Key Red Flags in Your Terms and Conditions Webinar

Hi everyone. We're just waiting to get a uh a critical mass, but um thank you so much for joining us. All right. Um, it sounds like we looks like we've got quite a few uh a few attendees. So, welcome everyone and thank you for uh attending. I don't know how many of you follow me on LinkedIn, but as I I mentioned on my LinkedIn, this is um this is one of my favorite topics. So, I know it sounds really boring, but I think it is so unbelievably important to so many of us on what the

terms and conditions look like and and the types of issues uh that all of us need to be thinking about um when we're when we're writing them, dealing with them daytoday, changing them as as they need to be changed often anymore. So, I thought we would um I'll kind of go through what we're going to go through in the next hour. Absolutely. Ask Questions, send them into the chat or you can ask us at the end. Uh Stacy and I went through a number of ways to go about this knowing that some of you are

are kind of new to figuring out terms and conditions. Some of you were expert in terms and conditions. So, we we're trying to hit the right tone here to make sure that everybody has something that they've learned from the next hour. Um, so let's just talk about the agenda and what we're going to talk about. So First we're just going to talk about what we call contract 101. Terms and conditions are a contract. They're a contract with your user and they shockingly follow a lot of the basic um contract rules. Um, we're gonna we're going

to tackle uh unconscionability, which everyone probably remembers from their their contract course back in law school. Um, interestingly, I think unconscionability is more common of a of an actual Argument when we're talking about terms and conditions than almost any other type of contract. We're going to mention some of the problem clauses um and things that everyone should be aware of. We're going to touch on arbitration clauses which are extremely treacherous right now. Um and then uh we'll talk about the different arbitration providers which I personally think is a very very important thing for all the

All companies to really think about as opposed to just picking one. Um, and then we'll kind of do a a short summary. Um, so that's uh that's basically we're going to talk about. So, um, let's let's get going. Um, hi everybody and thank you so much Karen for the intro. So, a, uh, little administrative uh, announcement. So we will be sending you the materials for this presentation, the PowerPoint and the reporting after the event and also 30 minutes uh into the presentation we'll share with you a CLA code. So please pay attention. uh we start

with the very basic rules of um contract formation and the types of contracts that you can publish on your website and then we'll go into more details about is like the user interface uh that will be enforceable. So there are basically three types two original types of online agreements and while one so-called hybrid. So the first one we all know is A click wrap is when you go on a website you want to buy a ticket and ticket master let's say you say I agree to the terms and conditions and privacy policy there is a

huge button saying you agree you press that button and there is a hyperlink next to that button saying this is the link to our terms and conditions and privacy policy and what's not and you agree affirmatively to those hyperlink terms and conditions. The other option is a browser rep. Sometimes When your website doesn't have an option to create an account and or have a subscription, you just offer uh some content that is available there and you don't really have this first interaction with a consumer to offer them to to sign affirmatively terms and conditions or

uh privacy policy or any other document. You usually just have a link. these the most common like just with a would you say these are most common just with um a company that just has a website but not Not like a product or service making you agree to I think this is this is definitely the most common car and thank you for this question uh because usually development team and like IT team they don't really like a lot of clutter and popups on your website they prefer like a smooth user interaction with a website so

they don't like all those popups or as certifications and for sure they don't want to see a huge screen saying you agree to cookie banner privacy Policy arbitration agreement before you can uh browse the website. So this will definitely scare part of the consumers. So usually in the most common user interface that you uh see is that there is a link to terms and conditions on the website and just by browsing that website you agree to the terms and conditions. This is also an action and we'll discuss later why that actually matters. Clicking on a

button is an action. Browsing a website is also an Action and an acceptance can be not just by saying I agree I accept of signing a contract. It also can be an action. The question is how affirmative is my consent and how informed it is when I uh constitute acceptance when I just affirm the the contract and I agree to the contract just by doing something as easy as browsing the website. The third type is the the trickiest one, the hybrid agreements. When you actually have a button saying continue, create an Account, buy a product,

but the button itself doesn't say I accept or I agree or I confirm. It doesn't have a check box. It basically offers me an option to to take an action without saying what will happen if I create an account or what will happen if I buy a product. This is the type of agreements that are tricky and we will discuss them in more detail later and how to work around your user interface that you don't run into a problem where the court will scrutinize Your user interface and say that the action that you asked the

user to take was not clearly uh confirming or uh his acceptance of the terms and conditions or her acceptance of the terms and conditions. Um so we'll move further to the user interface uh aspect of um terms and conditions. So why is it so important to have that click or check box and it's very important that the box is not pre-checked. So you see here that the Box is pre checked. Someone pro check that box. It wasn't project check there when you just open the website. So this is really important for the affirmative acceptance of

your terms and conditions that you first have an interface that is native enough and easy and understandable for the average consumer to understand that they are accepting terms and conditions. It's really important that uh your um accept button says that you accept the terms. It Doesn't say create an account or buy a product. Again, the terms and conditions must be uh hyperl if you are hyperlinking a link to the actual terms and they must be of a different color usually underlined. Basically, a link must look like a link like you typically expect that to look.

