There's lots of depressing stories coming out of our legal system these days, but on one small front at least there's been a surprising run of what I consider really good news. More and more judges are reaffirming the traditional view of "contracts of adhesion" and ruling that the onerous terms of shrinkwrap, clickwrap, and browserwrap agreements which deprive customers of any real recourse are not binding.
We noted last month the rulings in several cases where the courts in particular chose not to enforce one-sided mandatory arbitration clauses. Shortly thereafter came word of another case, Gatton vs T-Mobile, which might prove to be the biggest blow against unfair arbitration clauses yet. T-Mobile was attempting to block class action lawsuits from customers on such issues as non-prorated early termination fees and handsets locked into using the T-Mobile cell phone service. Under the mandatory arbitration clause and a ban on class-action lawsuits in T-Mobile's contracts, the company argued that the lawsuits must be dismissed and the customers forced to submit to arbitration instead.
Because T-Mobile's agreement was an actual signed contract in which the arbitration clause was reasonably prominent, it looked like it would be hard for the customer side to prove the arbitration clause was unconscionable. Nonetheless, the California appeals court ruled that "the high degree of substantive unconscionability arising from the class action waiver rendered the arbitration procedure unenforceable." The court cited a landmark California Supreme Court decision (Discover Bank vs Superior Court 2005) that said that class-action waivers "in a consumer contract of adhesion ... when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money ... are unconscionable under California law and should not be enforced."
The decision against T-Mobile has the potential to make it a lot harder for all vendors to use mandatory arbitration and class-action waivers to escape responsibility for their actions. A more recent decision by a higher court goes even further, calling into question the fundamental sneakwrap licensing tactic whereby the vendor can modify terms of the "contract" just by posting changes to a website. The recent decision by the U.S. Court of Appeals 9th Circuit in Douglas vs Talk America actually follows along the same lines as the court in the T-Mobile case on the potential unconscionability of mandatory arbitration and class-action waiver clauses under state law, but it also looked at an even broader issue.
Get the independent advice and expertise you need to support a virtual workforce.
The increase in Linux popularity has increased the frequency and sophistication of malware attacks. Read this 2 page white paper now to learn how you can protect your Linux environment with real-time protection that is certified by all major Linux vendors.
Download now »
Ensuring acceptable application delivery will become even more difficult over the next few years. As a result, IT organizations need to ensure that the approach that they take to resolving the current application delivery challenges can scale to support the emerging challenges. This handbook elaborates on the key tasks associated with planning, optimization, management and control and provides decision criteria to help IT organizations choose appropriate solutions.
Download now »
A common misconception is that mid-range storage requirements are dramatically different than that of a larger enterprise. Mid-range storage users may require less capacity, but they have similar functionality and management requirements. This ESG paper examines mid-range storage needs and reviews a new solution that adjusts size while retaining value, performance and functionality.
Download now »
Sign up to receive Business Resource Alerts
Recommend This
