Clicking Your Way to Enforceability – Court Enforces “Clickwrap” Non-Compete Agreement

Posted by on Jul 11, 2016 in Employment and Labor, Miscellaneous

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You’ve heard the buzz about Pokemon GO and decide to give it a try.  After installing the game on your phone and moving past the initial splash screen, you’re presented with the game’s Terms of Service, which you may “Accept” or “Decline.”  Just a single click stands between you and Pokemon-hunting goodness!

If you clicked the “Accept” button, you just entered into a “clickwrap” agreement.  Does that mean you’re now bound by everything stated in the Terms of Service?  The answer to that question is important from an HR perspective because work forms are increasingly being digitally executed by current and prospective employees over a computer network.  Thankfully, the answer is yes, as a recent New Jersey decision confirmed.

In ADP, LLC v. Lynch (D.N.J. June 30, 2016), a business outsourcing company (ADP) sued two former employees to enforce non-compete, non-disclosure, and non-solicitation provisions in a restrictive covenant agreement.  The defendants had enrolled in ADP’s stock award program electronically.  In order to receive awards in the program, they were required to click an “Accept Grant” button.  The option to click this button was unavailable until they affirmatively check a box acknowledging that they had read a collection of documents, including the restrictive covenant agreement.  The defendants had checked the box and clicked on the “Accept Grant” button.

The significance of this fact became apparent when the defendants, who were not residents of New Jersey, argued that the New Jersey court lacked personal jurisdiction over them.  The court noted that defendants had consented to the personal jurisdiction of New Jersey courts in the restrictive agreements.  The defendants argued that that the forum selection clause in the restrictive covenant agreement was unenforceable because they did not receive adequate notice of the clause.  The court rejected this argument as well, noting other cases in which clickwrap agreements incorporating additional terms by reference were regarded as providing reasonable notice that additional terms apply.  Some courts have even enforced clickwrap agreements that do not require affirmative confirmation that the signatory reviewed the terms before agreeing to them.  ADP was therefore allowed to pursue its lawsuit.

ADP confirms that electronic consent to agreements incorporated by reference into a clickwrap agreement is legally valid, assuming the agreements are supported by adequate consideration.  To build an even better case for enforceability, employees should be required to confirm their agreement with (not just acknowledgment of) the incorporated documents.  But beware of the clickwrap agreement’s close cousin—the “browsewrap” agreement, which states that continued action (like browsing the contents of a web page) constitutes agreement with certain terms.  Courts routinely refuse to enforce browsewrap agreements.   Requiring employees to manifest their agreement through affirmative conduct – like clicking on a button – is essential.

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Legal Ethics and Social Media

Posted by on Nov 27, 2013 in Miscellaneous

I’ll be speaking on December 18 at a half-day seminar on “Ethics and Social Media: What Attorneys Need to Know.”  The seminar is good for 3.0 hours of Hawaii MCPE credit and 3.0 hours of California CLE credit.  You might be interested in attending if you have questions like:

– What are the rules on legal advertising on social media?
– Should lawyers even set up a social media account?
– Who should I friend on Facebook?
– What are the do’s and don’ts of tweeting?

For more information or to register, click here.

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Introducing SM Safety Services

Posted by on Oct 2, 2013 in Advertising and Marketing, Copyright, Employment and Labor, Litigation, Miscellaneous, Social Media, Trademark

Social media can be risky business.  Whether an organization embraces or ignores social media, it or its employees probably already have a presence on a social network.  That simple reality can be costly for an organization without proper measures in place to deal with the risks of social media misconduct.  Readers of this blog are familiar with cases where business saw their reputations marred by employees who post embarrassing photos online about work mishaps or found themselves in legal trouble for firing an employee who vented on Facebook about a co-worker.

To help organizations manage the risks of social media activity, I’m proud to introduce SM Safety, a new line of services offered by my law firm.  The approach of SM Safety can be summarized in three words, each corresponding to a level of service that meets a particular need: checkup, plan, and audit.

A SM Safety Checkup is a low-cost way to ensure that an existing social media policy is legally compliant and effective.

A SM Safety Plan is for organizations who need assistance with preparing a new social media policy or enhancing an existing policy.

A SM Safety Audit is a comprehensive review of an organization’s overall presence in the social media space to identify exposure to legal risks due to social media use.

Each SM Safety service is offered for a flat fee.  To learn more about SM Safety or to obtain a quote, visit the SM Safety Services page on this site.

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Online Dating Service Defeats Member’s Lawsuit For Negligence in Posting Member Profiles

Posted by on Jul 5, 2013 in Litigation, Miscellaneous

Court dismisses lawsuit against Match.com arising out of attack of one member by anotherBeckman v. Match.com, 2013 WL 2355512 (D. Nev. May 29, 2013)

A court threw out a Match.com subscriber’s lawsuit alleging that the online dating service was responsible for the injuries she sustained from being attacked by a man whom she met through the service.  Mary Kay Beckman met Wade Mitchell Ridley through Match.com and dated him briefly before ending the relationship.  After the break-up, Ridley sent Beckman threatening and harassing text messages.  Several months later, Ridley ambushed Beckman at her residence and repeatedly stabbed and kicked her.

