

Paypal policy update: No class-action suits - ajw0100
https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/upcoming_policies_full

======
squarecat
[http://hothardware.com/News/Appeals-Court-Reverses-
Decision-...](http://hothardware.com/News/Appeals-Court-Reverses-Decision-
Allows-ClassAction-Lawsuit-Against-Dell/)

tl;dr

The issue in question was whether or not Dell's Terms and Conditions of Sale
could legally force the company's customers to settle disputes through
arbitration rather than in a court of law. This is the second time in recent
history that the ninth circuit has found such arbitration clauses
unenforceable due to the unconscionable burden they place upon the purchaser.

...

The court based its ruling in Omstead v. Dell directly upon an earlier case,
Oestreicher v. Alienware, in which Alienware (a Dell subsidiary) attempted to
force Mr. Oestreicher into arbitration. In that decision, the court wrote that
the Alienware contract was unconscionable because it was a "contract of
adhesion." A contract of adhesion is _a standardized contract, which, imposed
and drafted by the party of superior bargaining strength, relegates to the
subscribing party [the customer] only the opportunity to adhere to the
contract or reject it._

~~~
eli
IANAL, but wouldn't the Supreme Court's subsequent ruling in the AT&T case
supersede that? [http://www.npr.org/2011/04/28/135785797/supreme-court-
impose...](http://www.npr.org/2011/04/28/135785797/supreme-court-imposes-
limits-on-class-actions)

~~~
bragen
Courts have avoided _Concepcion_ with surprising frequency by holding that it
did not preempt ordinary unconscionability rules.

There's a pretty good round up of illustrative opinions here:
[http://www.uclpractitioner.com/2012/03/new-opinions-
interpre...](http://www.uclpractitioner.com/2012/03/new-opinions-interpreting-
concepcion-robinson-v-title-lenders-brewer-v-missouri-title-loans-and-kilgore-
v-keybank.html)

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ajw0100
I wonder if this is part of David Marcus' plan to "radically change" paypal
and "earn your trust again"...

<http://ndy.gd/JJgB>

edit: added trust quote.

~~~
yuhong
Well, class action suits itself are not free of problems.

~~~
rayiner
They're not, but they're a solution to a basic structural problem in the law.
In countries like the US that depend on private suits to accomplish what in
some other countries would be done through government enforcement actions, it
becomes possible to profit by screwing over a large number of people for a
small amount each. If that amount is less than a threshold, it becomes
unprofitable to litigate, and only a few such claims will be brought, far less
than the actual damages caused by the company.

------
paulgb
> Unless you opt out: (1) you will only be permitted to pursue claims against
> PayPal on an individual basis

So, you can opt out. But they will retain a herd immunity of sorts -- as long
as a critical mass of users doesn't opt out, a class action can never gain
steam. Clever.

Incidentally, has anyone managed to opt out? I can't figure out how to (the
new TOS doesn't even show up for me, so it may be that non-US users are not
affected)

~~~
illicium
From the Policy Updates page:

Opt-Out Procedure.

You can choose to reject this Agreement to Arbitrate ("opt out") by mailing us
a written opt-out notice ("Opt-Out Notice"). For new PayPal users, the Opt-Out
Notice must be postmarked no later than 30 Days after the date you accept the
User Agreement for the first time. If you are already a current PayPal user
and previously accepted the User Agreement prior to the introduction of this
Agreement to Arbitrate, the Opt-Out Notice must be postmarked no later than
December 1, 2012. You must mail the Opt-Out Notice to PayPal, Inc., Attn:
Litigation Department, 2211 North First Street, San Jose, CA 95131.

The Opt-Out Notice must state that you do not agree to this Agreement to
Arbitrate and must include your name, address, phone number, and the email
address(es) used to log in to the PayPal account(s) to which the opt-out
applies. You must sign the Opt-Out Notice for it to be effective. This
procedure is the only way you can opt out of the Agreement to Arbitrate. If
you opt out of the Agreement to Arbitrate, all other parts of the User
Agreement, including all other provisions of Section 14 (Disputes with
PayPal), will continue to apply. Opting out of this Agreement to Arbitrate has
no effect on any previous, other, or future arbitration agreements that you
may have with us.

~~~
paulgb
Thanks. I found an easier way -- deleting my PayPal account.

~~~
yuhong
But expect more legal agreements to do this.

~~~
paulgb
I do expect to see more of it, although I prefer to see it done the way
Microsoft does (I've linked it elsewhere in the thread). What rubbed me the
wrong way about this one wasn't the policy, but how they make opting out as
difficult as possible.

~~~
squarecat
Hence the emergence of such legislation as:
<https://en.wikipedia.org/wiki/CAN-SPAM_Act_of_2003>

Of which the efficacy is certainly arguable, since a truly reputable firm
might seek to provide such a mechanism in an easy-to-use manner. Whereas a
shady operation would, and do, ignore the directive anyhow.

