Class actions are a major pain for big companies. In fact, a recent survey by Norton Rose Fullbright, polling more than 800 corporate counsel, revealed that class action lawsuits were the most important legal issue impacting their companies.
If you've followed our blog at all, you already know that using a browsewrap agreement to bind consumers to terms on your website isn't the best practice for organizations looking to keep legal risk away. But we often receive the question -- well, isn't everyone else doing it? Sure, we knew there were some sites or companies that weren't overly concerned with protecting legal risk and were much more concerned with the "user experience" or the "aesthetic value" of the page. (We'll put those in quotation marks -- because it's plenty easy to preserve both while providing the user more-than-adequate notice.)
If your website employs a browsewrap website legal agreement, there are a number of practices you should follow to make sure that agreement is enforceable should you ever need to enforce it. Typically, browsewrap website legal agreements are intended to provide all sorts of legal protections for your website / business (disclaimers, limitations on liability, binding arbitration...lots of stuff...talk to your lawyer!) - but if its not enforceable then it does you no good at all. Below are some of the best practices we have found based on scouring millions (well maybe not millions) of pages of case law on the subject.
Once again, a court has held ruled that burying the link to a browsewrap agreement (in this case Terms and Conditions) in the footer of a website is an excellent way to render that browsewrap agreement meaningless and unenforceable. The ruling comes from the United States District Court, Eastern District of California. The website in questions is Job.com, a website for job-seekers and employers. Job.com, as part of its case, tries to enforce the browsewrap Terms and Conditions to assert a breach of contract claim.
There has been little guidance since the Zappo’s opinion back in 2012 regarding the validity of browsewrap and clickwrap agreements and the elements necessary for these agreements to be upheld. Just recently, however, the Northern District of California decided a class action case between the plaintiffs (Tompkins) and the defendants being a personal genetics company, 23andMe, who filed a motion to compel arbitration. The court held that the customers must go through arbitration because 23andMe’s clickwrap agreement containing the terms of service (which included an arbitration provision) was accepted when the customers created accounts or registered their DNA kits with 23andMe. Additionally, the court found that 23andMe‘s browsewrap terms of service agreement did not bind website visitors or customers who only purchased a DNA kit without creating an account or registering a kit.
Over the past week, General Mills, one of the largest food companies in the US, made a controversial update to its website legal terms that purported to prevent its consumers from suing it (rather requiring them to submit disputes via "informal negotiation" or arbitration). After the NY Times published a series of articles about the change, General Mills pulled the new terms due to concerns and misunderstandings expressed by many consumers. The new website legal terms posted by General Mills supposedly were intended to apply to consumers downloading coupons, “joining its online communities,” participating in sweepstakes and other promotions, and interacting with General Mills in a variety of other ways online. General Mills employed a pop-up box on its home page, stating that use of the site would “require all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.” [FYI - Companies like to require arbitration as a means for settling disputes as a means of preventing class action lawsuits]