My mental short-hand for Douglas v. U.S. District Court for the Central District of California, No. CV-06-03809 (9th Cir. July 18, 2007), is that Douglas was a "no notice" case. The plaintiff had no notice that the contract with his long distance provider had been modified and that the changes were on the provider's Web site. Without notice, the plaintiff could not be said to have assented to the modified terms. So the court said.
A few days ago, a federal district court in Michigan decided what I'll call an "almost no notice" case, Manasher v. NECC Telecom, No. 06-cv-10749 (E.D. Mich. Sept. 18, 2007). Again, it involves a telephone company; again, improper billing is alleged.
On the second page of NECC's monthly invoice, a series of five boxes are printed. The first four boxes address fees, discounts, and calling plans. The fifth box contains the statement:
"NECC's Agreement 'Disclosure and Liabilities' can be found online at www.necc.us or you could request a copy by calling us at (800) 766 2642."
NECC's online "Disclosure and Liabilities" page contained an arbitration clause, which NECC here asserted in a motion to dismiss the case. The Manasher court denied the motion, relying on Michigan case law explaining the circumstances under which one writing can lawfully "incorporate by reference" terms found in another writing. In Michigan, "the incorporating instrument must clearly evidence an intent that the writing be made part of the contract."
The language printed in NECC's invoice fails this test, the court said, because nothing in it "clearly indicates" that the online "Disclosures and Liabilities" statement is part of the service contract between the parties. The invoice "merely informs the reader" of where to find the disclosures statement, the court said. Before leaving this issue, the court also complained that the invoice's mention of the online terms was not conspicuous, that it was the last of five statements on the second page of the invoice, and that it was the only time the existence of online terms was mentioned by NECC. So the arbitration clause was out.
Looking at this decision from the telephone company's perspective, you can plausibly argue that better language and better presentation would have led to a better outcome. But ... (mind you, I don't give advice for a living) ... I can't think of any reason why a company would try to incorporate additional terms in this fashion. The customer has the company invoice, in print, in his hand. Presumably, the invoice is mailed every month. Why not put the additional contract terms in the envelope? Why send the customer out to the Web to look for additional terms? Just asking for trouble.
Is anyone aware of a case addressing this issue in the 5th Circuit?
Posted by: Bruse Loyd | May 04, 2008 at 12:58 PM