Wednesday, March 8, 2017
A recent case out of the Second Circuit, McCabe v. ConAgra Foods, Inc., 16-3301-cv, adds to the jurisprudence on promotions and offers and unilateral contracts.
ConAgra ran an annual promotion whereby it pledged to donate to a charity every time a certain code from its packaging was entered on its website, up to a certain maximum amount. McCabe alleged that this promotion created a contract and alleged that ConAgra breached the contract. A promotion is generally not considered an offer to enter into a contract unless it is clear, definite, and explicit, leaving nothing left to negotiate. ConAgra's promotion did not rise to that level, not least because the promotion was clearly limited to a certain maximum amount. For that reason, a person entering the code into ConAgra's website would never have any way of knowing if its code would trigger a donation on ConAgra's part, because the maximum donation amount might have already been achieved. ConAgra's promotion was not an offer, and McCabe could not accept it.
McCabe then tried to characterize the promotion as an invitation for offers, with people "offering" when they input the code onto ConAgra's website, and ConAgra "accepting" when it acknowledged receipt of the code. However, the promotion was too indefinite to set any terms for the "offer," and the code entry itself did not clarify any of the terms further.
At any rate, even if there had been a contract, the court found that there weren't sufficient allegations ConAgra had breached it. There was no allegation that ConAgra did not donate to the charity every time it received the code, up to the maximum amount. McCabe's disagreement was really with the charity's own methodology, which was not ConAgra's issue.
You can listen to the oral argument in this case here.
Sunday, February 26, 2017
We have blogged about arbitration clauses in contracts lots of times before, including in the Internet context, and including in the diet pill context. Now a recent case out of Florida, Vitacost.com, Inc. v. McCants, No. 4D16-3384, adds to the pile, in the Internet diet pill context. In this case, McCants sued Vitacost, from which he purchased dietary supplements that he alleged seriously damaged his liver. In response, Vitacost sought to compel arbitration based on the arbitration clause in the terms and conditions on its website. In Florida, the enforceability of Vitacost's "browsewrap" terms and conditions was a matter of first impression.
Vitacost claimed that the hyperlink to its terms and conditions was located at the bottom of every page of its website and that that was sufficient to put McCants on notice of them. However, the court noted that the constant positioning of the hyperlink at the bottom of the page required every user to have to scroll to the bottom of the page to notice the terms and conditions. Even upon buying something and "checking out," the hyperlink remained positioned toward the bottom of the page. McCants alleged that he had not seen the terms and conditions, and the court found that the hyperlink's location was not conspicuous enough to put McCants on notice.
Wednesday, October 26, 2016
Scholarship Spotlight: "Trust and Enforcement in Banking, Bitcoin, and the Blockchain" (Catherine Christopher - Texas Tech)
Bitcoin and other alternative currencies have been of particular interest in the contracts scholarly community for many reasons, including the potential elimination of intermediaries in electronic financial transactions and also the possibility of self-enforcing "smart contracts." In both cases, the major touted feature of the blockchain technology underlying bitcoin is that it allows for transactions to be "trustless." Catherine (Cassie) Christopher (Texas Tech) suggests in a new article, however, that the purported lack of need for trust is overblown and that intermediaries still have an important role to play.
Here is Professor Christopher's abstract:
Bitcoin has long been touted as a currency and a payment system that relies on cryptography and mathematics rather than trust. But is Bitcoin really trustless? And if so, would that be a good thing? This article under-takes a critical deconstruction of Bitcoin and the blockchain, their themes of democracy and transparency, and the idea that they are trustless. The article then proposes a new conceptualization of the role of trust in business and contracting: the bridging model, which allows for a more nuanced understanding of the interplay between enforcement and trust in contract formation. The bridging model is applied first to traditional banking, to illustrate and analyze the enforcement mechanisms underpinning the U.S. dollar as currency and the banking system as a whole, and to demonstrate that the enforcement mechanisms (government backing and regulation) are not as robust as generally believed. The bridging model is then applied to Bitcoin, to show not only that the system requires more trust than is generally understood, but also that both currency and payment systems benefit from the involvement of trusted intermediaries in response to problems and crises.
"The Bridging Model: Exploring the Roles of Trust and Enforcement in Banking, Bitcoin, and the Blockchain" is published in the Nevada Law Review at 17 Nev. L. Rev. 1 (2016), and is available for SSRN download here.
Friday, September 30, 2016
Yesterday, the United States Supreme Court granted certiorari in the case of Expressions Hair Design v. Schneiderman, which could result in a significant change in the way end users perceive credit card use. The issuing banks and card networks would, for obvious reasons, prefer a system in which the costs of card usage are borne by merchants and are hidden from the card-using customers who then perceive card use as free. Since that preference has found its way into the law of several states, it has raised a First Amendment issue.
