On June 8, 2021, the Second Circuit handed down its opinion in the case Soliman v. Subway Franchisee Advertising Fund Trust, Ltd., No. 20-946, holding that the vague, small type in Subway’s in-store ad referring to its “Terms and conditions” alongside the website address for these Terms was insufficient to provide clear and conspicuous notice to the consumer that she would be bound to the arbitration clause in those Terms. (View the opinion here.)
Has the Second Circuit done away with small type in ads? Has it done away with referring a URL for full terms? Will print ads now become the size of a La Guernica? No, no and I hope not.
FACTS: Subway ran a campaign giving consumers the opportunity to receive SMS offers by texting a keyword to a short code. The hard copy in-store ad read: “WANT SUBWAY DEALS SENT DIRECTLY TO YOUR PHONE? TEXT OFFERS TO 782929 (SUBWAY) TO START RECEIVING WEEKLY OFFERS.” The small type at the bottom read:
(A full copy of the ad is on page 7 of the Opinion.)
ISSUE: Under California law, whether a consumer is bound to the terms contained on a company’s website, where they are generally referenced on a print advertisement as “[t]erms and conditions” alongside the web address for the website containing exact terms (including an arbitration provision), because that consumer viewed the advertisement on display in a store.
HOLDING: Under California law, the consumer was not bound by the arbitration provision in the website Terms because such Terms were not clear and conspicuous to a reasonable person in the consumer’s position.
REASONING: The Second Circuit provided five reasons for its holding:
TAKEAWAY: This decision seems very harsh for an ad that is quite typical. On the good side, the Second Circuit confirmed that a consumer could still be bound by terms she never read as long as sufficient notice is provided, that smaller type (in itself) is not forbidden, and that reference to a URL for full terms could be sufficient. But looking at the “totality of the circumstances”, the Second Circuit wasn’t pleased. Taking into account the Court’s gripes, you may want to consider these suggestions:
It’s good to have a gut check every once in a while if at least to remember that someday, someone will be (or will not be) reading “NO PURCHASE NECESSARY [blah, blah, blah] …”