Um if there is a different user interface, it's sometimes uh is very popular. You might have seen this for a typical um user interface When you're asked to create an account and the wording says that by creating your account with our company, you accept all the terms and conditions and privacy policies and additional terms that may apply to the transaction. That's a tricky user interface. It can actually be problematic. Um so what we usually advise that there must be a prompt near the button and the button is usually not subscribe, next, follow, create or purchase.

The button must say I accept or I agree and I consent to the terms and conditions and there must be a prompt explaining what will happen if a user actually presses a button. So we usually say by pressing this button by checking the box you actually agree to terms and conditions privacy policy. Some websites also indicate that you agree to the terms and conditions and the arbitration agreement. Um but there there definitely must be that one sentence explaining what will happen When the user presses that button. Also the font shall not be very small. It

must be readable and when you hyperlink terms and conditions the link must be of a different color. That's really important and courts actually analyze how what is the user expectations with regard to the hyperlink and courts analyze that. We all expect hyperlink to be different. We usually expect it to be blue and we expect that to be underlined. So don't make transparent Hyperlinks. Uh don't make them unusual, unusually small or in any other kind of font that users would not really think that that is a u hyperlink. Also, when this always surprised me how um

how into the minutiae the courts seem to get on these issues, what what your UI looks like, what color things are, where they're located, the actual words. Um I think I think people used to say instead of accept it's they would say you know go or um or next or and and they seem Perfectly logical but courts have have really scrutinized this down to the font that you have it in. Right. I mean, it's like they they they scrutinize terms and conditions much more so than they would just a a contract that might have different

fonts or different colors. True. True. That's true. And we'll discuss why that happens because of the uh implied power disbalance. Uh as one of our arbitr arbitrators once said, well, you wrote that document, you Created the website, why are you trying to persuade me now that it's like clear enough? You could have made it much better. Um so that's really important because you are the one who actually created the user interface of the website and of course we'll be analyzing in detail what is the user interface how easily it is to understand what you're agreeing

to and also a tricky a tricky point is that many companies do not really pay attention to the funnel of This uh terms and and conditions acceptance and sometimes they have a third party provider that enables this uh for instance account creation and what we see very often our clients have a perfect pop up saying I agree to the terms and conditions when I create this account but the terms and conditions are the terms and conditions of the company your service provider that enables this functionality and then at a later stage when you click already

you received a Code to activate your account only there I see the terms and conditions of the company with which I'm creating an account that's a problem course also analyze it saying this acceptance should happen at the same time as the action that you are taking if I'm a create if I'm creating an account with let's say Facebook I'm expecting to to be presented with terms and conditions of Facebook and not their service provider enabling all this funnel of acceptance And account creation and that's really tricky because many companies do not really go back and

check what their service provider actually did so they uh they believe that they do have acceptance of their terms and conditions but they have never checked the actual funnel and how it works. Yeah, it's I think it's important. I think it's such a good it's such a good point, Stacy. It's important that um that everybody actually actually experience the user Experience themselves. go through the terms and conditions, click through, see how the funnel actually works. Make sure that it's your terms, not not somebody else's terms. and make sure all of these what seem like almost

irrelevant details, but they're so important because these are the ways that the courts are throwing out terms and conditions and and in particular if you have important clauses in there, class action waiver, choice of law, things That are very important to the company, the last thing you want is for all the terms to get thrown out because your your um link is in the wrong your hyperlink's in the wrong color. So, it's it seems ridiculous, but this is the type of things that that courts look at. So, it's really important to go through and actually

experience what a user would experience in accepting all of these terms and conditions. Yes. And now we'll go back to the Question Karen that you mentioned. What actually why is it so important that the user interface is uh understandable and easy and simple for a user? Because there is an applied risk of uncctionability and the courts believe that you usually try to squeeze in your terms and conditions terms that are unconscionable, overly harsh and very unfavorable for the party. that is in less favorable position and cannot really negotiate and um get better terms From you