~~~
StavrosK
Sure, but by making it hard for legitimate companies to spam you, we get a
much clearer separation of spam from ham. You don't have to know who all the
bad guys are, it's enough to know who all the good guys are.

These days, messages in my inbox fall into two categories: Messages with an
"unsubscribe" link, or spam.

This didn't use to happen in the olden days.

------
kiskis
I'm from Europe and I don't really getting it.

If you start a class action lawsuit, the best thing PayPal can do is to sue
you for contractual non-performance. At least in Europe, even if the contract
say that you won't file a lawsuit, the court will throw that part of contract
out, usually for constitution terms.

So is this legal in the US? How many of your constitutional rights can you
give up in a contract in the US?

~~~
rayiner
> So is this legal in the US? How many of your constitutional rights can you
> give up in a contract in the US?

In the US, the general rule is that you can give up your Constitutional rights
via contracts. It's, e.g., the basis for our criminal justice system, where
plea bargaining (which is the criminal analogue of a civil settlement
contract) is used in almost all cases despite a Constitutional right to a jury
trial.

~~~
andyjohnson0
_"In the US, the general rule is that you can give up your Constitutional
rights via contracts"_

Thats astonishing.

I see from your profile that you are a lawyer, so I'll ask. Are there any
limits to the rights a person give can give up? Could they, for example,
voluntarily sign a contract that irrevocably places them in servitude to
someone else (13th amendment)?

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zacharyvoase
As a non-lawyer, I'd be interested to know if existing Paypal customers in the
US can request a declaratory judgement on the enforceability of the
arbitration clauses. I feel there would be a beneficial chilling effect on
service providers if customers could bring class-action suits for declaratory
remedies about adhesive and unconscionable/inequitable terms of service—that
is, without having to first breach the terms of the contract (which could only
happen on an individual basis and in which case the playing field would be
massively un-level).

------
jamesaguilar
Sue in small claims court? I thought part of the point of class actions were
to make things cheaper for defendants by only having to defend one case
instead of thousands.

~~~
jrockway
Binding arbitration is even better for defendants, though, since all they have
to do is pay their friend the arbitrator to rule on their side. There are no
checks and balances, no jury of your peers, no appeals process, and no reason
for the arbitrator to ever side with you. If you sign a contract that includes
a mandatory binding arbitration clause, it means one thing: the other side
intends to violate the contract.

~~~
pc86
I'm familiar with your history on HN and your work with open source and
appreciate both, so please do not take offense to this.

You are completely and totally wrong about everything you just said. I run a
business and every client signs a contract agreeing to mandatory binding
arbitration. Why? Court cases are expensive, and most of my clients are
attorneys themselves or have significantly more resources than I do.

Both sides agree on an arbitrator and each side pays 50% of the fee.
Arbitration is not some back room circle jerk where the defendant gives the
arbitrator a couple hundred bucks for a favorable ruling, and the notion that
it is is offensive to people like me who rely on that option. And guess what?
If the arbitration _was_ like that, you're within your right to sue.

~~~
jrockway
The problem is not back room deals but how the system converges on local
maxima. Say you're consumer C and you have a problem with megacorp A. Megacorp
A chooses arbitrator B. B sides with you. Consumer D has a problem with A, and
B again sides with the consumer. Arbitrator B is fired by megacorp B. Megacorp
A brings in arbitrator D, who sides with Megacorp A. This continues,
generating happiness for Megacorp A and plenty of income for Megacorp D,
making everyone happy but consumer C.

It's simply how the incentives are aligned. If judges were paid salaries by
major corporations and could be fired at the corporation's whim, the court
system would, at the very least, _seem_ unfair.

For two small entities wanting to disagree over something, arbitration might
work out OK. But it absolutely does not work out between consumers and large
corporations. Fair or not, they don't seem fair, and seeming fair is the legal
system's number one task.

~~~
pc86
The comparison to judges would be a fair comparison if both parties paid 50%
of the judge's salary, and both parties had to agree on which judge to use.
Arbitrators are simply not chosen and paid for by the corporations. The way it
is typically done is that one arbitrator is agreed upon by both parties
(negating any implications of foul play), or each party chooses one and those
two arbitrators choose a third.

I think it was mentioned elsewhere that contracts that are both (A) between
parties of vastly disparate power, e.g. Microsoft's EULA and the average Xbox
gamer; and (B) "take it or leave it" style contracts have been ruled on at
least one occasion to be untenable.

Understanding this is not usually the case in the US, I'd rather have a legal
system that seemed unfair unless you researched the details than one tried to
seem fair from the outside at the risk of being unfair to specific groups.

------
hmottestad
I would like to find the first form on their page, find out where it posts to
and post my opt out there. If the web server responds with a 200 OK then I
know they got it so I have opted out and received a confirmation that they got
my message.