Tony Mauro of law.com summarizes the case as follows:
In the Expressions case, the court will be asked to decide the constitutionality of laws in 10 states that allow merchants to charge customers more for credit-card transactions—but require them to call the difference a cash “discount,” not a credit-card “surcharge.” California, Connecticut, Florida, Massachusetts, New York and Texas are among the states with similar statutes on the books.
The credit-card industry has lobbied for such laws since the 1980s, critics say, because using the word “surcharge” would discourage shoppers from using credit cards.
“A ‘surcharge’ and a ‘discount’ are just two ways of framing the same price information—like calling a glass half full instead of half empty,” Deepak Gupta of Gupta Wessler wrote in his petition challenging New York’s law. “But consumers react very differently to the two labels, perceiving a surcharge as a penalty for using a credit card.”
Expressions Hair Design posted a sign that said it would charge three percent more for paying by credit “due to the high swipe fees charged by the credit-card industry.” It and other merchants challenged the law as a violation of their First Amendment speech rights. The U.S. Court of Appeals for the Second Circuit rejected the claim, finding that the law regulates “merely prices,” not speech.
* * *
A coalition of large merchants including Albertsons, Rite Aid and Spirit Airlines sided with the petitioners in urging the court to take the case.
Friday, September 16, 2016
A British start-up company called Luminance, which is also the name of its flagship due diligence analysis, “promises” to read documents and speed up the legal process around contracting, “potentially cutting out some lawyers.” (See here and here).
Luminance says that its software “understands language the way humans do, in volumes and at speeds that humans will never achieve. It provides an immediate and global overview of any company, picking out warning signs without needing any instruction.” Really? When I was working in the language localization things more than a decade ago, I heard the same promises then… but they never come to fruition. We’ll see how this program fares.
The software is said to be “trained by legal experts.” Talk about personification of an almost literary-style. We see the same trend in the United States, though. Just think about phone and internet programs that pretend to be your “assistant” and use phrases such as “Hi, my name is [so-and-so], and I’m going to help you today…”
Meanwhile, if a law firm used software to analyze documents, would it not be subject to legal malpractice if it did not discover contracting or other issues that a human would have, in this country at least? It would seem so… and for that reason alone perhaps also be a breach of contract unless clients were made aware that cost-cutting measures include having computers analyze documents that attorneys normally do.
Sunday, August 28, 2016
The Second Circuit just ruled in a case involving Amazon that "reasonable minds could disagree on the reasonableness of the notice" of the arbitration agreement provided by Amazon.
In 2013, the plaintiff, Dean Nicosia, bought diet pills on Amazon containing the ingredient sibutramine, a controlled substance that was withdrawn from the market by the FDA in 2010 because of concerns over severe health risks. Mr. Nicosia stated that the presence of sibutramine was not disclosed to him and that he was never notified nor offered a refund, even after Amazon stopped selling the product. Amazon moved to dismiss on the grounds that Nicosia's claims were covered by a mandatory arbitration provision. The district court granted that motion, finding that Nicosia had constructive notice of the arbitration clause.
When Nicosia bought the product, the final checkout screen stated “Review your order” and “[b]y placing your order, you agree to Amazon.com’s privacy notice and conditions of use.” The words “conditions of use” were hyperlinked to the actual text of the terms including the arbitration agreement, but were “not bold, capitalized, or conspicuous in light of the whole webpage.” Proximity to the top of a webpage also does not necessarily make something more likely to be read in the context of an elaborate webpage design. Additionally, said the court, “[a]lthough it is impossible to say with certainty based on the record, there appear to be between fifteen and twenty‐five links on the Order Page, and various text is displayed in at least four font sizes and six colors (blue, yellow, green, red, orange, and black), alongside multiple buttons and promotional advertisements. Further, the presence of customers’ personal address, credit card information, shipping options, and purchase summary are sufficiently distracting so as to temper whatever effect the notification has.”
The court made the further analogy:
“It is as if an apple stand visitor walks up to the shop and sees, above the basket of apples, a wall filled with signs. Some of those signs contain information necessary for her purchase, such as price, method of payment, and delivery details, and are displayed prominently in the center of the wall. Others she may quickly disregard, including advertisements for other fruit stands. Among them is a sign binding her to additional terms as a condition of her purchase. Has the apple stand owner provided reasonably conspicuous notice? We think reasonable minds could disagree.”