as a service provider. So by default we have uh a hares balance between the parties and that really affects the enforcibility of the terms of the substantive substantial terms of your agreement. So we'll have again again probably like three minutes of uh contract law uh 101. But you all know that uh when courts analyze which provisions are enforceable including the arbitration provision and they usually look into two aspects of uh Unconditionability. They look into substantive and procedural. By substantive they basically try to understand whether this provision really shocks the consciousness of a user reading it

because many users imply that well they will not put their something so crazy right I will not be um I don't know selling my car when I get a Facebook account so this is kind of implied trust and the courts will see the or if the pro the terms of your Agreement are unduly oppressive uh or harsh or in in any other way unreasonable. And again, these terms are very they they're not clear-cut. So only through the case law, we can see which terms were considered by the court as unduly harsh and unfavorable. And we

will discuss them a little bit later today uh one by one. in particular with these um it's it's interesting because of course the company does have the market power um And and they are writing the terms and if we write them so well that they're so strong that's that's sort of when um when the courts come down on us. So it's it's it's important to understand that most of the factors for unconscionability are going to be against the company. They're they're courts are going to look at us with suspicion. So we can only we can

only go so far. They have to be fair. Um, that having been said, there's There's a lot of ways to to make sure that the company is protected, but cases have made it very clear that if if the terms are are too strong because we typically are the stronger party, um, they could get thrown out. Yes. And we'll actually talk about this a little bit later. uh but for now we can start with the question that the court will be asking when uh presented with the uh questionable provision and the question That you should be

asking when you're drafting the agreement or reviewing agreement drafted by your lawyer because as Karen mentioned your lawyer can be too good and the provision can be super uh favorable for you as a company but these are the questions you should be asking so first one well who are you as a company what is your market power can I get this product from any other source Um, in uh the Hackne case that we'll be discussing today versus Life Nation, the Court said that well the problem is that the company is a market leader. If I

want to buy a ticket for any concert, there is honestly no other market substitute and everybody's going to the same website and my power to negotiate terms is zero and my my option to go and buy a different ticket through a different website is also quite limited. So this is the question that you should be asking. Who are you as a company? How what is your market share? How big is Your market? Is there an ability to buy similar goods and services from a different service provider? Then how is a disputed cloth presented? If you

if you have a provision that you would think you would want to know about, for instance, if you're a donor and you're donating money to the local theater and you're reading their terms and conditions and privacy policy, you would probably want to know whether your name will be published in their wall of fame With including the amount that you donated. So if you believe that reasonably you would be concerned if this this information is not clear and conspicuous enough make the clear makes it bold. Make sure that the user interface of the document itself is

clear enough for everyone to understand what they are accepting. And the last point is that in California's attack is a sliding scale. Meaning if the the provision is not that uh is not that Oppressive, but the way you present it, for instance, you dig it deep inside on section 17 and your document is 40 pages long. The court will analyze that and said, well, that was really hard to notice for a consumer and uh therefore it is really a sliding scale. Even if the term itself is not that oppressive, it really matters how you present

that terms. And now Karen, we go back to you analyzing in detail each and every term that um not each and every most of the Terms that course usually pay attention some terms that that I think you really need to be aware of and and whether it's drafting, reviewing, revising or updating in particular. it. A lot of a lot of terms have to be updated currently because of all the changes in the law. But be careful when you're revising them because some courts are finding that if you say it's effective immediately, they courts may or

may not accept that. They may require another Acceptance. But if you are drafting them, I think it's important to to note in the terms that they should be effective immediately. Whether or not you have the the consumer accept again because it when when you are sued or there's a mass arbitration, it gets it gets very um hard to litigate when you have more than one terms applying. So try to recall I try to remember when you're revising them to try to make them effective Immediately. One of the things that courts throw out um almost uniformly

though is one-sided terms if there are imbalance rights between the parties. And this could be this could be lots of things. It could be um if the consumer wants to if the consumer has a problem, they have to go to arbitration, but if the company has an issue, they can go straight to court. Courts wouldn't um agree with that at all. There's also if there's a limitation on damages, it Needs to be it needs to be bilateral. If there are um statute of limitations or contractual limitations issue, everything needs to be balanced. And one uh

one court found that because a term and condition mentioned that for example if there was infringement going on that the company could could both uh sue or report it to a to a uh a prosecutor. the court found the fact that the company put in there that they could seek or refer criminal action made The terms imbalanced um because it didn't say that either party could refer any kind of complaints to a prosecutor. So courts have gotten very very um interested in any imbalance rights. So when drafting them, try very hard to make sure everything

