A federal district court in Illinois recently held in Anand v. Heath that a digital marketing company could not force a user to arbitrate because a “Continue” button on its website did not provide clear notice that clicking the button constituted assent to the hyperlinked terms and conditions that contained the arbitration provision.

As we have noted previously, website operators who wish to enforce their online terms against users will have a higher likelihood of success if they do two things. First, the website should display the terms to users in a conspicuous fashion. Second, and applicable here, the website should affirmatively and unambiguously require users to assent to the terms. Anand demonstrates that online agreements risk unenforceability when the terms are presented in a manner that does not make clear to users that they are agreeing to be bound.

The website www.retailproductzone.com offers users free gift cards in exchange for their responses to surveys and for their consent to be contacted for marketing purposes. Reward Zone USA LLC, a subsidiary of Fluent Inc., maintains the website. In June 2017, plaintiff Narantuya Anand registered on www.retailproductzone.com and completed a survey to receive a free gift card. According to Anand, she then received several unwanted telemarketing voicemails and text messages. 
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On July 19, 2018, in May, et al. v. Expedia Inc., U.S. Magistrate Judge Mark Lane issued a Report and Recommendation recommending that U.S. District Judge Robert Pitman for the Western District of Texas grant a motion to compel arbitration and dismiss a putative class action on the grounds that the plaintiff agreed to the defendants’ website’s Terms and Conditions, which contained a mandatory arbitration clause.

HomeAway User Files Putative Class Action 

HomeAway is an online marketplace for vacation rental properties where property owners can list their properties for rent and travelers can book rental properties. HomeAway’s original business model was to charge owners a fee to list their properties (either on a one-year subscription or pay-per-booking basis) and to allow travelers to search and book rentals for free. HomeAway was acquired by Expedia in 2015 and changed its business model to charge travelers a fee to book rentals in mid-2016. Plaintiff James May had been a property owner who used HomeAway since 2013.
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As we have noted previously, YouTube users sometimes object when the online video giant removes their videos based on terms-of-use violations, such as artificially inflated view counts. In a recent California case, Bartholomew v. YouTube, LLC, the court rejected a user’s claim that the statement YouTube posted after it removed her video, which allegedly gave the impression that the video contained offensive content, was defamatory.

Joyce Bartholomew is a musician who creates what she calls “original Christian ministry music.” Ms. Bartholomew produced a video for the song “What Was Your Name” and posted the video on YouTube in January 2014. YouTube assigned a URL to the video, which Ms. Bartholomew began sharing with her listeners and viewers. By April 2014, she claims that the video had amassed over 30,000 views.

Shortly afterwards, however, YouTube removed the video and replaced it with the image of a “distressed face” and the following removal statement: “This video has been removed because its content violated YouTube’s Terms of Service.” The removal statement also provided a hyperlink to YouTube’s “Community Guideline Tips,” which identifies 10 categories of prohibited content: “Sex and Nudity,” “Hate Speech,” “Shocking and Disgusting,” “Dangerous Illegal Acts,” “Children,” “Copyright,” “Privacy,” “Harassment,” “Impersonation” and “Threats.”
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ARKANSASLast year, this blog raised concerns regarding the TCCWNA, its growing popularity with plaintiffs’ lawyers and the implications for online retailers. At a high level, the TCCWNA is a New Jersey consumer protection law that focuses on contractual terms (including online terms of service) governing transactions between sellers/service providers and New Jersey consumers. It prohibits sellers/service providers from including certain common provisions in their contracts with New Jersey consumers, and provides aggrieved New Jersey consumers with the right to recover from the seller/service provider a civil penalty of not less than $100 per violation. The TCCWNA applies even if the relevant contractual terms are expressly governed by the laws of a state other than New Jersey.
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A New York State senator has introduced a bill that would make posting footage of a crime to social media with the intention of glorifying violence or becoming famous punishable by up to four years in prison and fines.

Instagram hit the 700-million-user mark.

Brands spent 60% more on social media advertising in the first

Because it bases its assesments on job title, location and industry, LinkedIn’s new Salary feature might be more accurate than are other online compensation estimation tools.