The Amazon case raises some interesting questions, I think. First and as always: is an online customer – a consumer in this case - truly put on notice just because of a hyperlink on a website? The Second Circuit will now get a chance to resolve that issue. Second, and perhaps much more troubling here is the weight the district court gave to the mere fact that Mr. Nicosia had “signed up for an account” with Amazon. In today’s day and age, we all sign up for numerous accounts to conduct all sorts of life matters from the simple to the complex. I, for one, don’t like to shop or conduct much other business online, but I have an entire spreadsheet full of usernames and passwords to various websites that I have used or still sometimes use. In and of itself, that hardly means that I am aware of any contractual terms contained anywhere on those websites. In my opinion, holding users to such “notice” is unreasonable and unrealistic in today’s busy world (it is simply too time-consuming to study all possible legal requirements listed on all these website in detail to do by far most of the things I do online, and I am sure many other consumers are in my situation.). Even worse, the district court seemed willing to hold consumers to the very high burden of having to familiarize themselves with perhaps frequently changing terms online after having created an online account with a certain company. Again, that is just not realistic with the modern barrage of necessary and/or required website usage. Finally, the court found that users do not actually have to read the terms to be bound by them. It is apparently enough that they could have “inquired” of these terms. That’s giving an online company tremendous legal weight and, arguably, presents split authority in comparison with that of the Ninth Circuit.
The case is Nicosia v. Amazon.com, Inc.
Hat tip to Matthew Bruckner of Howard Univesity School of Law for bringing this story to my attention. http://www.law.howard.edu/1831
Thursday, August 4, 2016
I might wish that more places would just tell me the end price without the extra fees, but, for now, I think the widespread acceptance of these fees in the course of transactions indicates they're here to stay for the time being.
Wednesday, August 3, 2016
Yesterday, Stacey noted how employers should be careful not to be too greedy when dealing with employees. Another example of the backlash – judicial or legislative – that may be the result if employers overstep what ought to be reasonable limits in interactions with their employees is a new law in Massachusetts that prohibits employers from asking job candidates about their salary history as part of the screening process or during an interview.
Why indeed should they be able to do so?! In a free market, freedoms cut both ways: just as an employee can, of course, not be sure to get any particular job at any particular salary, the employer also cannot be sure to be able to hire any particular employee! There is no reason why employers should enjoy financial insight about the employee when very often, employees don’t know about the salaries at the early stages of the job negotiation process. Both parties should be able to come to the negotiation table on as equal terms as possible, especially in this job market where employers already often enjoy significant bargaining advantages.
Massachusetts also requires Commonwealth employers to pay men and women equally for comparable work.
Wednesday, July 20, 2016
How often do those of us in the contracts realm get to string together "commercial law," "U.S. Supreme Court," and "original jurisdiction" in the same sentence? If your answer is, "not nearly often enough!" then you may want to keep tabs on a lawsuit filed last month by Arkansas, Texas, and 19 other states against Delaware and MoneyGram. At issue is the appropriate recipient of unclaimed property, the property in this case being the proceeds from unused MoneyGram payment instruments, which, after a time, are ultimately subject to escheat to the state.
The Dallas Morning News described basic facts in covering the rollout of the litigation by the Texas Attorney General:
Attorney General Ken Paxton today accused the state of Delaware of swiping up to $400 million in unclaimed checks that rightfully belong to Texas and the 48 other states.
Texas’ share, he said, would be about $10 million.
For the last four or five years, Paxton said, announcing a lawsuit against Delaware that was filed directly at the U.S. Supreme Court, Delaware has been requiring financial institutions incorporated under its laws — in particular MoneyGram – to turn over unclaimed funds only to Delaware.
But under a 1974 federal law, Paxton asserted, such funds belong to the state in which a transaction originated. MoneyGram lets people pay a fee to purchase a check they can send to someone else.
“The state of Delaware elected to begin playing by a different set of rules,” Paxton said, calling the practice both illegal and unfair. “Delaware has our money.”
He cited an audit released in February 2015 that found that Delaware had claimed more than $150 million in unclaimed checks that originated in 20 other states. Extrapolating to the whole country, he said, the tally could be $400 million.
This group of 21 states is not the first to take issue with Delaware's appropriation of the unclaimed property. Wisconsin and Pennsylvania brought a similar lawsuit in federal district court in which defendant Delaware ultimately invoked the original jurisdiction of the Supreme Court to resolve disputes between states. SCOTUSblog provides some helpful detail on the legal background and procedural posture of these state-v.-state cases:
The core legal issue in each of the new filings is whether a 1974 law with an assignment of priority of state ownership for unclaimed tangible property applies to the new instrument, which some 1,900 banks or other institutions across the country are using instead of cashier’s or teller’s checks. Delaware says the law does not apply; the other states disagree.
The Supreme Court has issued three rulings on competing state claims to unclaimed intangible property; Congress has overruled one of those, in a 1974 law known as the Disposition of Abandoned Money Orders and Traveler’s Checks Act. That law is at the center of the cases that have reached the Court under its “original” jurisdiction — that is, its authority to decide, in the fashion of a trial court, a legal dispute not decided by a lower court. This jurisdiction is often implicated in resolving disputes between states — as in the new filings over unclaimed property.
