Category Archives: Litigation

“Terms and Conditions of Sale” provided by hyperlink created binding contract

[Thanks to the Technology & Marketing Law Blog and the ContractsProf Blog for alerting me to this case.]

Several purchasers of Dell computers filed a class action lawsuit against Dell in an Illinois court. Dell moved to dismiss the action, or to compel arbitration, based on an arbitration clause found in the “Terms and Conditions of Sale” that were available for viewing by clicking on a blue hyperlink found on each of the pages that website visitors saw during the purchasing process.

Although the plaintiffs admitted that by purchasing computers online they entered into contracts with Dell, they claimed that the Terms and Conditions of Sale containing the arbitration clause were not a part of the contracts. They argued that merely making a link to the Terms and Conditions of Sale available was insufficient, and that Dell should have required purchasers to affirmatively manifest their assent by clicking an “I Accept” box.

Dell argued that it had done enough to make purchasers aware of the Terms and Conditions of Sale. It had provided the link by means of a contrasting blue hyperlink. It had also stated on numerous pages on its website, used for marketing and for purchase, that all sales were subject to the Terms and Conditions of Sale.

The trial court determined that the online terms and conditions had not been “adequately communicated” to the plaintiffs, because Dell did not “provide a display text on the Web site that manifested a clear assent to the terms and conditions,” and because the terms and conditions themselves were not visible on the pages viewed while placing the orders. Accordingly, the trial court denied Dell’s motion to dismiss or to compel arbitration. Dell sought review. The appellate court reversed.

On appeal, the court held that the plaintiffs were properly made aware of the terms and conditions. The hyperlinks appearing on the web pages made the pages “the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract.” The contrasting blue color of the hyperlink served to make it conspicuous. Finally, the court noted that because the plaintiffs were purchasing computers online, they were not novices, and should have known that more information would have been available by clicking on the link.

Because the Terms and Conditions of Sale were part of the online contract, the court held that the arbitration clause applied. It reversed the decision of the trial court and remanded it with directions to either stay or dismiss the action so that the parties could arbitrate their disputes.

Hubbert v. Dell Corp., — N.E.2d —, 2005 WL 1968774 (Ill.App. 5th Dist., August 12, 2005).

Case demonstrates court’s reaction to glitches in electronic case filing

Eighth Circuit overturns ruling against party whose counsel did not receive electronic notification of court orders.

In the recent case of American Boat Co. v. Unknown Sunken Barge, which was a tort action against the United States, the U.S. District Court for the Eastern District of Missouri granted summary judgment against plaintiff American Boat on September 2, 2003. American Boat moved for reconsideration, but the motion was denied on November 5, 2003.

Although they were signed up for the court’s electronic filing system, local counsel for American Boat did not receive notification of the order denying the motion for reconsideration. Lead counsel, who was not signed up for electronic filing and therefore expected to get a paper copy of the order, never received such paper copy. He first learned of the order when he checked the PACER system on March 4, 2004.

Because the time for appeal had passed, American Boat filed a motion to reopen the time for filing an appeal. The district court denied the motion to reopen, finding that notice of the November 5 order was received, notwithstanding counsel’s statements to the contrary.

American Boat moved for reconsideration of the denial of the motion to reopen. It submitted an affidavit of a computer expert who stated “with near to absolute certainty” that the notification e-mail to local counsel never arrived. During the pendency of this motion to reconsider, lead counsel signed up for the court’s electronic filing system. He never received electronic notification, however, when the court denied the motion on August 12, 2004.

In light of the continuing problems with electronic notification, American Boat filed a second motion to reconsider the denial of the motion to reopen. This time it submitted the affidavit of another computer expert which stated that lead counsel did not receive email notification of the denial of the motion to reconsider. The district court denied this motion as well, and American Boat sought review with the Eight Circuit Court of Appeals, which reversed and remanded.

The appellate court noted that the district court correctly presumed the delivery of email messages since they showed up as entries on the clerk’s docket sheet. However, the appellate court concluded that the district court abused its discretion in denying American Boat an evidentiary hearing on whether the presumption of delivery had been rebutted, and remanded to the district court for such a determination.

The court observed that the newness of the electronic filing system made it likely there were glitches yet to be worked out. Furthermore, the fact that attorneys who had not signed up for electronic notification did not receive paper copies demonstrated possible flaws in the system. Finally, one of the government’s attorneys in the matter also reported not receiving electronic notification. In light of these factors, American Boat had “made a sufficient showing to at least be entitled to an evidentiary hearing on the issue of whether they have adequately rebutted the presumption [of delivery].”

American Boat Co. v. Unknown Sunken Barge, — F.3d —, 2005 WL 1949693 (August 16, 2005).

