California Court Holds Website Link To Fair Usage Policy Not Conspicuous Enough To Indicate Limits to Term "Unlimited"

Disclosures

On October 4, the California Court of Appeal held that the disclosure of limits to an “unlimited” calling plan in a linked Fair Usage Policy was not sufficiently conspicuous to support a lower court’s judgment as a matter of law that the calling plan was not misleading.  Chapman v. Skype, Inc., B241398, 2013 WL 5502960 (Cal. Ct. App. Oct. 4, 2013). The putative class action complaint alleged violations of California’s Unfair Competition Law, false advertising law, and Consumer Legal Remedies Act, in addition to common law intentional and negligent misrepresentation and unjust enrichment claims. The calling plan in question was advertised as “unlimited,” but included a link to a Fair Usage Policy that explained that the plain was limited to 6 hours per day, 10,000 minutes per month, and 50 numbers called each day. The defendant argued that it had adequately disclosed these limits, but the plaintiff claimed that the terms in the Fair Usage Policy contradicted the word “unlimited” in the plan’s description. The trial court had dismissed all claims without leave to amend. The Court of Appeal held that plaintiff had adequately alleged violations of the statutory provisions, and should be permitted to amend her complaint as to her inadequately pled common law claims. The court concluded that the plaintiff had alleged sufficient facts to create a question of fact as to whether consumers were likely to be deceived by the plan terms, noting that under the applicable laws the plaintiff did not need to show that the use of the word “unlimited” was actually false, but rather that such use was misleading. The court thus instructed the trial court to vacate its order sustaining the defendant’s demurrer as to the statutory claims, and to allow plaintiff to amend the complaint as to the common law claims.