The Court has no binding obligation to take on such a case. However, if it does, it customarily names a “special master” to act like a junior judge to gather facts and make a recommendation for a decision. A special master’s report is not final unless it becomes the ruling of the Supreme Court.
The large dollar amount in dispute arises from an aggregation of small transactions that will be familiar to anyone who has studied the "money order" species of negotiable instrument:
While Delaware’s claims are at the center of this new financial fight between the states, the controversy actually turns on the specific financial instrument involved, and the Texas company that has been issuing those items, which it calls “official checks.” That company, MoneyGram Payments Systems, Inc., has its main business office in Texas but it is incorporated in Delaware. It does business in all fifty states.
Its main business is as a kind of financial partner to banks and other institutions that prefer not to issue cashier’s checks or teller’s checks in their own name. MoneyGram does it for them, so it acts as the financial backer of its “official checks.”
That kind of transaction is conducted for some of the same reasons that stores do a business in money orders or traveler’s checks. The idea is that, in the form of a money order or traveler’s check, the piece of paper is a guaranteed form of payment that works like cash; in other words, it won’t “bounce” for lack of sufficient funds behind it. Typically, this kind of instrument is in fairly small amounts.
The Supreme Court does not frequently consider issues intersecting with commercial law in quite the way that this case does, so the outcome will certainly bear watching.
Wednesday, July 6, 2016
Yesterday, I blogged here about ticketscalping “ticketbots” outperforming people trying to buy tickets with the result of vastly increased ticket prices.
Now Ashley Madison – dating website for married people – has announced that some of the “women” featured on its website were actually “fembots;” virtual computer programs. In other words, men who paid to use the website in the hope of talking to real women were actually spending cash to communicate with computers (men have to pay to use the website, women don’t).
Why the announcement? The new leadership apparently wanted to air the company’s dirty laundry, so to speak.
Ashley Madison was hacked last year, revealing who was using the website to cheat on their husband, wife or partner. It was a devastating hack, ruining lives and even leading a pastor to commit suicide.
This seems to be a clear breach of contract: if you pay to communicate with real women, the contract must be considered breached if all or most of the contact attempts went to and/or from computers only. Perhaps even worse for Ashley Madison is the fact that the company is under investigation by the U.S. Federal Trade Commission. The FTC does not comment on ongoing cases, but “it could be investigating whether Ashley Madison properly attempted to protect the identity of its discreet customers -- which it promised to keep secret. Or it could be investigating Ashley Madison for duping customers into paying to talk to fake women. On Monday, the company also acknowledged that it hired a team of independent forensic accounting investigators to review past business practices around bots and the ratio of male and female U.S. members who were active on the site."
Tuesday, July 5, 2016
Have you ever tried buying concert tickets right when they were made available for sale on the Internet, only to find out mere minutes later that they were all sold out? Or, for that matter, highly coveted camping reservations in national or some state parks?
Where once, we all competed against the speed of each other’s fingertips and internet connections, nowadays, “ticket bots” quickly snatch up tickets and reservations making it virtually impossible for human beings to compete online. Ticket bots are, you guessed it, automatic computer programs that buy tickets at lighting speed. They can even read “Captcha boxes;” those little squiggly letters that you have to retype to prove that you are not a computer. Yah, that didn’t work too well for very long.
“A single ticket bot scooped up 520 seats to a Beyonce concert in Brooklyn in three minutes. Another snagged up to more than 1,000 U2 tickets to one show in a single minute, soon after the Irish band announced its 2015 world tour.”
Ticket bots scoop up tickets for scalpers who then resell them on other websites, marking the tickets up many times the original price. (I’m actually not saying that state and national parks are cheated that way, maybe camping reservations in those locations are just incredibly popular as hotel prices have increased and incomes are staggering. I personally used to be able to, with t he help of a husband and several computers, make campground reservations for national holidays, but those days are long gone…”we are now full.”).
Ticket bots are already illegal in more than a dozen states. New York is considering cracking down on this system as well. However, the most severe penalty under New York law is currently fines in the order of a few thousand dollars where ticket scalpers make millions of dollars. A new law proposes jail time for offenders. This is thought to better deter this type of white-collar crime in the ticket contract market.
