Douglas v. Talk America Revisited

By Eric Goldman

Last month, I blogged on the Douglas v. Talk America case. I think it’s fair to say that a lot of lawyers are scratching their head about this case. The case *might* stand for the proposition that websites cannot unilaterally amend their user agreements simply by posting new terms to the website, making it a significant case that would invalidate a broad swath of current online user agreements. On the other hand, we’re not exactly sure what the case says because the court opinion is cagey about the exact sequence of events and contract terms at issue.

To sort through this, it would helpful to see AOL’s actual contract. I haven’t found that yet, but a trusted source sent me a declaration from the case that attaches a copy of a Talk America user agreement. Unfortunately, we’re not sure how this agreement differs from the initial AOL agreement or to what extent the court considered this agreement in its discussions.

In any case, the self-described amendment procedure (Secs. 1(b), 7(d) and 8) is complicated and provides a variety of ways that notice can be effected–per 7(d), many types of changes can be effected unilaterally by posting to the website, but other mechanisms can be used, such as publishing a newspaper ad. I have no idea what that means! Perhaps Talk America didn’t contemplate that it would amend the contract that way. Otherwise, a newspaper ad announcing a major contract change but published in a single newspaper in some obscure corner of the world satisfies the literal requirement.

This type of odd provision suggests why the Ninth Circuit may have ruled as it did. In my opinion, as someone who has drafted plenty of aggressive user agreements, this agreement is imbued with an extraordinary amount of hubris and arrogance about Talk America’s ability to unilaterally abuse its users. If I were a judge presented with this contract, I wouldn’t like it either, and I would be inclined to eviscerate its provisions. I’m not sure if the Ninth Circuit was similarly influenced, but it’s a good reminder that an online user agreement must be written in a way that won’t alienate judges.