Google and the reasonable person

You may recall a posting on this site from a few weeks ago about an Indiana court that concluded a plaintiff who hadn’t consulted the Internet failed to exercise due diligence in locating a defendant for service of process. A court in West Virginia has taken the centrality of Google in everyday life one step further. The judge in the case of Plemons v. Gale, 2005 WL 1798335, (S.D.W.Va., Jul 27, 2005) equates doing a Google search with the “reasonable person standard.” Here’s an extensive quote from the case:

“In the ‘time, place, and circumstances’ of this case, one who actually wanted to inform Ms. Plemons that her house was to be conveyed because of a failure to pay roughly $3,000 in taxes and fees would not have looked for her in the dusty corners of the Kanawha County record room. In the age of telephones, internet search engines, online newspapers, online people-finders, and readily available credit reports, most people can easily find someone. Thus, if a reasonable person were charged with the duty of locating Ms. Plemons in the relatively small city of Charleston, West Virginia, it is my belief that he would be likely to employ ‘Google’ to find her name, call information to learn her telephone number, contact her lending bank, or call her ex-husband. Instead, Advantage searched the public records for Ms. Plemons’ address and mailed written notices to two of the addresses contained therein. When the notices were found to be undeliverable, Advantage did nothing further. I continue to believe that those efforts failed to meet the constitutional standards of due process.” [Emphasis added.]

Internet access during trial provides unfair advantage

The New York Workers’ Compensation Board allowed the State Insurance Fund to install a wireless network in the Syracuse office of the Board, enabling the Fund’s attorneys to access their files during proceedings before the Board. Other attorneys appearing before the Board were denied wireless Internet access. The Central New York Workers’ Compensation Bar Association, as well as a couple individual plaintiffs, filed suit against the Board, alleging that its policy to allow the Fund but not other attorneys access to a wireless network was arbitrary and capricious. The trial court agreed, and the decision was affirmed on appeal.

The court held that although the fund is an agency of the State, in litigation it is considered to be a separate entity. Thus, it is of the same status as any other litigant appearing in proceedings before the Board, and not entitled to special treatment.

In affirming that the Board had acted arbitrarily and capriciously by allowing Internet access to the Fund’s attorneys, the court found that:

“The wireless access sought by the Fund provides the Fund an unfair competitive advantage in litigated matters as the installed hardware permits only the Fund’s attorneys access to their case files in the heat of litigation, putting at their fingertips volumes of meaningful exhibits, legal research and other information, with no similar provision for claimants and the myriad of other insurance carriers whose representatives appear before the Board.”

Matter of Central New York Workers’ Comp. Bar Assn. v. State of New York Workers’ Compensation Bd., 2005 N.Y. App. Div. LEXIS 2877 (March 18, 2005).

Time Warner ordered to identify sender of offensive e-mail

In the case of Fitch v. Doe, the Supreme Court of Maine has held that while the Cable Communications Policy Act of 1984 generally prohibits a cable operator’s disclosure of subscriber information, an exception provided in the Act allows disclosure to nongovernmental entities pursuant to court order, so long as the subscriber has received notification thereof.

On Christmas Eve 2003, an anonymous person sent an email under Plaintiff Fitch’s name with a derogatory cartoon attached. Fitch filed suit in Maine state court against the unknown sender of the email (John or Jane Doe). Fitch then sought an order directing Time Warner (the ISP of the account from which the message was sent) to disclose Doe’s identity. Doe’s counsel objected to the disclosure, arguing that the disclosure was forbidden by the Cable Communications Policy Act of 1984, 47 U.S.C.A. § 551 (the “Act”), and that Doe did not consent to allow Time Warner to disclose his identity. The trial court ordered disclosure, finding that Doe’s agreement with Time Warner provided such consent.

Doe appealed to the Maine Supreme Court, but the lower court’s decision to order disclosure was affirmed. Although the court concluded that the lower court erred in determining Doe had consented to disclosure, such disclosure was authorized under an exception found in the Act.

The Act restricts cable providers from releasing information about their subscribers without the consent of the subscriber concerned. Section 551(c)(2)(B) of the Act authorizes disclosure of personally identifiable information if the disclosure is, “subject to subsection (h) of [Section 551], made pursuant to a court order authorizing such disclosure, if the subscriber is notified of such order by the person to whom the order is directed.”

Section 551(h) provides that when a governmental entity is seeking disclosure, it must show by clear and convincing evidence that criminal activity is reasonably suspected. Doe had argued that the reference to Section 551(h) served to “meld” the entire exception into one applicable only when the government seeks information about a subscriber. Because Fitch was not a governmental entity, Doe argued that the exception to the restriction of disclosure should not apply.