Monday, June 13, 2016
Stories such as this [https://www.washingtonpost.com/lifestyle/travel/i-flew-to-abu-dhabi-for-265-round-trip-heres-how-you-can-do-the-same/2016/06/07/fc33cbea-29a3-11e6-b989-4e5479715b54_story.html] about finding incredibly cheap airlines to both national and international destinations because of airline computer pricing mistakes (real or otherwise…) have become commonplace. In 2012, the Department of Transportation established clear rules against changing the price of a ticket after purchase. But in a new decision by the U.S. Department of Transportation, that rule will no longer be enforced:
“As a matter of prosecutorial discretion, the Enforcement Office will not enforce the requirement of section 399.88 with regard to mistaken fares occurring on or after the date of this notice so long as the airline or seller of air transportation: (1) demonstrates that the fare was a mistaken fare; and (2) reimburses all consumers who purchased a mistaken fare ticket for any reasonable, actual, and verifiable out-of-pocket expenses that were made in reliance upon the ticket purchase, in addition to refunding the purchase price of the ticket.
Travelers’ websites thus now recommend that people hold off making further travel plans until a ticket and confirmation number have actually been issued. Some have further said about the glitch fares that “[t]ravel is not something that is only for the elite or [people] from certain economic brackets.” Of course, it shouldn’t be, but with the deregulation of the airline industry and steadily increasing prices and fees, history seems to be repeating itself: air travel is, for many, becoming unaffordable. This in spite of record-breaking profits for the airline industry benefiting from low oil prices and, I want to say of course, fares increasing, holding steady or certainly not decreasing very much. Airline executives say they are sharing the wealth with passengers by investing some of their windfalls into new planes, better amenities and remodeled terminals. They're also giving raises to employees and dividends to investors. Right… And whereas some years have been marked by bust, many more have been booming for the airlines.
Given that, why would the DOT be amenable to help out the airlines, and not passengers? Under contract law, mistakes that are not easily “spottable” have, traditionally, not been grounds for contract revocation. If one considers the contract to have been executed when the airline accepts one’s online offer, why should the airline, absent a clear error or other mitigating factors, not be expected to follow the common law of contracts as other parties will, depending on the circumstances, of course, likely have to? That beats me.
Some airlines are, however, choosing the honoring the mistake fares. Others don’t. Bad PR, you say? That also does not seem to matter. The most hated airline in the U.S. a few years back – Spirit Airlines – was also (at least then) the most profitable.
Hat tip to Matt Bruckner of Howard University School of Law for bringing this story to my attention.
Monday, May 30, 2016
Watching terms and conditions litigations continue to play out is an interesting exercise. One of the things we learn is that the terms and conditions mean what they say, which should be obvious, but of course ignores the fact that basically nobody reads what they say. Consumers seem to be consistently caught off-guard by some of the terms. A recent Ninth Circuit decision, Geier v. M-Qube Inc., No. 13-36080, reinforces this (you can watch the oral argument here).
Geier sued m-Qube based on a mobile game it marketed called Bid and Win. m-Qube was not the provider of the game; rather m-Qube merely marketed the game. The other defendants in the case were all similarly removed from the actual content of the game, serving as "intermediaries" and "gateways." The game's actual content provider, Pow! Mobile, was not sued by Geier.
The dispute in the case was over whether m-Qube and the other defendants were third-party beneficiaries of the terms and conditions of the game. Allegedly, when signing up for the game, subscribers, under the terms and conditions, waived all claims against Pow! Mobile's "suppliers." Despite this clause, Geier was attempting to sue m-Qube, et al., over text message abuses in violation of Washington law. (Geier, incidentally, was not alone in suing over this. A class action in the District of Nebraska was complaining about the same behavior.)
The Ninth Circuit's decision in this case is a matter of straightforward contract law: If you are an intended third-party beneficiary of the contract, you can enforce the contract. There is no real surprise there, except maybe to the consumer here, because it may sink Geier's entire case, which now hinges on whether m-Qube and the other defendants are Pow! Mobile's "suppliers." If they are, then they are intended third-party beneficiaries of the terms and conditions' waiver clause and can seek to enforce it. We may not be reading those terms and conditions, but we may be waiving lots of our rights nonetheless.
Friday, May 27, 2016
Scholarship Spotlight: What We Buy When We 'Buy Now' (Aaron Perzanowski - Case Western & Chris Jay Hoofnagle - Cal-Berkeley)
Contracts in the digital age continue to raise novel issues of mutual assent and interpretation, and misunderstanding by individual users crosses over into consumer law as well. In What We Buy When We 'Buy Now, authors Aaron Perzanowski (Case Western) and Chris Jay Hoofnagle (California - Berkeley) generate and analyze empirical data on consumer understanding of contracts for digital wares, concluding that this area is ripe for action by the Federal Trade Commission. Here is the authors' abstract:
This article presents the results of the first-ever empirical study of consumers' perceptions of the marketing language used by digital media retailers. We created a fictitious Internet retail site, surveyed a nationally representative sample of nearly 1300 online consumers, and analyzed their perceptions through the lens of false advertising and unfair and deceptive trade practices. The resulting data reveal a number of insights about how consumers understand and misunderstand digital transactions. A surprisingly high percentage of consumers believe that when they “buy now,” they acquire the same sorts of rights to use and transfer digital media goods that they enjoy for physical goods. The survey also strongly suggests that these rights matter to consumers. Consumers are willing to pay more for them and are more likely to acquire media through other means, both lawful and unlawful, in their absence. Our study suggests that a relatively simple and inexpensive intervention — adding a short notice to a digital product page that outlines consumer rights in straightforward language — is an effective means of significantly reducing consumers’ material misperceptions.
