Barely Legally

Confessions of a Moot Court Bailiff

Old News in re: Zappos Shoes

Business Insider has an interesting take on contract law and how it applies to online web retailers. Specifically, they report on a recent court ruling involving Zappos, everyone’s favorite online shoe store. The headline reads: Almost Every Website On The Planet Could Be In Legal Jeopardy, Thanks To Zappos. Well, that’s certainly an outsized claim.

Let’s start with a little background. Zappos is a company that sells shoes and stuff online. Recently, some hackers got into Zappos’s computers and downloaded the personal information (email addresses, names, phone numbers, etc.) of 24 million customers. Now, customers are suing Zappos for screwing up. Zappos says that the lawsuits have to go to arbitration because all 24 million customers agreed to Zappos’s Terms of Use, and one of the Terms was “no matter how bad we screw up, you can’t sue us. We go to arbitration.”

And now a court has tossed that arbitration clause, and Business Insider thinks that this will ruin every website on the planet. Well, okay. Have at it, guys. Here’s their legal analysis:

[Zappos] put a link to its terms of service on its website, but didn’t force customers to click through to it. What Zappos should have done: Force customers to click a button that says sure, yeah, whatever, they’ve read the terms and agree to them. Courts have found these “clickwrap” terms valid—even though in reality no one actually reads the stuff they’re agreeing to.

This is all technically right, but I fail to see how any of this is devastating to Every Website on the Planet. This is not news. I mean, the source Business Insider uses for this article is law professor Eric Goldman’s blog, and Professor Goldman explicitly says:

Zappos can hardly be surprised by this adverse judicial ruling. We have known for years that browsewraps are unenforceable (see some of the cases discussed here).

So yes, every website on the planet could be in legal jeopardy if they ignore nearly a decade of judicial rulings on this exact topic. This isn’t novel. No lawyer ought to be surprised about the court’s reasoning on the browsewrap/clickwrap distinction, because courts across the country have reasoned this exact way for a very long time.

One More Thing

Oh, and the other lesson from Zappos’s ruling, that “being allowed to change the terms of use at any time without notice” is toxic and unenforceable, is also extremely well settled. If you have a contract where one side can change the terms without telling the other side, that’s just not enforceable. It was true when we did it with paper, and it’s true when we do it with websites. This is not new.

Heck, here’s Professor Goldman writing about that exact issue five and a half years ago.

Indeed, the court independently concludes the arbitration clause is unconscionable. I expect courts will aggressively police these unilateral amendments using unconscionability and other limiting doctrines.

And here we sit, five years later, with courts doing exactly that.