is is evenly balanced and that that there isn't one-sided uh one-sided provisions. Also, if there's excessive burdens put in and This would be something that is is where you have a lot of things and together altogether they make the terms a unconscionable. If you limit if your statute of limitations is for a particular um a particular cause of action in your state is four years and you're limiting it to six months. And then you say if the consumer sues they have to pay all the fees or if if the company wins the the consumer has

to pay attorney's fees. Those are the types of Things that courts really, really, really don't like. They feel like if a company's at that point taking advantage of the consumer, courts will just throw out the terms alto together. And if there's broad, and we all like to do this, broad claims of liability. There are those those standard all caps paragraphs that we've all seen um and everybody puts in their terms. read those very carefully sometimes because we were also very careful and we tried Very hard to make sure that um that there's these limitations. So

if somebody gets sued, they can only get it for certain certain claims and and and then they're capped at certain points. um courts look at those carefully and if it looks again like we're limiting to the point of not allowing a consumer to have any rights at all, uh they find it to be unconscionable. So my kind my advice is keep it. Just read it carefully. make sure that you're not Going overboard because the key when you're drafting these is to make them as strong as possible without making them unconscionable. Um, another provision that a

lot of people talk about are opt outs. Um, so most states have found that an opt out isn't required. Meaning that a consumer, whether a lot of times it's it's 30 days or or 15 days from the time that they accept the terms, whether they can opt out of the arbitration agreement. Um, and usually that's some Some opt out. It needs to be handwritten in the mail. A lot of a lot of times terms don't make it easy. You don't just say click here and you can opt out. Um, it's a it's a process and

and companies a lot of times make it a process because they don't want a lot of people to opt out, but they want to allow the option because courts use it as as a um a really good tool if if if the if the court's finding that otherwise some of these terms are Overbearing, there's the argument, well, you could always opt out and this consumer didn't. So, a lot of times we add it in because very rarely do consumers opt out and it really gives us a really good argument to defend the terms, but but

some companies just really really don't like the concept of opting out. They know that means then maybe a plaintiff's lawyer can get a bunch of optouts together and and do a class action. So, it's this to me is Something that really needs to be thought out. Um, some companies just say, "I'm willing to lose that argument if I'm arguing that my terms are not unconsionable." Others tend to have it, but make it a little bit harder. So, opting out is not um easy. Um, and keeping it out, not not having isn't necessarily fatal, but it

is something that the courts will look at, good or bad, when they're analyzing all of these terms. Um, and just a sorry inter note Here. So when you're drafting this provision, try not to copy from someone else's terms and conditions. You need to understand what information you actually need to receive from a user to a factory that opt out because often uh the terms say well the moment you started browsing the website you agreed and you have 30 days then there is a problem. How will you understand that the user actually started using your website?

Maybe you're tracking their IP address, maybe you're Not. All those questions might must be asked before before you start drafting that clause. You try to understand how you will identify that user, how will you factuate his opt out, right? And then to is there a way for you to keep to keep track of all those opt outs. So the procedure really matters and you you should think beforehand what kind of data you would need from that consumer to actually identify him and effectuate that opt out. That's right. And Stacey, you make such a good point.

Um, a lot of people just look at other companies, big companies terms and just sort of want to adopt them as their own. I'm not saying that those terms that that people look at aren't excellent terms, but they may not be um easily transferable. This being one of them, um, if you have no ability to track people who opt out, just following somebody else's terms um isn't going to help. Um, but uh when you're Looking at others terms, just try to think about what's going to work work for your company and whether it's something that

you you want to track, you want to make sure you have or it's just too much of an administrative burden. Um, but it does it is an argument that the courts really focus on. Um, as is shifting fees. Um, different arbitration providers have different rules on whether or not you even can shift fees. Um, that having Been said, if all the fees are shifted, the and that the uh venue is is somewhat inconvenient for consumers and and the basically the the burden to try to bring a claim seems hard on the consumer. courts will find

that to be unconscionable. A lot of times anymore, all of these arbitration hearings and such are over video anyway. So, it's it's almost less of an issue. But if it's very important uh to your company that you have a venue in a particular Place, I would just make sure you word it carefully and you also allow somewhat that the arbitrator could decide unless it's inconvenient for everyone or or some way of adjusting um so as it doesn't seem like uh arbitrations have to be in person in Los Angeles and you have a consumer in Kentucky