Sales of digital media generate hundreds of billions in revenue, and some percentage of this revenue is based on deception. Presumably, if consumers knew of the limited bundle of rights they were acquiring, the market could drive down the price of digital media or generate competitive business models that offered a different set of rights. We thus turn to legal interventions, such as state false advertising law, the Lanham Act, and federal unfair and deceptive trade practice law as possible remedies for digital media deception. Because of impediments to suit, including arbitration clauses and basic economic disincentives for plaintiffs, we conclude that the Federal Trade Commission (FTC) could help align business practices with consumer perceptions. The FTC’s deep expertise in consumer disclosures, along with a series of investigations into companies that interfered with consumers’ use of media through digital rights management makes the agency a good fit for deceptions that result when we “buy now.”
Professors Perzanowski's and Hoofnagle's article is forthcoming in the University of Pennsylvania Law Review in 2017, but you can download their current draft here.
Thursday, May 12, 2016
If you and I worked in an industry with highly sensitive information (assuming that we do not), it might be one thing if we thought we could email confidential information to our private email accounts and copy such information to a memory stick without finding out. But if a C-level employee at a high-tech company does so, does such conduct not rise to an entirely different level of at least naivety, if not deliberate contractual and employment misconduct?
A court will soon have to answer that question. Louis Attanasio, former head of global sales for an IBM cloud computing unit has been sued by IBM for breach of a contractual confidentiality clause, misappropriation of trade secrets, and violation of a non-compete agreement when he left – information in hand – to work for direct competitor Informatica.
In 2016, Attanasio allegedly started sending confidential information to his private email account, including draft settlement agreements between other IBM employees who had left to work for competitors. Before leaving IBM, Attanasio was asked to return a laptop to the company, which claims that he cpied files to a USB storage device.
Once again, the extent of the traceability of our electronic actions at work has become apparent. I continually remind my students of this to help them avoid “traps” such as the above or, frankly, simply to remind them that they should not spend much, if any, time on their computers not working (most seem to use their own electronic devices anyway these days, but still… and doing so is also very visual in an office setting.). Employers frequently complain about the work ethics of new college graduates, so it might be worthwhile to remind our students of what seems obvious to us.
Monday, May 2, 2016
The answer is a definite... maybe.
Bitcoin, of course, is the original--and many would say at this point, most successful--effort to create a "cryptocurrency," a digital store of value that can be traded electronically without the necessity of a bank intermediary yet can also avoid the problem of double-spending (i.e., digital counterfeiting) that would destroy an electronic currency's value. For purposes of contract law, Bitcoin is most notable because the aforementioned double-spending problem was solved by the creation and implementation of blockchain technology. Blockchain programming allows, among other things, for the maintenance of transactional records in a ledger distributed among numerous and otherwise unrelated computers across the internet rather than in a central location. Contract lawyers have particular reason to care about the blockchain because it raises the looming possibility of "smart contracts," contracts with the technical capability of enforcing themselves.
An enduring mystery of Bitcoin has been the identity of its 2008 creator, who to date has been identified only by the pseudonym "Satoshi Nakamoto." Efforts to identify Nakamoto have been largely unsuccessful, with the most notable misstep being Newsweek's debunked 2014 claim that Satoshi was Japanese-American physicist Dorian Nakamoto.
This rather enduring tech mystery may have been solved, though skeptics remain unconvinced. In an interview with the BBC and other media organizations, Australian tech entrepreneur Craig Wright claims to be the real Satoshi Nakamoto, and other prominent members of the Bitcoin community are backing his claim. The fact that Wright's claim arose on the eve of the digital currency and technology conference Consensus 2016 has allowed for the intriguing circumstance of people in the know reacting and the entire story being live blogged.
So is Craig Wright actually Satoshi Nakamoto? Opinion certainly may shift over the next several days and weeks, but at this point a majority seem to be accepting his claim or profess to be open to accepting it. All in all, an intriguing turn of events out on the periphery of contracts and commercial law.