The court disagreed, and held that 511(h) served merely to impose a higher standard when the government seeks disclosure of information about a cable subscriber. Because Fitch was not a governmental entity, Time Warner was permitted to release the information in response to a valid court order, so long as it had given notice to Doe. The record established that Doe had received such notice, thus the Act did not bar Fitch’s access to the requested information.

Fitch v. Doe, — A.2d —-, 2005 WL 627569 (S.Ct. Me., March 18, 2005).

Court tells ISPs they can’t have their servers back

In the case of Voicenet Communications, Inc. v. Pappert, 2005 WL 546645 (March 9, 2005), the Third Circuit has upheld the U.S. District Court for the Eastern District of Pennsylvania’s denial of injunctive relief that would have ordered government officials to return certain items of computer hardware to the technology companies from which they were seized in a criminal investigation. The court held that the plaintiffs had failed to demonstrate irreparable harm that would result from the government’s continued possession of the equipment.

Plaintiffs Voicenet and Omni provide access to Usenet, through servers called “arrays.” In 2003, state and local officials seized numerous arrays owned by plaintiffs after being informed that the software on the servers was being used to access illegal pornography. When the officials would not return the arrays, plaintiffs filed suit, claiming violations of their First Amendment rights, and seeking, among other things, a preliminary injunction that would order the return of the arrays.

The District Court denied injunctive relief and the Court of Appeals affirmed. Voicenet and Omni had argued that they and their customers would suffer irreparable harm if the court did not grant the preliminary injunction. The appellate court held that plaintiffs had not shown irreparable harm from being denied possession of the arrays, in part because the arrays could have been replaced for approximately $20,000. The fact that money damages could provide relief precluded an award of injunctive relief.

The court further held that the District Court properly denied injunctive relief that would have required the officials to return to plaintiffs the subscriber records residing on the servers. The officials had promised not to view the records without first notifying the plaintiffs, who could then seek injunctive relief to prevent such viewing. The plaintiffs had argued that giving such discretion to the officials contravened the holding of ACLU v. Reno, 929 F.Supp. 824 (E.D.Pa. 1996). The court in that case had explained that “the First Amendment should not be interpreted to require us to entrust the protection it affords to the judgment of prosecutors.” In this case, however, the court held that no prosecutorial discretion remained, as “the officers’ assurances were absolute.”

Voicenet Communications, Inc. v. Pappert, 2005 WL 546645 (March 9, 2005) (Not selected for official publication).

Court wrongly took judicial notice of facts contained on government website

The Sixth Circuit has overturned the U.S. District Court for the Southern District of Ohio’s dismissal of a class action lawsuit against the City of Columbus, holding that the magistrate judge improperly considered evidence contained on the city’s website. The magistrate had taken judicial notice of the information contained on the website, but the Court of Appeals held that the website was not a public record containing information the accuracy of which could not reasonably be questioned.

Plaintiffs filed suit against the City of Columbus, Ohio alleging that a mediation program established by the city to handle disputes over bad checks violated the Federal Fair Debt Collection Practices Act and the Ohio Consumer Sales Protection Act. The City moved to dismiss, arguing that the program was neither a “debt collector” under the Federal act nor a “supplier” under the Ohio law, and thus could not be liable under either of the statutes. The magistrate judge granted the motion to dismiss. In reaching its decision, the magistrate judge took judicial notice of information contained on the City’s website, namely, a statement that the program’s purpose was to resolve disputes, not collect debts.

The Court of Appeals overturned the magistrate judge’s dismissal and remanded the case for further proceedings. At issue was whether the judge properly took judicial notice of the information contained on the City’s website. Noting that a district court generally may take judicial notice of the existence of public records, the Court of Appeals held that “a court may only take judicial notice of a public record whose existence or contents prove facts whose accuracy cannot reasonably be questioned.”

The City had argued that the website was a public record simply because it was the record of a public entity. The Court swiftly determined, however, that the plaintiffs had reasonably questioned the accuracy of the information, and that they should have been given the opportunity to introduce contradictory evidence. The magistrate judge’s reliance on the website constituted reversible error.

The court gave a nod to public policy considerations that should prohibit a court from blindly accepting the contents of government websites: “If all online statements by a government agency could be relied upon as true by a court considering a motion to dismiss, government agencies could defuse any complaint alleging improper governmental motives merely by stating an arguably proper motive on their website. Such a result could eviscerate all sorts of fraud, civil rights, and other laws requiring investigations into governmental motives.”

Passa v. City of Columbus, 2005 U.S. App. LEXIS 2832 (6th Cir. February 16, 2005).