AT&T Mobility LLC v. Concepcion: How Class Actions Got Castrated by Contracts

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Have you ever looked at the terms and conditions of your phone contract?  I know I didn’t before law school.  What you might not have realized, though, is that you may have signed away your ability to sue the phone company.  Even more so, when a company has practiced deceptively across all of their customers, your chance to sue en mass may also have been signed away.  It all stems from a case called AT&T v. Concepcion.

The facts of the case are that the Concepcions saw AT&T offering a deal for a free phone when you signed up with them.  They signed up, but were surprised to find out that they still owed $30 in sales tax based on the phone’s value.  They found out that others had encountered the same issue across the country.  For one person to sue a company for $30 is foolish as they will spend exponentially more.  But in a class action suit, the cost is spread among the people and the accumulated $30 of thousands of people come make the case worthwhile.  The bigger incentive of class actions is to keep companies in check and keep them from shady practices.

Unfortunately, AT&T had written a mandatory arbitration clause into the contract.  They believed that each person had to go to arbitration individually, which would be pointless for each person.  In a controversial decision, the Supreme Court agreed with AT&T that the clause was binding and held that such clauses were enforceable, regardless of class actions.

While the ability to come to an agreement via contract is essential to a free market, the class action suit serves as a necessary check to unscrupulous businesses and harmful tactics.  Even worse is that the contracts are usually non-negotiable.  While the Court says you can always go elsewhere, this ruling all but guarantees that every phone company will have an arbitration clause.

An interesting footnote to this case is the new attempt by companies to stretch this holding to your likes on Facebook and follows on Instagram.  As the New York Times discusses, large food companies are adding legal terms to its pages in the hopes of having you agree to giving up your right to sue.  It is a fascinating side effect of $30 bill.

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Clickwrap Agreements: Why Clicking “I agree” Binds You to a Contract

Every time we download or install an product we go through the same steps.  We click “Next” over and over until we see the bar pop up showing how long it will take to install the product and we can leave to do something more productive.  Yet during those initial clicks, there is one that always stand out as different.  A text box will pop up with the words “User License Agreement” somewhere on the front and we can scroll down to read what the document says.  We also have to click on a button or check a box that says something to the effect of “I agree to the Terms and Conditions.”  Of course we don’t read what it says.  No one does.  We’ve never had a problem with it and we assume it is just useless legal jargon to limit liability in the case of a bear attack or something.  Unfortunately, by clicking “I agree” we have likely entered into a contract.  The question now is what have we agreed to.

But how can they do this?  Well our friends in the 7th Circuit established “Clickwrap Agreements” as a valid form of contracts.  In ProCD v. Zeidenberg, the court held that such agreements, though unilaterally made, are valid because the purchaser can always return the item or choose not to download it.  The fact that the person did not read the terms is his own fault.  You always have the duty to read the terms of a contract before agreeing to it.  Since he accepted an offer that he had the right and ability to refuse, the court found that clickwrap agreements were valid contracts.

Every Wednesday, we hope to cover a User License Agreement that a vast amount of people have likely agreed to and summarize what is in the terms.

So be warned: just because you don’t know what the agreement says, that doesn’t mean you won’t be bound by it.

[For more in-depth discussion, check out:  The Clicks That Bind: Ways Users “Agree to Online Terms of Service]

Disclaimer:  This information is not for use as legal advice, in litigation, or in any other way that concerns the practice of law.  Any legal questions should be directed to a practicing attorney in your area.  This information is for news and opinion purposes only and is intended to promote discussion and further research.  This is not to be relied on for legal purposes.

Wednesday ULA: iTunes for Windows

It’s time for our Wednesday User License Agreement.

Today’s is iTunes for Windows (click on the link for the full document).

Here are some highlights:

  1. The software is being licensed to you, not sold.  This enables Apple to limit property and ownership rights that you would normally have if you owned iTunes.
  2. You cannot disassembled or reverse engineer the software…among other things.
  3. You can only make a one-time permanent lending of the software provided that all parts are transferred, you do not retain any copies, and the receiving party reads and agrees to the license.
  4. You can limit ad-tracking by opting out of program.  Go to settings in iTunes and clicking “Limit Ad Tracking” setting.  This won’t eliminate ads, but it will prevent the companies from targeting you with specific ones.
  5. Privacy policy is located at www.apple.com/privacy/.
  6. iTunes Store and other Services are a pile of overlapping agreements allowing them to use data and other information from your use of them.
  7. Your rights under the license are terminated automatically, without notice, by Apple if you fail to comply to the terms in the agreement.
  8. As a consumer (not for business, trade, or profession) that use of the software is at your own risk, as permitted by law.
  9. All warranties are disclaimed, expressed or implied, including merchantability and many others, as permitted by law.
  10. Apple does not warrant against interruption of service or use, discontinuation of a service, or that defects will be corrected.
  11. Apples will not be liable for personal injury or any consequential or incidental damages whatsoever. (unless allowed by law; details in the terms)
  12. In no event shall Apple’s total liability exceed $50 (other than required by law).
  13. The governing law will be of California.

The agreement has much more detail so I recommend reading it.  Hopefully you have a better idea of what you have agreed to.

Disclaimer:  This information is not for use as legal advice, in litigation, or in any other way that concerns the practice of law.  Any legal questions should be directed to a practicing attorney in your area.  This information is for news and opinion purposes only and is intended to promote discussion and further research.  This is not to be relied on for legal purposes.