now"	Not enforced: no disclosure that clicking meant agreement; website use insufficient

The pattern is consistent. When the Ninth Circuit has enforced online terms, the page told the user, close to the button, that clicking meant agreement. When it has refused, the button's label described some other action (continue, connect, join, check out) and the terms were left for the user to discover. Judge Jay Bybee's dissent in Chabolla warned that small design differences would yield opposite results; Perkins shows the court is still drawing the line at the assent statement, not at the font size alone.

Is the Rugs.com ruling binding precedent?

No; Perkins v. Rugs.com is an unpublished memorandum disposition, and under Ninth Circuit Rule 36-3 it is not precedent except under the law-of-the-case, claim-preclusion, and issue-preclusion doctrines. Under Federal Rule of Appellate Procedure 32.1 and Rule 36-3, parties may cite unpublished Ninth Circuit dispositions issued on or after Jan. 1, 2007, but district courts and later panels are not bound by them.

The practical weight of the decision therefore comes from the published cases it applies. Berman, Nguyen, Godun, and Chabolla are binding in every federal court in the circuit when California, Washington, or similar state formation law is at issue, and Perkins is a clean illustration of how those authorities apply to an email-capture box. Expect it to appear in string cites in opposition briefs, and expect defense counsel to answer that it is unpublished and fact-bound. Both points are correct.

What happens next in Perkins v. Rugs.com?

The case now returns to Judge Chun in the Western District of Washington, where it proceeds as a putative class action in court rather than as individual arbitrations. Unless Rugs.com seeks rehearing or further review, the next steps are the ordinary ones: pleadings motions, discovery, and eventually class certification.

Three issues will shape what follows:

• Procedural posture. Section 16(a) of the FAA lets a party immediately appeal an order denying a motion to compel arbitration, and the Supreme Court held in Coinbase, Inc. v. Bielski (2023) that district courts must stay proceedings while that appeal is pending. The affirmance ends that pause.
• CEMA damages. Washington's HB 2274, effective June 11, 2026, cut CEMA statutory damages from $500 to $100 per email and added a knowledge requirement to the subject-line prohibition. The amendments apply only to suits commenced on or after June 11, 2026. Perkins was filed in 2025, so on the defense firms' reading of the amendment, the prior $500 figure and the pre-amendment liability standard continue to govern it.
• Standing. Federal judges in Washington have split on whether receiving a misleading subject line in a solicited email is a concrete injury for Article III purposes. That question, not arbitration, may be the next major defense.

Rugs.com may also try other formation evidence, such as later account creation or checkout flows, if either plaintiff made purchases through a screen with a properly worded assent statement. Courts have repeatedly analyzed each plaintiff's interface separately, as Judge Richard Seeborg did in the Walgreens health-data case in October 2026.

Does the Rugs.com decision affect mass arbitration?

Yes, indirectly: the Rugs.com arbitration ruling confirms that companies cannot rely on email sign-up boxes or website use to form arbitration agreements, which shrinks the population of consumers who can be compelled to arbitrate and, by the same logic, the population that can file individual demands against those companies.

Formation cuts both ways in mass arbitration. A respondent facing thousands of demands at the American Arbitration Association (AAA) or JAMS sometimes argues that particular claimants never agreed to arbitrate, because a formation defense moves those claimants out of the fee-generating arbitral forum. Claimant firms, for their part, must show for each client that an agreement exists before the provider will administer the claim, and provider mass-arbitration rules increasingly require claimant-specific information at filing. A retailer whose only formation event for marketing subscribers is a "Join Now" box may find that those subscribers can neither be forced into arbitration nor file en masse under the arbitration clause.

The ruling also sharpens a design choice. Companies that want arbitration to cover email subscribers must build a sign-up flow that states the assent rule next to the button, and once they do, they inherit the mass-arbitration exposure that comes with an enforceable clause. For many consumer brands, the CEMA math (thousands of subscribers, dozens of emails each) is precisely the scenario in which mass filings by coordinated counsel become economically attractive. Drafters weighing a class action waiver for marketing lists should model both outcomes.

What it means for drafters, defendants, and claimants' counsel

For drafters and product teams. The safest design under Ninth Circuit law is a statement placed immediately adjacent to the action button, in readable type and contrasting color, that says in plain words that clicking the button (named exactly as labeled) means the user agrees to the linked Terms of Use, including the arbitration provision. A checkbox that the user must affirmatively tick is stronger still. Language buried in the Terms of Use declaring that site use constitutes acceptance adds nothing on its own. Keep dated screenshots and version logs of every sign-up interface, because the proponent bears the burden of proving what each plaintiff saw.

For defendants. Audit every point of data capture (email pop-ups, SMS opt-ins, account creation, checkout, app onboarding) before litigation begins, not after a motion to compel is filed. Formation evidence must be plaintiff-specific; a declaration describing the current site is not proof of the screen a subscriber saw in 2024. Consider whether a weaker formation argument is worth an interlocutory appeal that, as in Perkins, may end with an affirmance that plaintiffs' firms publicize.

For claimants' counsel and PI-adjacent consumer firms. Formation remains the most reliable route around an arbitration clause because it requires no showing that the clause is unfair. Request the defendant's interface history in early discovery, and map each named plaintiff's touchpoints. In mass arbitration, the same scrutiny applies in reverse: confirm each client's agreement before filing, or expect respondents to contest formation claimant by claimant.

For litigation funders. The decision modestly increases the value of in-court CEMA and similar statutory email cases against retailers whose capture flows resemble Rugs.com's, though the HB 2274 damages cut for suits filed after June 11, 2026 lowers the ceiling for new filings.

Frequently asked questions

Does clicking "Join Now" to sign up for emails mean you agreed to arbitration?

Not by itself under Ninth Circuit law: in Perkins v. Rugs.com, a "Join Now" click did not bind subscribers because the page did not say that clicking meant agreement to the Terms of Use. A sign-up button can form a contract only when the page clearly links that click to acceptance of conspicuously disclosed terms.

Who are the parties and judges in the Rugs.com case?

The plaintiffs are Sarah Perkins and Emily Wright, the defendant is Rugs.com LLC, and the district judge is John H. Chun of the Western District of Washington. The Ninth Circuit appeal is No. 25-4155, decided Oct. 28, 2026.

Did the court find Rugs.com's arbitration clause unconscionable?

No. The court never reached unconscionability, because it found that no agreement to arbitrate was formed in the first place.

Is the Rugs.com ruling binding precedent?

No. It is an unpublished memorandum disposition under Ninth Circuit Rule 36-3, citable but not binding, though it applies binding published decisions such as Berman, Nguyen, and Godun.

How much are Washington CEMA claims worth?

For suits commenced before June 11, 2026, CEMA provided $500 per violating email; HB 2274 reduced that to $100 for suits filed on or after that date and added a knowledge requirement. Perkins, filed in 2025, falls under the earlier regime.

How can companies make online arbitration agreements enforceable?

Place a clear statement next to the button that clicking it means agreement to the linked terms, make the link visible and distinct, use an affirmative checkbox where feasible, and preserve records showing which interface each user saw. Those steps track the notice and assent requirements the Ninth Circuit applied in Berman, Godun, and now Perkins.