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"Gotcha" Clause V. First Amendment

Dec 23, 2013

My colleague Paul Darwish sent this story my way this week. It’s a CNN report about a fight between a Utah couple and a company called KlearGear.com. The Palmers were not happy with KlearGear’s customer service. In response, they posted a review about their experience on ripoffreport.com. 

According to the CNN report, three years later the Palmers got an e-mail from KlearGear demanding a payment of $3500 if the Palmers didn’t take down the post in 72 hours. The basis for the demand? Some fine print in the terms of use that “prohibits [the user] from taking any action that negatively impacts KlearGear.com”  That demand was tougher to comply with than it looked, given that ripoffreport.com requires an arbitration process before a post can be removed. When the Palmers failed to comply with the KlearGear demand according the CNN report, KlearGear reported the Palmers to debt collection company. As a result their credit rating took a hit.

So can KlearGear get away with this? What about the First Amendment? Is this America? In reverse order, the answers are: “yes”; “probably doesn’t apply” and “most likely not.”

As to the First Amendment, it’s not clear to me that it offers protection here. While the First Amendment permits speakers to publish truthful information, a speaker may contract that right away. And the Supreme Court has held in several instances that the First Amendment doesn’t limit the effect of laws of general applicability. So a court can enforce a contract where a party signs away its First Amendment rights. 

But that doesn’t mean KlearGear’s “contract” would hold up. Given that it’s buried in fine print, and considering the consequences here – potential liability for an indeterminate period of time – my sense is a court would find it “unconscionable” and not enforce it. The time issue alone is troubling – the statute of limitations for libel is typically a year or two at the most. But the statute of limitations for contracts is typically longer. In Ohio, for example, a party has 8 years to bring a lawsuit alleging a breach of a written contract. And the public policy implications are enormous – should a party who merely buys a product or service online be prohibited from expressing their dissatisfaction on the threat of a penalty over $3000?

Nonetheless, while the case against enforcement is compelling, there’s no guarantee that a court will do the right thing.  Before you vent about lousy service you might want to look at the terms of service.       

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