Also I don't need to do this, because I'm in Norway and I have no reason to
join an American class action suit and in Norway you can't sign away your
rights in this manner.

------
fnordfnordfnord
FnordFnordFnordCo LLC Policy update. This update to the User Agreement
effective ca. many years ago. contains changes that affect how claims you
(PayPal) and FnordFnordFnord have against each other are resolved. You
(PayPal) will be used only as a last resort. Pretty much if there is any
alternative better than a carrier pigeon, it will be used.

------
rsync
Absurd. Think of what a class action lawsuit is, in its bare form - it is a
form of free speech - a peaceable assembly.

I dislike runaway litigation as much as anyone, blah blah blah, but you can't
keep me from peaceably assembling for whatever reasons I see fit.

------
rayiner
How is this even legal?

~~~
notimetorelax
This is something I don't get about these clauses in contracts. Law should
supersede any private contract otherwise what's the point of having such law?

~~~
rayiner
Laws create private rights, and those rights can be contracted-away. Say the
securities laws create a private right of action for people who make
misrepresentations on a prospectus. If you're an investor who buys a security
from a shady issuer, you can choose to sue or not. The law just creates a
right of action, it doesn't force you to use it. The law views contracts to
give up that right of action as being just a part of your discretion in
exercising that right.

Obviously a contract can't protect a company from, say, criminal enforcement
by the SEC, because that's a right held by the government, not the injured
individuals.

~~~
grecy
> Laws create private rights, and those rights can be contracted-away.

Maybe in your country.

In Australia, at least, they can not.

When going ice skating those signs that say "Skaters do so at their own risk"
mean nothing in Australia. There are certain rights an individual can not sign
away.

~~~
kevinpet
If you can't waive your rights, you can't even settle out of court. That's
what a settlement is -- an agreement to waive right to due for some payment.

~~~
grecy
In the case of basic rights, why would you want to settle out of court?

i.e. if the ice skating rink from the above example is negligent in their
requirement to provide a level of care, then they need to be punished by a
court.

~~~
ComputerGuru
How is it hard to understand? Settle does not in any way mean "forgive" or
"forget" or "waive."

Court: a year (or more) of legal fees, proceedings, headache, stress, and pain
in the ass. Settle: Get less cash, be done with it.

In both cases, you're being compensated for the violation of your basic
rights. In one of them, you take up the court's time and pay for it dearly in
order to make your point publicly and to potentially get more money. In the
other, assuming you're trying to sue someone without too much hubris such that
they're willing to settle, the affair is much tidier, but generally less
bitter for the loser, too.

~~~
sixcorners
Why do you have to agree to that before hand? Why doesn't the contract prevent
Paypal from suing other parties?

------
xuhu
So where is the webpage that takes your Name, Address, paypal Email, and sends
the opt-out letter for you, for $0.99 ?

~~~
randomchars
Paid via Paypal of course.

Though I'm not sure if it would be possible because you need to sign the
letter.

------
Tipzntrix
I've started seeing these on my Visa card as well, about 1 month ago. I wonder
which one tipped the other off about it, or which case made this so sensitive
to these large companies.

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krob
That's okay, seriously. I have no intention of ever using paypal ever again.
Case closed. I wonder how many new customers this is going to loose them? Only
time will tell.

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ams6110
Contracts only mean what the courts say they mean. And if your only agreement
is a "yes" typed into a text field or a checkbox clicked, probably mean even
less than that.

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fiendsan
Oh no and paypal said they were changing... yeah like 99% of paypal users have
the time and money to sue paypal individually, yeah change...

------
ghaste
Netflix, just this week added a similar EULA...

~~~
jamesbritt
Netflix annouunced that some months ago in the US. Are you just seeing it now?

For some time I was getting a page banner on netflix.com telling I had to go
agree to this. I never did. I keep expecting them to cancel my service.
Perhaps they went and agreed for me.

------
magoon
Words on a page.

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siscia
it is legal ?

~~~
ChuckMcM
Probably, see:
[http://usatoday30.usatoday.com/news/washington/judicial/2011...](http://usatoday30.usatoday.com/news/washington/judicial/2011-04-27-supreme-
court-class-actions_n.htm)

~~~
bovik
"Scalia was joined in AT&T Mobility v. Concepcion by Chief Justice John
Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito."

Big f __ing surprise.

~~~
DannyBee
The supreme court started class actions in the US, the supreme court ended
them (in practice).

In reality though, your problem is with Congress. This had nothing much to do
with class action lawsuits, and everything to do with the federal arbitration
act and whether it preempts state law. Congress could trivially fix this by
adding two sentences to the law.

------
ludovicurbain
Am I the only one surprised with the widespread use of "IANAL" as an
abbreviation ?