who just obviously wouldn't want to fly all the way and and participate. It makes um the courts really see this as a way of just overburdening the Consumers. Um the other thing is is anytime you have new terms and you you put them out without notifying, you don't have a popup. You don't have an email. We all get those emails all the time. some company that you you haven't really shopped at or haven't used in a very long time sends you a an email that says we've updated our terms. Um, it's important because lack of

notice is a really big argument and and if it's so whether it's a popup, whether it's an Email, whether it's just something that shows up on the on the website very prominently, make sure you give notice if you're going to um adopt new terms, even if it's a modification. A lot of times and for many years we would put in terms that if it's material we will uh we'll make you accept again or give you notice but if it's an immaterial change it just seemed like such an you big administrative burden to notify a user

every time somebody finds A typo um anymore that the court just doesn't ex because who determines what's material and what's not material. I know Stacy and I have had con conversations about, you know, is changing choice of law material, is is changing um um a particular uh fee material. And because there's no real law on what's going to be material and what's not, uh, it's it's better to just make your changes, notify, and and put the big change up and not not try to Figure out what's material and what's not. Um, even if you say

it's in your discretion to decide what's material and what's not, courts still don't really like the concept of having changes made and not notifying the consumer about um the changes. Um, the other thing that's really big right now is retroactivity. Whether you can make any of your changes retroactive, certainly you can make it going forward. Can you make it retroactive? I mean, I will tell you, We're trying it. we're doing it. Um, does it always work? No. Um, but does it uh help? Yes. Um, so that's another one of the issues is could a court

find that that's unconscionable? I I think they could. Um, but it doesn't necessarily mean don't do it on some of these because a lot of it is just how is the court going to see all of the what the court might find is these uh unconscionable terms. The court's going to look at all of them. If there's only One um maybe two, a court may say, "Yeah, those aren't great, those terms, but overall your terms and conditions look good. um it might be okay. Um if you have five, probably not. Um but do you need

to have every single possible term in addressed in a way that every court around the country has has said are um are approved and not unconscionable? Probably not. You really need to think about how important these Are to you, your company, and which ones you're willing to give a little on and which ones you're not. It ultimately becomes very bespoke. Um because it depends on what you do and whether some of these are important or not. And that's time for the CLA code. So the CLA code is consent. Um, okay. Now we'll lose 50% of

our audience. That's right. Everybody can everybody can leave. Um, all right. We're going to go through Just a few of the uh clauses in particular that that I think are really important and governing law to me is is extremely important. Um, one of the things to really think about, don't just go find somebody else's uh, choice of law clause and copy it. Also, don't think that just because of choice of law clause that was used in a a more of a bargain for contract um, is going to work in your terms and Conditions because the

courts are going to scrutinize it a lot more carefully. So, it's really important to decide how broad you want it to be. Do you want it to cover just the interpretation of the terms, just the terms and conditions contract itself, or do you want it to cover maybe some related statutory rights? Um, what about unrelated claims? Um, do you want to try to see if the governing law controls that as well? It depends on what what you um what you Think you want covered and and it's super important to be very intentional. And one of

the things that's super important, I think, is to think about your company. What do you do? What are the most common claims? What are the claims you're most afraid of? What law do you want to govern those? So, what are you really afraid of class actions? If you're really afraid of class actions, you might want the Governing law to be a state that that has more um class action friendly law for your particular country company. What about product liability? If you don't have a product, although um this doesn't always apply, but generally if you're not

if you're a service company, you're not a product company, maybe you're at least less interested in product liability law. So, you're less inclined to want to make sure you choose a state law that is Going to govern the the relationship with your consumer. you're less likely to want to make sure you have a very product liability law friendly law. Um, gambling. If if there's any kind of uh allegation that that what you do could be gambling, every state law is pretty much different. You might want to think about that before choosing which which law you're

going to select as your governing law. Same thing with consumer rights. Do you have subscriptions? All Of that is a balance and and some companies um just choose the state law that they're in because they know it. Their lawyers are barred there and it makes sense. That would that would be a rational decision as well. But this needs to be intentional. Don't just choose the law where you're located because ultimately for the the claims that you're most likely to get, you want to consider all of the law and figure Out which one's going to be

best for the most impactful claims that you could possibly get. Sorry. And I will repeat the CLA code. It was consent like consenting to terms and conditions. Yes. Um All right. Contractual limitations. This is something else that's again very important. Um think about what law you choose and also look at the statute of limitations of the most likely claims that are made Against your company and then you can figure out based on that whether you also want a contractual limitation. meaning you want to shorten the statute of limitations. So if breach of contract in your