States are trying to pass laws that balance bereaved people’s desire to access their deceased loved ones’ social media accounts with the privacy interests of the account holders and

CaptureThe latest issue of our Socially Aware newsletter is now available here.

In this issue of Socially Aware, our Burton Award winning guide to the law and business of social media, we discuss the impact online trolls are having on social media marketing; we revisit whether hashtags should be afforded trademark protection; we

ContentGraphic_SmallWe’re in the midst of a seismic shift in how companies interact with user-generated content (UGC).

For years, companies were happy simply to host UGC on their websites, blogs and social media pages and reap the resulting boost to their traffic numbers. And U.S. law—in the form of Section 512(c) of the Digital Millennium Copyright

Welcome to New Jersey state concept on road sign

If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this blog post.

In what amounts to a feeding frenzy, plaintiffs’ lawyers are working overtime bringing class action suits against e-commerce companies, alleging that their online terms and conditions violate New Jersey’s unusual Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). Some of the online retailers to have been sued include Victoria’s Secret, Bed Bath & Beyond and TOYS ‘R’ US, with more suits being filed every day.

Unlike most consumer protection laws, the TCCWNA focuses specifically on the contractual terms governing certain transactions with consumers, imposing limitations on such terms even if such contractual terms are governed by the law of a state other than New Jersey—creating a potential gotcha for e-tailers who are based outside of New Jersey and who traditionally have their online terms and conditions reviewed only by lawyers admitted to practice in the state whose laws govern such terms and conditions.

Although the TCCWNA was enacted in 1981, it has only recently achieved notoriety, as more and more plaintiffs’ lawyers have embraced the statute due to its broad scope and its statutory penalty of not less than $100 per violation without the need to prove actual harm.

Overview of the TCCWNA

 New Jersey adopted the TCCWNA over 30 years ago not to create new rights for consumers, but rather to “bolster[] rights and responsibilities established by other laws,” particularly those established by New Jersey’s Consumer Fraud Act (“CFA”). Observers have noted that the number of TCCWNA cases has been increasing in the last few years, particularly since 2013 when the Supreme Court of New Jersey in Shelton v. Restaurant.com, Inc. found that online certificates or coupons were subject to TCCWNA rules and opened the door to TCCWNA class actions stemming from e-commerce.

The TCCWNA applies where a company is a “seller, lessor, creditor, lender or bailee,” offering its services to a “consumer” or “prospective consumer” in New Jersey. A “consumer,” under the TCCWNA, is defined as “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.” Indeed, courts have emphasized that the TCCWNA is inapplicable unless the plaintiffs are consumers.

The text of the TCCWNA prohibits three types of provisions in consumer contracts, warranties, notices and signs.

First, it prohibits provisions violating “clearly established” legal rights of a consumer or responsibilities of a seller, lessor, creditor, lender or bailee. These rights and responsibilities may arise from federal or state law. For example, one court found that provisions restricting limitations periods for initiating lawsuits, asserting counterclaims or raising affirmative defenses violate consumers’ rights under federal and New Jersey procedural rules.

Second, the TCCWNA prohibits provisions waiving a consumer’s rights under the TCCWNA. In Johnson v. Wynn’s Extended Care, Inc., for example, the U.S Court of Appeals for the Third Circuit held that a provision in a service contract that prevented the recovery of attorneys’ fees and costs constituted a waiver of a consumer’s rights under the TCCWNA, and was therefore prohibited.

Note, however, that at least two cases have found that a claim under the TCCWNA cannot be based merely upon an omission. As one court noted, the statute’s use of the term “includes” suggests that only a statement affirmatively “included” in the consumer contract, warranty, notice or sign should give rise to liability; in addition, the legislative history does not include any examples of an omission triggering liability.

Third, the TCCWNA prohibits blanket “inapplicable in some jurisdictions” savings clauses (e.g., phrased “void where prohibited”)—though, notably, it does not prohibit such savings clauses in any warranty. In order for a savings clause to be acceptable under the TCCWNA, the statute requires the clause to specify which provisions, if any, are unenforceable in New Jersey.

