Print Ad’s “Terms and Conditions” Don’t Create Binding Arbitration Clause–Soliman v. Subway
Subway ran a promotion offering deals if customers signed up for text messages. The stores displayed the following print ad:
The language in the bottom right:
This is a logical result, but the court could have be more concise in its explanation. For me, point #3 should have been dispositive–the print ad never had a proper call-to-action that said if you do X, you agree to the terms. (The court says that language isn’t 100% required, but it kind of is). On that issue, Point #5 is also problematic. If you’re going to refer someone to T&Cs, make sure they expressly cover the circumstances you are trying to govern.
Even if the print ad cross-reference failed, why Subway didn’t include the T&Cs in the text message signup process? Subway required the plaintiff to text back her zip code to confirm consent to future texts, so it would have been easy to include a call-to-action referencing the T&Cs in that interaction. Adding the T&C formation to a text message signup process isn’t rocket science or even cutting-edge thinking, so I’m baffled how Subway missed that. Indeed, Subway had properly confirmed the T&Cs in a prior campaign with text message signups, so they knew what to do.
A few more comments on the court’s discussion:
- The court uses a “reasonably prudent person” standard. This is a variation from the Meyer v. Uber ruling, which used a “reasonably prudent smartphone user” standard. As usual, the court intuits what reasonably prudent consumers would do without any supporting empirical evidence.
- The court says the circumstances are “very distant” from those in Meyer v. Uber. Instead, they “more closely resemble those in which courts have found cluttered websites with a hyperlink to terms and conditions to be insufficiently conspicuous to provide inquiry or constructive notice to the consumer,” like Nicosia v. Amazon (although Amazon did get to arbitration in that case eventually).
- The decision raises some obvious red flags about incorporating terms by URL into print materials. The court says there’s no absolute prohibition against it, but “companies relying on the mixed-media incorporation of contractual terms involving a combination of a print advertisement, text messaging, and a website (rather than a purely paper or purely web-based medium) must take into account the practical obstacles in each situation relating to the conspicuousness of the notice, as well as access to the terms and conditions, that may be created by the various modes of communication being utilized”
- The court says it’s open to different paths to contract formation, just not what Subway did: “as with purely web-based contracts, we impose no particular features that must be present to satisfy the reasonably conspicuous standard in the context of a mixed-media communication with a consumer such as the case here, involving the use of a “call to action” print advertisement with the consumer and containing a reference to terms and conditions that requires the consumer to then respond by utilizing text messaging on a cellphone. The panoply of technological variations available to companies in the internet/smartphone age, as it relates to the form and content of communication interfaces with consumers, makes any bright-line rule for reasonable conspicuousness in this arena extremely difficult to discern, and we do not attempt to do so here. Instead, each situation will continue to require careful examination on a case-by-case basis under the applicable legal standard.”
Surely a disappointing result for Subway, especially in light of how easily avoided it was.
Case citation: Soliman v. Subway Franchisee Advertising Fund Trust, Ltd., No. 20-946 (2d Cir. June 8, 2021)