state is six years and you want to make it two years because you just don't want claims coming in um six years later um that that's a very rational business decision. Whether or not you can do that depends on the state law that you are going to have apply. So, in California, which is the example we're using here, can you use contractual limitations? Yes. Are they always found to be proper and not unconscionable? No. It depends. And things that it could depend on is how how low did you make your contractual limitation. Did you make

it a month? Did you make it six months? those don't um those are not seen as as very um reasonable to a lot of courts. one year. Courts have found one year to be to be a a perfectly Acceptable contractual limitation. But you need to compare it to the actual statute of limitation because if you have a a six-year statute of limitation and you're putting in a one-year, the court may not like that. If you have a two-year statute of limitation and you're making it one year, the courts may say that's okay. Um, it really

depends on the comparison and it also depends on on if you're if it's under a year, it's pretty much going to be a Problem. Um, Karen, that's an interesting Sorry, interrup interesting question that we also discussed with you and many of our clients are asking how do you know what will be the applicable statute of limitations? You don't know all the potential claims. and you don't and I know that we're in this position all the time and we we just try to we focus on the most likely claims um and and the most uh impactful

claims and meaning like the highest Damages or the most expensive in litigation and we try to look at those and compare. But like everything when it comes to terms and conditions, there's not really a perfect answer to any of this. what we're trying to do is is limit uh liability in a way that's not unconscionable and and I think it's different um for different companies. It's different comp compared to a lot of the other clauses. It really becomes kind of a balancing act in each specific Uh term. And then um at least in California, the

discovery rule applies which can extend things. Um so that's just something I think a lot of other states do that as well. So if the consumer says, "I didn't have any idea." Um that can make both the contractual limitations and the statute of limitations longer. Um so it's just something to be aware of. Um, okay. We're going to get to Arbitration clauses. This is is currently one of the um one of the most litigated part of terms and conditions. And I will tell you it is a um this is this is kind of where we

are the most concerned and we spend the most amount of time when we're reviewing terms, drafting terms, amending terms. Um and so just and we could do an hour presentation on each of these um each of these provisions, but to kind of stay High level, some of the things that you really need to make sure that you're paying attention to in your arbitration clause, assuming you have one, obviously you don't need to have one. Some companies are going away from them altogether. they find that all of the problems that companies are having with arbitration clauses

are becoming so ownorous that they'd rather just go to court. Um even if it's a class action, they feel like a class action is better Than a mass action. Um they feel like at least they have a judge who arguably is is somebody who is going to read the papers, make decisions, you have the right to appeal. There's a lot of reasons uh to decide you don't want an arbitration clause altogether. But if you have one, some of the things that you probably really need to make sure that you're focused on is do you have

a delegation provision? Um delegation provision. Who decides Um where you should be deciding the case? Should you be in court? Should you be in uh arbitration? And different companies make different decisions for different reasons. Some people want the judge to decide that. Some people want the arbitrator to decide that. Um and and we could talk about the pros and cons of all of that. The most important thing is to think about it and figure out what you think is going to be best for your company and the likely claims. Um payment requirements. This is something

that um gets fraud up all the time. Who pays for the arbitration? Um who pays the arbitration fees? Who pays the arbitrator fees? Is there an attorney's fees clause? All of those types of things uh need to be very thought out and also they should be thought out in connection with whatever arbitration provider you're selecting because the different providers have different rules. Um and and some Providers, if you don't follow the their rules on payment, actually won't even arbitrate the case. They just say, "Well, we don't agree with your payment requirements, so we're not going

to arbitrate at all." Um now, I will tell you sometimes that actually works out for the best, but not not always. So, it's something else to really think about. Um mass protocol rules. This is something that that we all worry about all the time. It is a um an issue Where there is no clear law. There's no clear guidance. Um it it appears that right now at least um no one is really focused on trying to fix mass arbitrations. So because of that, whatever the protocol you have in your arbitration provision is very important. You

need to make sure you know what you're doing. Um you've intentionally drafted it in a way not only that is consistent with whatever the current law is, and the law changes All the time, but whatever is consistent with current law, and you also make sure that um it's what the company wants to do ultimately. Um and and I will tell you again, we could spend a lot of time on on mass uh protocol rules, but it is important to not just choose your provider. Call them, talk to them, study the rules, and make sure you're

getting what you want, and make sure you're writing the rules consistently with you're writing your rules and the terms And consist and the terms and conditions consistent with what the rules are in whatever provider for mass arbitrations you've selected. Um, the selection of the arbitrator, and we'll talk about this in a in a second, you need to talk, you need to decide, do you want three, do you want one? Um I've talked to a lot of the arbitration uh providers who say you have three arbitrators, it's five times the cost, not just three times the

