Facebook and the Law of Stealth Changes in Consumer Contracts
We get hints at the answer by comparing Facebook’s old Terms, dated May 24, 2007, to the current Terms, dated February 4, 2009.
Here’s what’s really the most important change:
You agree that all claims and disputes between you and Facebook that arise out of or relate in any way to the Terms or your use of the Facebook Service will be governed by the laws of the State of California (and United States federal laws applicable therein), without regard to principles of conflict of laws.
That’s much better for Facebook users: California has some of the most pro-consumer laws in the nation.
Let’s get back to Facebook’s unilateral, stealth change.
We reserve the right, at our sole discretion, to change or delete portions of these Terms at any time without further notice. Your continued use of the Facebook Service after any such changes constitutes your acceptance of the new Terms.
Streamlined? Nope. The difference was probably Douglas v. United States Dist. Court, 495 F.3d 1062, 1066 (9th Cir. 2007), decided a month after Facebook’s old Terms, which held:
Parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. Fn 1 Indeed, a party can’t unilaterally change the terms of a contract; it must obtain the other party’s consent before doing so. Union Pac. R.R. v. Chi., Milwaukee, St. Paul & Pac. R.R., 549 F.2d 114, 118 (9th Cir. 1976). This is because a revised contract is merely an offer and does not bind the parties until it is accepted."
Fn 1: Nor would a party know when to check the website for possible changes to the contract terms without being notified that the contract has been changed and how. Douglas would have had to check the contract every day for possible changes. Without notice, an examination would be fairly cumbersome, as Douglas would have had to compare every word of the posted contract with his existing contract in order to detect whether it had changed.
That is to say, a month after Facebook claimed a unilateral right to modify its Terms without any notice to users of the change, the 9th Circuit (the Federal appellate court for California) ruled that companies were required to give notice. (Tech bloggers, like Ars Technica, picked this ruling up at the time, so I’m sure Facebook did, too.)
Arguably, Douglas does not directly apply to this circumstance, where Facebook and its users nominally agreed to permit such secret changes through the old contract, but it’s unlikely such an argument would fly under California law, which often throws out unfair mass contract provisions like these for "unconscionability." See, e.g., Shroyer v. New Cingular Wireless Servs., 498 F.3d 976, 986 (9th Cir. 2007)(throwing out class arbitration waiver as "unconscionable and unenforceable under California law.")
Did I just mention a class arbitration waiver? Note that Facebook changed that part of their Terms, too.
With respect to any claims or disputes you intend to bring on behalf of a class, you agree to arbitrate whether a class could be certified before bringing such action in a court of law. If the arbitrator refuses to certify the class, you will continue to resolve your individual claims or disputes through binding arbitration. If the arbitrator finds that a class should be certified, you may file the class action in a court of law provided you waive any right to a trial by jury. Claims for injunctive or other equitable relief may also be brought in a court of law.
Another changed required by law, particularly California law.
So, are these changes valid or not? The plaintiff in Douglas kept using the services for years without noticing the changes, and even so they weren’t applied to him. The same may not be true to users, like you, who are aware of these changes and keep using Facebook.
But what about your old content? If you leave now, does Facebook still have an non-exclusive license to use your content?
Likely not, given Douglas above, which holds, in essence, that Facebook’s new Terms don’t apply to you until you have actually assented to them. Facebook knows that, which is why their new Terms don’t have that " It is your responsibility to regularly check the Site" garbage anymore.
But you’re going to need to make some choices soon, since your continued use might be considered "assent" to the new Terms. We’ll talk about that more tomorrow, as well as the deeper meaning of the Terms, particularly in light of Facebook’s response to the controversy.
Max Kennerly is a Philadelphia lawyer.