Talk America Fails to Communicate

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A federal appeals court is allowing a plaintiff to proceed with his attempt to talk back to Talk America.

Plaintiff Joe Douglas may proceed with his class action lawsuit against Talk America because the long-distance company never mailed notice of contract changes that barred such suits, the 9th U.S. Circuit Court of Appeals has ruled.

The only notice was posted on the company’s Web site.

The contract changes required arbitration of disputes, waiver of class action remedies, and additional service charges. Douglas filed suit when he learned of the extra charges four years later.

The San Francisco-based court ruled that Douglas could not be bound by the contract changes and vacated a lower court order compelling arbitration.

A company that merely posts its contract changes online does not bind customers to the new terms, the San Francisco-based court said in its per curiam opinion. Citing basic principles of contract law, the court said a revised contract is merely an offer and doesn’t bind the parties until it is accepted. Assent cannot be inferred without proper notice.

The court said the dispute was the first time a federal appeals court has considered whether a company may enforce a modified contract when the new terms are posted online rather than mailed.

A hat tip to How Appealing, which posted the opinion. Douglas v. U.S. District Court (PDF), No. 06-75424.

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