When In Doubt, Spell it Out — The Hazards of Using E-Mail to Amend Contracts

By John Ottaviani

Although the First Circuit’s May 23 opinion in Campbell v. General Dynamics Government Systems Corp. arises in the employment context, any company that engages in the practice of amending the terms of use, a privacy policy or other contractual relationships by means of e-mails or postings to Internet or intranet sites should take heed. The case provides a textbook example of how NOT to proceed.

After Campbell filed an ADA claim against his former employer, General Dynamics moved to dismiss on the grounds that the company’s employment policy mandated arbitration of the claim. The policy was not part of the policies in effect when Campbell was hired, but was promulgated several years later. An e-mail announcement from the President of the company was sent out to the entire work force announcing the new policy, and explaining some terms of the policy. However, the e-mail made no mention of whether or how the new policy would affect an employee’s right to litigate workplace disputes, or that the Policy contained an agreement to arbitrate that would become binding upon continued employment. These facts, and the text of the policy itself, could only be discovered by clicking on and reviewing several layers of linked documents.

Campbell claimed he had never seen the policy, had not agreed to it, and was not bound by it. The District Court, and the First Circuit, agreed and refused to enforce the policy. The decision clearly suggests that these type of announcements and contractual amendments may be effected electronically, and may be enforceable in the proper circumstances, but that General Dynamics did not provide sufficient notice of the contractual nature of the e-mail in this circumstance. Key problems: (1) the company could not identify any other instance in which it relied upon either an e-mail or intranet posting to introduce a contractual term that was to become a condition of continued employment; (2) the company could have easily required a response to the e-mail, either on paper or by requiring the employees to “click” a box on the computer screen, but it did not do so; and (3) the text of the e-mail did not provide fair warning that showing up for work the next day would result in a waiver of the right to litigate employment disputes, either by stating this fact directly, or even by containing any language to put the employees on inquiry notice that the communication had contractual significance.

The Electronic Contracting Practices Working Group of the American Bar Association’s Cyberspace Law Committee has been following this case, and is working on developing guidelines to follow in order to modify electronic contracts the right way (in other words, so one can enforce the changes).

Just like we saw in the early “clickwrap” cases, the courts are not going to be forgiving of those who take shortcuts when it is relatively simple to do it the right way. In this case, the decision is clear that the policy might have been enforceable if the company had provided more adequate notice that the e-mail had contractual implications.