Anyone who has even a cursory familiarity with modern technology is undoubtedly familiar with one-sided terms of service agreements. Everything from bank accounts to phone service now requires consumers to accept that any contract disputes will be handled on the service provider's terms, which typically specify arbitration in a venue of the corporation's choosing. But the Supreme Court of Washington has now provided consumers in that state with some relief, ruling that the state's Consumer Protection Act makes lopsided service agreements void.
The case started when one Michael McKee signed up for AT&T long distance service in 2002. Although McKee lives outside of the city of Wenatchee, he wound up being assessed a monthly utility tax specific to that city. McKee was finally able to determine that the company assessed these taxes based on ZIP codes, regardless of whether the ZIP fell entirely within the city limits. He responded by filing a class-action lawsuit; AT&T responded by attempting to compel binding arbitration, per its customer service agreement. The appeals ultimately made their way to the Washington Supreme Court.
That court has now returned a unanimous ruling (PDF, via the Seattle Post-Intelligencer) that reaffirms the decisions of lower courts: AT&T's service terms contain clauses that are, in legal terms, "unconscionable," meaning that no reasonable individual would have agreed to them had he or she realized their full scope. The specific issues, however, only apply to Washington State.
The ruling was based in part on which state laws apply. AT&T's contract stipulated New York, where it is incorporated, while McKee alleged violations of Washington's robust consumer-protection laws. The court ruled that, since the contract was negotiated, agreed to, and executed in Washington, the case should proceed there. The ruling's disdain for these sorts of service agreements appeared to peek through, as it referred to "negotiation (what little there was)."
With Washington law in effect, the court ruled that a number of aspects of the contract's dispute resolution agreement were unconscionable. These included a prohibition on class-action claims, which may be the only way to have access to effective counsel for issues as (individually) small as the service fees, which totaled less than $2 a month. Similarly, a confidentiality clause could prevent the full extent of small violations from being publicly recognized. Other aspects were simply abusive: AT&T stipulated it could collect attorneys' fees and consumers could not, and the agreement halved Washington's statute of limitations time period.
AT&T argued that the contract was valid, in that it sent McKee a copy of it and his continued use of the service constituted an agreement to its terms. The court did not agree, noting that there was no clear evidence that McKee had received his copy, much less made a positive assent to its terms. AT&T also noted that a later modification of the agreement brought its terms closer in line with Washington law (the original agreement is still available). The court, however, found that this one-sided dictation of terms reinforced its conclusion that there was no real agreement on the part of consumers.
The court had the option of determining that some portions of the contract were legally valid and could be enforced. Instead, the ruling determined that unconscionable conditions pervaded the dispute resolution agreement, rendering it invalid in its entirety. Ruling otherwise, the court reasoned, would simply encourage companies to write the most unpleasant terms possible: "If the worst that can happen is the offensive provisions are severed and the balance enforced, the dominant party has nothing to lose by inserting one-sided, unconscionable provisions."
This isn't a sweeping victory for consumers, as it is based on the laws of a single state. The ruling, the justices noted, relied on "Washington’s Consumer Protection Act, which evidences a strong public policy" in favor of consumers. Still, it is an indication that courts may find that use of a service does not necessarily imply agreement to all its terms, and companies cannot simply get away with writing the most restrictive agreements possible in order to have courts then parse it into the best legally sanctioned terms.
No comments:
Post a Comment