Wednesday, March 30, 2016
Have you ever been frustrated with seeming endless and practically unreadable scroll-down window that accompany many internet contracts? Or maybe you don't even think about them enough to be frustrated. The dozens of pages of scroll text typically end with a checkbox stating, "I have read and understood the foregoing agreement." All but the most unusually focused among users will check the box without having read the verbose digital boilerplate, and both sides surely recognize the untruth of the "read and understood" certification.
A court has recently refused to enforce an arbitration provision because it was buried at the bottom of the lengthy scroll able window. And the decision came from not just any court, but from the United States Court of Appeals for the Seventh Circuit--known for present purposes as the founder of the ProCD and Hill v. Gateway 2000 line of shrinkwrap arbitration-clause cases.
Over at the National Law Review, attorney Eric G. Pearson describes the facts of in Sgouros v. TransUnion Corp., No. 15-1371 (7th Cir. March 25, 2016), an opinion by Chief Judge Diane Wood applying Illinois law:
Sgouros purchased a “credit score” package from TransUnion, and he later brought suit, alleging that TransUnion had provided him with a number that was erroneously high and thus useless to him in his negotiations with a car dealer. TransUnion filed a motion to compel arbitration, which the district court denied.
The crux of the dispute concerned the webpage for “Step 2” in Sgouros’s purchase, which asked him for an account username and password and for his credit-card information. See slip op. at 4. Below these fields were two bubbles to answer whether a user’s home address was the same as the user’s billing address (“yes” or “no”), and below that was a scrollable window in which only the first two-and-a-half lines of a “Service Agreement” were visible. Had he read to page 8 of the 10-page agreement, Sgouros would have found the arbitration clause. Below the scrollable window was a hyperlink to a printable version of the agreement and a bold-faced paragraph memorializing an “authorization” to obtain credit information. Rounding out the bottom of the page was a button labeled “I Accept & Continue to Step 3.”
Judge Wood's opinion itself begins, for those of us who admire persuasive storytelling, with an excellent example of framing the story around the ultimate result:
Hoping to learn about his creditworthiness, Gary Sgouros purchased a "credit score" package from the defendant, TransUnion. Armed with the number TransUnion gave him, he went to a car dealership and tried to use it to negotiate a favorable loan. It turned out, however, that the score he had bought was useless: it was 100 points higher than the score pulled by the dealership.Believing that he had been duped into paying money for a worthless number, Sgouros filed this lawsuit against TransUnion. In it, he asserts that the defendant violated various state and federal consumer protection laws. Rather than responding on the merits, however, TransUnion countered with a motion to compel arbitration. It asserted that the website through which Sgouros purchased his product included (if one searched long enough) an agreement to arbitrate all disputes relating to the deal.
- The arbitration clause was not visible in the window.
- The site did not call the user’s attention to the arbitration provision in any other way.
- The site did not require the user to scroll to the bottom of the window or to first click on the scroll box.
- It was not clear that the purchase “was subject to any terms and conditions of sale.”
- The term “Service Agreement” said nothing “about what the agreement regulated.”
- The bold-faced paragraph was merely an authorization, and the button labeled “I Accept” actually misled the consumer to thinking that this was an acceptance of only the authorization’s terms. “No reasonable person would think that hidden within that disclosure was also the message that the same click constituted acceptance of the Service Agreement.”
All in all, an interesting turn of events from an important court on issues of clickwrap terms and arbitration.
Thursday, March 24, 2016
Clipping coupons and bringing them to retail stores is passé, but online “couponing” is considered cool by consumers. 23% of consumers report that they use more coupons now than earlier because technology makes it easier to find and use them. 51% of the consumers who do use coupons say that they use them more than they did five years ago. Part of this may be a reflection of declining personal incomes, and part may be because the recession has demonstrated the value of savings to many people.
Former CEO of J.C. Penney Ron Johnson was famously ousted when he decided to eliminate the chain’s coupons and no less than 590 annual sale events (yes, almost twice per day!). JCP has now settled a lawsuit that alleged that the company falsely inflated its prices (showing “regular” and “original” prices that had never been in effect) in order to be able to have such sales. http://www.usatoday.com/story/money/2015/11/11/jcpenney-settles-lawsuit/75567958/
Where does a reasonable store draw the line between these two ends of the spectrum? With the truth, of course, and letting the chips fall where they may in a fiercely competitive marketplace. Needless to say, that is tough to do with shareholder expectations of endless growth and earnings. One thought might be for retailers to offer more items for sale that are actually appealing, unique and well fitting (when it comes to clothes) rather than the same boring outfits everyone else offers. Just a thought in times when vendors such as the Gap and Banana Republic, for example, are suffering from immense “product acceptance challenges” (read: boring stuff no one wants to buy).