Beckman filed a $10 million lawsuit against Match.com for (1) negligent misrepresentation; (2) deceptive trade practices; (3) negligent failure to warn; (4) negligence; and (5) negligent infliction of emotional distress.  The federal district court of Nevada granted Match.com’s motion to dismiss the entire lawsuit.

The court held that Section 230 of the Communications Decency Act immunized Match.com from the negligence and negligent infliction of emotional distress claims.  The court easily found that Match.com was an “interactive services provider” and not an “information content provider.”  The court also found that the theory behind the claims was exactly the reason that CDA immunity exists—to protect publishers against liability based on publication of online content generated by third parties.  Beckman alleged that Match.com was negligent in posting Ridley’s profile, which led to her to date Ridley and later be attacked by him.  Because the information in the profile originated from Ridley, CDA immunity protected Match.com from liability based on publication of the profile.

The court took a bit more effort to apply the CDA to Beckman’s claims for negligent failure to warn and negligent representation.  Although those claims tried to focus on Match.com’s alleged failure to warn Beckman instead of Ridley’s profile, the court concluded that the wrongful conduct alleged in the claims was still traceable to the publication of the profile.  There was nothing for Match.com to negligently misrepresent or negligently fail to warn about other than what a Match.com user might find on another user’s profile.  Since the negligent failure and negligent misrepresentation claims were just another way of holding Match.com liable for information originating with a third party, the CDA barred those claims.

The court also found reasons to dismiss the negligence-based claims other than the CDA.   The negligence claim failed because no special relationship exists between a provider of online dating services and its subscribers, and in the absence of a special relationship, Match.com owed no duty to its subscriber.  The emotional distress claim could not survive because, according to the court, posting an online dating profile did not rise to the level of “extreme and outrageous” conduct required to recover for emotional distress.  Finally, Beckman did not satisfy a heightened pleading standard that applied to the negligent misrepresentation claim.

The deceptive trade practices claim, which Beckman brought under the Federal Trade Commission Act, was dismissed because there is no private right of action to enforce the Act.  Beckman argued that the claim alleged that Match.com was negligence per se for violating the Act, but the court found that she did not plead such a claim.

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Estate Planning in Cyberspace: Making Sure Data Doesn’t Byte the Dust

Posted by on Jun 18, 2013 in Miscellaneous

Ownership of contents of online email account gets called into question after account owner diesAjemian v. Yahoo!, Inc., 987 N.E.2d 604 (Mass. Ct. App. May 7, 2013)

Who owns the data in an online account after the account owner dies?  It’s a question that’s growing in importance as online email accounts become commonplace and cloud storage services like DropBox and Google Drive gain users.  A Massachusetts court faced that question in Ajemian v. Yahoo!, Inc., but left it unresolved.

In Ajemian, an individual (Robert) opened a Yahoo! email account for the primary use of his brother, John.  Robert shared the account as a co-user.  Several years after Robert opened the account, John died.  Robert and his sister Marianne were appointed co-administrators of John’s estate.  At the time of John’s death, Robert had not accessed the Yahoo! account for several years and had forgotten the password.

Robert and Marianne tried to get access to the contacts in Yahoo! account to retrieve email addresses of John’s friends and notify them of John’s death and memorial service.  Robert and Marianne also wanted access to the emails in the account to help identify and locate John’s assets and administer his estate.

After negotiations, Yahoo! agreed to turn over the subscriber information for John’s account to Robert and Marianne if they obtained a valid court order, which they did.  Yahoo! believed that the Stored Communications Act prohibited it from disclosing the contents of the emails in the account, however.  This prompted Robert and Marianne to sue Yahoo! in the Massachusetts probate court.  Robert and Marianne argued that the emails were the property of John’s estate and, therefore, as administrators of the estate, they were entitled to access to the emails.  Robert also argued that as co-owner of the account, he was entitled to its contents.

The probate court dismissed the lawsuit on various grounds, including that the Terms of Service (TOS) governing the Yahoo! account required the lawsuit to be filed in California.  On appeal, the Appeals Court of Massachusetts decided that the TOS was unenforceable because Yahoo! failed to prove that it reasonably communicated the TOS to Robert and that he indicated his acceptance of the TOS, such by clicking on a box that says “I Agree” (i.e., a “clickwrap” agreement).  Even if Robert had accepted the TOS, the court would not enforce the forum selection clause contained in the TOS because it was unreasonable and overbroad.   The Appeals Court sent the case back to the probate court for a ruling on the issue of access to the contents of the Yahoo! account.

LegalTXTS LessonBecause the contents of online accounts can be quite valuable, they should be treated as an asset in an estate planning program.  Much hassle and confusion can be avoided by making pre-death decisions about how one’s online information should be handled upon one’s death, such as entitlement of access to the accounts and ownership of their contents.  To plan effectively, one might need to take into account the terms and service corresponding to online services.  In Ajemian, for example, the terms and conditions for the Yahoo! account purportedly limited the transferability of the account and terminated the rights to the Yahoo! ID and the account’s contents when the account owner died.  If an online service has similar terms, a workaround might be needed to preserve the rights of the account owner’s estate to data stored by the service.

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