Harris vs. Blockbuster holds hope for better terms of service

Greg wrote to the Gripe Line this morning to share an interesting bit of news. “One of Ed Foster’s crusades,” he says, “involved online terms of use that can be changed at will.” And, he points out, a lawsuit is moving forward, according to a recent news report in the Register, that could potentially derail this slippery practice.

“A year ago, a Texas woman named Cathryn Elaine Harris sued Blockbuster after it used Beacon to share her movie rentals with her so-called Facebook friends,” says the Register piece. Harris claimed that Beacon, an add-in that displays recent purchases to friends, as used by Blockbuster violated the video protection privacy act. Blockbuster’s term-of-use agreement stipulated that users waived the right to any class action, making it difficult for her to bring suit. But Harris’ suit claimed that this agreement was unenforceable because it was

“illusory.”

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According to Judge Lynn’s ruling:

Blockbuster attempted to invoke an arbitration provision in its “Terms and Conditions,” which includes a paragraph governing “Dispute Resolution” that states, in pertinent part: “[a]ll claims, disputes or controversies . . . will be referred to and determined by binding arbitration.” It further purportedly waives the right of its users to commence any class action. As a precondition to joining Blockbuster Online, customers were required to click on a box certifying that they had read and agreed to the Terms and Conditions. 

The basis for the Plaintiffs’ claim that the arbitration provision is illusory is that Blockbuster reserves the right to modify the Terms and Conditions, including the section that contains the arbitration provision, “at its sole discretion” and “at any time,” and such modifications will be effective immediately upon being posted on the site.

And Lynn finds, based on a precedent she details, “The Court concludes that the Blockbuster arbitration provision is illusory…[T]here is nothing in the Terms and Conditions that prevents Blockbuster from unilaterally changing any part of the contract other than providing that such changes will not take effect until posted on the website.”

So, in effect, this ruling not only allows anyone affected by the ill-conceived Beacon breach of privacy to sue the video rental company in a class-action suit, it also opens the door for suits that shoot down these “illusory” terms of service that — by definition — can be changed at will.

Greg points out (according to the Register story), “The ruling may have broader implications for the Net as a whole. Blockbuster is hardly alone in attempting to unilaterally modify its terms and conditions whenever it feels like it. Lynn’s ruling would invalidate online contracts left, right, and center.”