Good Enough Notice — Even if Not for Assent
A recent case out of the Eastern District of California, Handy v. LogMeIn, found that there was notice good enough to defeat a consumer’s claims under California’s Unfair Competition and False Advertising Laws — even if that notice might not be sufficient for contract formation.
Darren Hardy obtained LogMeInFree which was provided free of charge and allowed users to remotely access a desktop computer from another computer. Some time later, he purchased Ignition for $29.99 which allowed him to access a computer using a tablet or smart phone. Four years later, the defendant, LogMeIn, discontinued the free LogMeIn product although it offered LogMeInPro for $49/year for two computers. Handy claimed that LogMeIn, when marketing Ignition, should have informed consumers that LogMeInFree could be discontinued in the future.
LogMeIn’s “Terms and Conditions of Use” stated that users accepted
“BY COMPLETING THE ELECTRONIC ACCEPTANCE PROCESS, CLICKING THE “SUBMIT” OR “ACCEPT” BUTTONS, SIGNING, USING ANY OF THE PRODUCTS OR OTHERWISE INDICATING YOUR ACCEPTANCE OF THESE TERMS . .”
The Terms allowed the company to “to modify or discontinue any Product for any reason or no reason with or without notice to You or the Contracting Party. LMI shall not be liable to You or the Contracting Party or any third party should LMI exercise its right to revise these Terms or modify or discontinue a Product.” It also allowed the company to “in its sole discretion immediately terminate these Terms and this subscription, license and right to use any Product if . . . LMI decides, in its sole discretion, to discontinue offering the Product. LMI shall not be liable to You, the Contracting Party or any third party for termination of the Service or use of the Products . . .”
The plaintiff argued that he didn’t remember being prompted to review the Terms and Conditions prior to buying Ignition or during his use of it. He also stated that if he had known that LogMeInFree would be discontinued, he would not have purchased Ignition.
California’s False Advertising Law (Cal. Bus. & Prof. Code section 17500) states that it is unlawful for any company to make any untrue or misleading statement in advertising. California Unfair Competition Law (Cal. Bus. & Prof. Code section 17200) prohibits “unlawful, unfair, or fraudulent” business practices. Because the plaintiff’s claims under both Laws relied upon claims that the defendant engaged in knowing deception, the plaintiff was subject to the heightened pleading standards of Rule 9(b) of the FRCP.
The Court granted the defendant’s motion to dismiss because the plaintiff failed to meet the heightened pleading standard for fraud. It found that the plaintiff failed to provide sufficient factual detail to state his claims for several reasons although I’ll only discuss the contract-related one. The court found that LogMeIn provided notice that LogMeInFree could be terminated in its Terms and Conditions of Use. While Handy argued that the Terms were not binding as they were a “browsewrap,” the court stated that missed the point:
“Whether the Terms and Conditions constituted an enforceable contract is irrelevant to whether the Terms and Conditions related to LogMeInFree provided notice to prospective purchasers of the Ignition app that LogMeInFree could be discontinued….the fact that Defendant posted on its website information that told users that LogMeInFree could be terminated undermines Plaintiff’s claims. Though this information was not forced on Plaintiff through a clickwrap, the evidence makes clear that Defendant did publish the fact that it reserved the right to terminate the free app, LogMeInFree.”
In other words, the court found that terms on a website could provide sufficient notice to defeat a claim based upon deception even if the notice wasn’t sufficient to meet the standards for contractual assent.