cost. Um so it's a lot. But if you're Splitting that cost, um maybe then it's something that you want or is are these so important that you don't want to leave it to a single arbitrator that can't be appealed. Maybe it's important enough to you to pay the price to have three. and how are those arbitrators selected and chosen? Those are all important things that that you need to think through because you could make a very complicated um procedure, but it also is going to Cost a lot more money. Maybe that doesn't matter, but it

may. In which case, those are the types of things that you really need to be thinking about when you're selecting you're writing in your rules. The the how to select your arbit arbitrator. Also are what about lack of discovery? Um any procedural limitations, page limits, um whether you can file a motion, um an early motion, a later motion, do you need to get approval to file a motion? Does the arbitration um rules force you to go into court um or force you to go to hearing? There are so many things to think about and and

courts look at these. If you don't allow any discovery, if you only allow a very 10 pages for the consumer to file their claim or you have very very short deadlines, courts are going to look at that and and those are things you need to really think about. Also, if you don't want discovery though, if you're Like, "The last thing I want is for some consumer to come in and file a bunch of discovery," you can say there's not going to be discovery, just keep that in mind. Is one of the things that you're balancing

when you're when you're writing these things, it's don't put in very short deadlines and 10-page limitation and you don't get discovery. And I mean if you have too many um it makes it unconscionable but these are things that you need to think About what's going to work for your company. Um carveouts um we used to put in one-sided carveouts all the time for IP whether if if the company had an IP litigation. for example, somebody uh somebody it's alleged is a um a uh trademark infringement, copyright infringement, something like that. We used to have one

way carveouts where we would allow the company to sue for those types of things in court. That doesn't Work anymore. The the carveout has to be bilateral. So if anybody accuses the other side of copyright infringement, both sides should be able to go to court and avoid arbitration. But it's definitely something that um that companies need to look at. Maybe they want to throw all even even infringement uh copyright infringement or patent infringement into arbitration. Certainly you can do that, but it's something to think about. Um the yes also sorry one Quick note that the

court will actually analyze who is going to use that right. So if you have a right that is completely like reciprocal but then the user doesn't really care about that provision. It would never go and challenge IP injunction just because he would never ask for an IP injunction. The court will call that out and say well that's clearly kind of right that only you will use. So if you allow to to challenge injunctions in court but only IP injunctions, the court will notice that likely. Yeah, that's uh yeah, all of these things are just super

important to think about. Um the asymmetrical appeal appeal, if only one side can appeal, that that's definitely something you need to um probably never put in because that's always going to be a red flag. everybody either can appeal or cannot appeal is is the the best way to do it. Um and another issue is on Public injunctions and this is this is something that is um state by state on whether a consumer can get a public injunction. But in certain states public injunctions are um are allowed um and and the consumers are allowed under due

process procedures to seek a public injunction. So, it's important to at least think about whether your terms limit them or whether your terms are whether it's something you want to allow. Um, for a long time, We would say to the extent a consumer can get a public injunction, it has to be stayed until everything else is decided, thinking that at least that way, chances are the cases would settle and we never have to worry about um about litigating the public injunction. So, there's ways to get around these things, I is what I'm saying, or at

least address some of these red flags. But when it comes to your arbitration clauses, think about them. Be Intentional, be thoughtful, and think about what you want for your company and what's going to what's going to make the most sense. I wanted to get to and this is something Stacy and I spend I so many hours on um how to choose the right arbitration provider. Um and basically basically we spend hours talking to these folks. I suggest that others do. You learn a lot by talking to these people and and getting at least Their interpretations

of how their how their rules work and would work for some of the more impactful claims that your company may have. And um some of these are more what I would say company friendly, some are more consumer friendly, and some are kind of just down the middle. Um regardless in in the world where mass arbitration is is very common um who you select is very important. Um when we get in the phone and I mean Stacy I think I I a lot of Times feel like someone's trying to sell me a used car. Um the

salesmanship that these guys do on trying to get you to use them as your provider is is um is shocking. Um and then once we talk to them, they email us constantly. They want to make sure we're their friends. Um so there's a lot of salesmanship when it comes to choosing your provider. But the types of things that that I think you'd consider um when choosing is is case management. Um how do they do it? Do they do they make you go all the way through hearing before the consumer has to prove that they actually