Sunday, March 20, 2016
A recent California appellate court case, Long v. Provide Commerce, Inc., found that a browsewrap agreement containing an arbitration clause failed to provide notice sufficient for assent. The case is likely to be significant in shaping wrap contract doctrine because it is the first California appellate court decision which addresses “what sort of website design elements would be necessary or sufficient to deem a browsewrap agreement valid in the absence of actual notice.”
This case is another in a line of cases coming out of California and the Ninth Circuit which is making a long overdue correction to contract law doctrine -- doctrine which veered dangerously off course with ProCD and its ilk. As I’ve previously noted, the law in this area is still working itself out, and my guess is that other jurisdictions will start reevaluating the meaning of “assent” when it comes to wrap contracts (and start following the Ninth Circuit’s more reasonable understanding of reasonableness).
(Disclosure and fun fact: I am the recipient of a chair funded from a class action settlement involving ProFlowers).
Thursday, March 17, 2016
As more and more retail shopping seems to be shifting from brick-and-mortar stores to both well-known and perhaps more shady online retailers, the need to read the online terms and conditions very carefully is obvious. As we have discussed here before, this is hard enough to do when these are phrased in legally and linguistically challenging ways. But what to do when a company seemingly tries to come across in a lighthearted and funny way, but is still dead serious about the underlying legal messages? Some people have found out that this can present almost insurmountable obstacles.
Take, for example, outdoor clothing and gear provider 123Mountain in Colorado. (H/t to Professor Miriam Cherry of the Saint Louis University Law School for bringing this story to the attention of the Contracts Listserv.) Its linguistically very poorly drafted terms and conditions contains statements such as “[w]e love all of our Users, especially those that buy lots of stuff from us,” “[y]ou understand that 123mountain is good, but not perfect. Therefore, we cannot and do not guarantee that the Site will be free of [sic] infection from viruses or other mean computer stuff…,” “[y]ou acknowledge and agree that there are mean people in the internet world…,” “[y]ou are not allowed to resale [sic] our product as commercial activity 9 mean [sic] your Canada Goose, Nobis, Moose knuckle and Parajumper is for you not to resale at your Russian cousin) [sic],” and “[a]fter all, nobody, except my friend's cat Misse is perfect, and even she sometimes has an accident … 123mountain shall have the right to refuse or cancel any orders placed for that product(s)[sic] listed at the incorrect price. Sorry.” Or how about this one: “ We will accept pre-orders for Canada Goose, Nobis, Moose knuckle and Parajumper. Please keep in mind that it can take up to 24 months to fulfill a preorder for Canada Goose, Nobis, Moose knuckle and Parajumper.” See the complete terms and conditions here.
Two years for an item of clothing? I would personally not be sufficiently interested in waiting two years for any kind of clothing, and certainly not a mere sports jacket. Many other products are available that will do just fine, thank you.
As reported in detail here, a 123Mountain customer came to the same conclusion the hard way himself. In early November 2015, he placed an order for a jacket with “two-day shipping.” When he still had not received the jacket a week later, he contacted the company and was told that he could expect the jacket within slightly less than three weeks. When inquiring about the impression that he had gotten from the website that the item was in stock, he was told that the item was “available for order” rather than actually “in stock.” A full month later, he was told that the item would still ship no later than at the end of November …. 2017. Yes, you read that right: two years later. When not paying for the invoiced amount, 123Mountain sent a collection agent after the customer!
For good reason, it seems, 123Mountain only has one star on Yelp.com, the lowest possible ranking. The Lakewood, Colorado, Police Department, has apparently received nine other complaints against 123Mountain since 2013, but “the knotty terms and conditions that customers agreed to when making purchases online made it impossible to charge the couple with a crime.”
So, not only can some companies often get away with contractual arguments for years, but prosecutors also find it “impossible” to charge companies with crimes, even in cases such as the above. That’s a very sad state of affairs for online contracting, business ethics, and customer service. Greed and selfishness seem to be the order of the day in many cases.
Thankfully, major credit card companies seem more willing than before to help their customers in cases like this. The “fault” is not as readily placed on the buyer as before, at least judging from anecdotal evidence and personal experience. This, of course, does not guarantee an ultimately positive outcome for defrauded customers. Online review sites such as Yelp are also somewhat helpful in this context, but in times when online review websites are also known to suffer from their own credibility problems due to allegedly fake reviews, the situation is factually and legally troublesome for online buyers. This is even more so in times when people often resort to buying even such things as cat litter and kitchen towels online to, among other things, save the hassle of carrying bulky items home themselves. Online shopping is here to stay. Amazon has even announced plans to deliver packages by drones minutes after ordering. It seems that the law needs to rapidly develop to address the many legal issues that have arisen and continue to arise in the online contracting context.
Ideas on how to do so? Comment below!