TechLaw

Mere Web Posting of Contract Modifications Doesn't Bind User to New Terms

After long distance provider Talk America bought America Online's long distance business, it made several additions to the service contract: inserting a class action waiver, an arbitration clause, and a choice of law provision calling for New York law. Typical risk-shifting strategies.

The contract modifications were posted on Talk America's Web site -- but, one customer alleged, no additional notice of the modification was given. No e-mail notice, no mention stuffed into a monthly billing envelope. Only a modified contract posted to the provider's Web site.

The Ninth Circuit, in a case of apparent first impression at the circuit level, held that the Web posting alone was insufficient to bind the customer to the terms of the new deal. "Parties have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side," the court wrote.

The court said that it would be unreasonable to expect the customer to periodically visit the provider's Web site to inspect the contract for possible changes. "Without notice," the court wrote, "an examination would be fairly cumbersome, as [the customer] would have had to compare every word of the posted contract with his existing contract in order to detect whether it had changed."

So, in the Ninth Circuit, at least, online postings of contract modifications will be effective only when (1) the customer is informed of the change, and (2) the precise nature of the change is explained to the customer in the notice. Merely including language in the original contract informing the customer that the contract could be modified at some future date by posting changes to the Web would seem to fall short of the court's test.

The case is Douglas v. U.S. District Court for the Central District of California, No. 06-75424 (9th Cir. July 18, 2007).

E-Mail Urging Workers to Join Union Is "Commercial" Message Under CAN-SPAM Act

Verizon management didn't like it much when a handful of union organizers created fake e-mail accounts bearing the names of Verizon officials and proceeded to send hundreds of e-mail messages urging its employees to join the Communications Workers of America.

The telecom company sued the union officials under the CAN-SPAM Act, alleging that the messages were unsolicited, contained false and misleading information, and failed to include a means to opt-out of future communications. The union officials' first line of defense were claims that the e-mails were protected under the First Amendment and were beyond CAN-SPAM's reach because they were not commercial in nature.

A good defense one would think, but not good enough for Judge T.S. Ellis III, who tossed it aside somewhat summarily. The judge held that the e-mails were commercial under CAN-SPAM and that union representation is a "commercial service." The CAN-SPAM Act is intended to regulate only commercial speech.

"To the extent that the Act is applied only to fraudulent or misleading speech, it poses no First Amendment questions, as unions can claim no special privilege to engage in misleading representations of fact," the judge wrote. "First Amendment jurisprudence does not compel the conclusion that union organizing speech is per se non-commercial, nor prohibit application of the CAN-SPAM Act to misleading speech by labor unions."

In explaining that union representation is a "commercial service," the court remarked that the CWA performs economically valuable services such as providing representation in workplace disputes, and bargaining for workers' interests in wages and conditions and hours of work. These services are typically performed for a fee by unions and by competing providers such as lawyers and mediators, the court wrote.

It appears that the union officials, thus shorn of any First Amendment protections, now face an uphill battle. The identity of the sender of the e-mails was admittedly faked, and the message body--which enumerated the benefits of union membership and urged the recipient to call the CWA--did not contain the sender's physical address nor a ready means for opting-out of future mailings.

The case is Aitken v. Communications Workers of America, No. 1:06cv1161 (E.D. Va., July 12, 2007).