are a consumer? Um because a lot of times, at least with the the mass arbitrations, um plaintiffs council are just collecting off of an ad on Facebook and they get a name and and come to find out it was just somebody, you know, putting in their name. They never actually purchased your product or used your service. In which case, that is Something that at least I think should have been thrown out at the very beginning. You want a provider who is going to verify those at the beginning. you don't want to have to spend the

time and money to arbitrate or litigate these to the very end come to find out it was just a madeup claim at the beginning. Um so that I think is a super important thing to think about um on on consumer protections and transparency. Um these are things that if the rules are too Ownorous for the particular arbitrator, the court's going to throw them out. So you need to review them. you need to talk to these folks and find out how do these things work um and and how does the process work? Do both sides have

transparency into how decisions are made? Who's making them? Things that you would have in court. That kind of transparency was something that you need from your provider. Cost structure is um is so Important. Um, they not only are the cost structures all over the place, but Stacy, don't you feel like we're getting a a new cost structure from somebody like weekly anymore? Yes. Yes. You're changing it very often and uh some of them try to be competitive for offering lower prices uh depending on whether you actually is going to litigate the case or if you

know that you will be a target of mass actions, your strategy will be Different. Some providers say we have brilliant uh professionals. They they provide really uh high quality education, but you don't care because you know that 100% of claims against you will be mass actions and what you really care is the motion of summary judgment that Karen mentioned just because 90% of those complaints are not real users and you really want to have a an option to um to have that motion without asking for it. Um and uh some service providers Offer pretty flexible

feed structure for mass actions recently. So like the uh a quick bonus point if you use jams in your terms and conditions go back and check because if you do check if you have mass protocol uh called out directly in your terms because if you do not you cannot use their flexible fee structure and they will charge you per claimant and you can get 10,000 complaints and you will pay for each and every of them. If you do Have a mass um and mass action uh provision in your terms, you will pay 7500 uh fixed

fee for the filing of no matter how many complaints. So that's really important to to stay up to to check who is your service provider, who is your arbitration provider and um check changes to their uh mass prodigal and and the fee structure and decide whether you still want to be with them. Yeah, it's it's that the the cost structures Change all the time and and the difference between a $7,500 fee and a $20 million fee is real. Um that actually happens. Um otherwise, quickly, I think it's super important to be able to file early

motions. Um if you've got a case that is completely frivolous as a matter of law, some of the arbitrator uh providers don't let you do it. they want you to go all the way to hearing because they want their arbitrators to make a lot of Money. Um, you know, but that also means you as a company are spending a lot of money where if you were in court and you could file a motion to dismiss, the whole thing would have gone away. So, it's important I think to check are those available and just basically the

fairness of the procedures and don't just rely on what they tell you because again used cars guys make sure are there are there fairness? Are there appeal rights? Make sure that whatever you're Using. Um, it's going to be fair and it's not going to get thrown out. Um, and it's going to work for your company specifically because, um, they they're not all the same. So, just because some other company, even if it's your competitor, is using a specific arbitration provider, they may have different needs um, and they may have different um, decision- making. So it's

what's what's a good provider for one is not necessarily a good provider for Someone else. It's it used to be because I'm old and I can say this. We used to just say AAA. Everybody said AAA. Well, that's not necessarily the best choice anymore and it's certainly not necessarily the best choice for everyone. Um it is just really important to talk to everyone or to talk to somebody who's talked to everyone and choose the one that's going to work for you. All right, we have one minute. One minute of the final takeaways. Um, so the

first rule to remember is your lawyers are brilliant, but try to to understand whether you can understand the terms and conditions when you receive the uh the draft from your lawyers. try to read through and understand as if you were a consumer. Can you understand what's going to happen if you want to sue a company? Because the judge will try to step into the shoes of the consumer and understand How easy it is to find the way through the document. The second rule to remember is that the judge will be harsh on you. The judges

usually or arbitrators usually say that you are the party who was drafting the agreement, who was designing the website. you were able to to to opt in for any provision that you wanted. Therefore, if you have terms and conditions that have really broad applicable law provision, but then your the definition of the dispute is Very narrow, that will be a problem for you when you're arguing that the should be a broader interpretation of your provision because the court will usually say, well, you could have made it not that narrow, but you for some reason decided

to have a narrow applicable law provision or um terms and conditions. Uh I think we we are really really now out of time. Um, if anybody has a question, uh, Stacy and I can stay on. Otherwise, I mean, you can always reach out. I hope This wasn't too boring. It is really important. Um, you can save your company millions of dollars if you just really focus on your terms and conditions. And I hope everybody has a really good day. Thank everyone. Bye.