Does "No Contract" Really Mean No Contract?

Of course not. There is always a contract with cell phone service. Everybody knows that.

Except the plaintiff in Williams v. MetroPCS Wireless Inc., No. 09-22890 (S.D. Fla. Jan. 5, 2010), who is pressing a two-pronged attack on the arbitration clause in her alleged contract with MetroPCS, a cell phone service provider. First, the plaintiff claims that MetroPCS never informed her of the existence of a contract (it was on the MetroPCS website). Second, she claims that MetroPCS marketing materials indicated to her that there were "no contracts" and "never any contracts required" to obtain MetroPCS service.

The trial court, which appeared sympathetic to the plaintiff's arguments, summarized the plaintiff's contentions like this:

[S]he remembers an advertisement featuring a Unicorn and a mermaid stating no contract was required, several other commercials along the same lines or theme with the "no contract" language, and a commercial featuring a contract being passed through an animated paper shredder and moments later a drawing of a contract with a circle and diagonal line or slash through it. To her the contract with a circle and slash through it indicated there was no contract, not that there was a contract with a hidden arbitration clause she never saw or understood. To her, the phrase "no contract" means no contract.

MetroPCS argued that the phrase "no contract" is a standard industry term for "prepaid service plans with no long-term commitment and no termination fee."

MetroPCS advanced a lawyerly, connect-the-dots argument for a valid contract. The plaintiff was (allegedly) given a Welcome Guide when she signed up for service. The Welcome Guide directed the plaintiff to the MetroPCS website for additional information about her cell phone service. The website contained a "Terms of Service" hyperlink at the bottom of the page. The Terms of Service contained a hyperlink to a "Start of Service Request" form, which read: "BY USING METROPCS'S WIRELESS SYSTEM OR ANY OTHER SERVICE, YOU ARE INDICATING YOUR INTENT TO BE BOUND BY THE TERMS AND CONDITIONS OF SERVICE OF THIS AGREEMENT. IF YOU ARE A NEW CUSTOMER AND YOU DO NOT AGREE TO THIS AGREEMENT, DO NOT INITIATE SERVICE."

So, according to MetroPCS, the plaintiff was made aware of the existence of a contract when she received the Welcome Guide, and she agreed to the contract by using the MetroPCS service.

Except that the plaintiff claimed that she never received the Welcome Guide and she never visited the MetroPCS website and the Terms of Service were never again brought to her attention because she elected to receive monthly billing statements via text messages (which did not mention the Terms of Service). She claimed that she purchased her cell phone and MetroPCs cellphone service at a MetroPCS store, and that she left the store without receiving or signing any paperwork.

Setting aside the issue of MetroPCS's "no contract" marketing, there are quite a few court decisions upholding contracts in similar situations. But all of them turned on the fact that the plaintiff received, at some point, notification of the existence of a contract. Cases like Fonte v. AT&T Wireless Services Inc., 903 So.2d 1019 (Fla. Dist. Ct. App. 2005)(terms contained in the welcome guide), Briceno v. Spring Spectrum L.P., 911 S.2d 176 (Fla. Dist. Ct. App. 2005)(terms contained in cell phone packaging), the "venerable" Hill v. Gateway 2000, 105 F.3d 1147 (7th Cir. 1997)(terms contained in the shipping box). Unlike this case, the defendants in Fonte, Briceno, and Hill all presented evidence that the plaintiff was given a copy of the contract or was directed to its online location, the court noted.

The court said that the plaintiff's situation was more like General Impact Glass & Windows Corp. v. Rollac Shutter of Texas Inc., 8 So.3d 1165 (Fla. Dist. Ct. App. 2009), a case in which the appellate court ruled that an online arbitration clause was not a part of the parties' contract because none of the several paper-based documents signed by the parties made reference to it.

Here, the court didn't conclusively rule on the enforceability of the arbitration clause in the alleged contract between the plaintiff and MetroPCS. Instead, the court ruled that the plaintiff had presented enough evidence to put the question to a jury of her peers. I wonder how that will turn out. Over at the MetroPCS website, they aren't using the "no contract required" promotion anymore.

Comments

[Steve R.]

I hope that reality will make an appearance in our legal system and that all these so-called contracts will be declared invalid.

The legal system should provide a level playing field for both the buyer and seller. When the seller asserts through legal obfuscation that the buyer has no rights, the court should squash that.