In one recent case, Martinez-Santiago v. Public Storage, the following language was found to be in violation of the TCCWNA’s prohibition against overly broad savings clauses: “If any provision of this [agreement] shall be invalid or prohibited under [the law of the state where the applicable premises are located], such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions.”

Certain courts, however, have refused to find such a violation of the TCCWNA when the consumer contract, notice or sign is only available within New Jersey, or when the clause uses the alternative “to the extent permitted by law” phrasing, as discussed below.

TCCWNA’s Potential Danger to Online Companies

The TCCWNA is potentially dangerous for companies operating online for at least three reasons.

First, plaintiffs’ lawyers are pushing for an extremely broad application of the statute. They argue that the TCCWNA applies to almost every company providing consumer products online that are available to New Jersey residents, and to any “written consumer contract” and “written consumer warranty, notice or sign” made available to these residents—presumably encompassing nearly all material displayed or offered by a company online.

Second, as noted above, the TCCWNA may expose companies located outside of New Jersey (but whose online websites can be accessed within the state) to claims stemming from any applicable “clearly established” federal or New Jersey state right or responsibility, effectively requiring companies based outside of New Jersey to develop expertise on all potentially applicable New Jersey laws (even if their website terms of use purport to be governed by another state’s laws and have been carefully drafted and reviewed by lawyers admitted to practice in such state).

Think about it: If every state had a law similar to the TCCWNA, every e-tailer would need to have its online Terms of Use reviewed by as many as 50 different lawyers. The result would essentially be a full employment act for attorneys across the country.

Third, the TCCWNA is potentially dangerous for companies because it provides an “aggrieved consumer” with the option to seek recovery of a civil penalty of not less than $100. This means the penalties in class actions—especially the penalties in class actions over online terms and conditions—could add up quickly. The text of the statute also allows for actual damages, reasonable attorneys’ fees and court costs in addition to the civil penalty, and further states that such remedies are cumulative and do not preclude recovery available under other laws.

Some Guidance for Online Companies From Emerging TCCWNA Case Law

Because claims arguing that online terms and conditions violate the TCCWNA have been filed only recently, there is only sparse guidance from the courts on how online companies selling into New Jersey can protect against these lawsuits.

Moreover, any such company, if it has not already done so, should promptly contact New Jersey counsel for advice on how to ensure its online terms and conditions are compliant with the TCCWNA.

With those important caveats in mind, recent court decisions applying the TCCWNA do highlight some potential precautionary measures for website operators.

For example, as a first line of defense, it may be prudent for companies to include, and seek to bolster the enforceability of, an arbitration provision and a related class action waiver clause in their online terms and conditions. As an example, in one TCCWNA case, the Supreme Court of New Jersey indicated that an arbitration provision would have been enforceable if it had clearly and unambiguously notified the consumer that she was waiving her statutory right to seek relief in the court of law. While there is no prescribed wording for a valid arbitration provision, one New Jersey court found the following arbitration notice to be acceptable:

The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the [subject matter of the agreement]. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes.

As a second line of defense, it may be prudent for companies, working with New Jersey counsel, to review and potentially revise their online contracts, warranties and notices in light of TCCWNA cases to date. One approach suggested by existing TCCWNA case law is that businesses can avoid violating the TCCWNA’s prohibition on blanket “inapplicable in some jurisdictions” savings clauses by using different language in their savings clauses to achieve the same result. As noted above, the text of the TCCWNA prohibits savings clauses that state that certain terms “may be void, unenforceable or inapplicable in some jurisdictions” if such clauses do not identify which terms are or are not void, unenforceable or inapplicable in New Jersey. In Kendall v. CubeSmart L.P., however, the United States District Court for the District of New Jersey found that companies could use savings clauses that “attempt…to conform to New Jersey law.” Citing several cases, it held that the phrases “to the extent permitted by law,” “in the manner permitted by applicable law,” “allowed by applicable law” and “or as otherwise permitted by applicable law” were acceptable in savings clauses under the TCCWNA.


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