Douglas v US District Court ex rel Talk America

The case of *Douglas v. U.S. Dist. Court ex rel Talk America* (495 F.3d 1062, 2007) revolves around whether a service provider can modify its terms by merely updating them on a website without informing customers. Joe Douglas originally contracted with AOL for long-distance phone services, which were later provided by Talk America. Talk America introduced new contract terms—additional charges, a class action waiver, an arbitration clause, and a choice-of-law provision under New York law—posted online without direct notification to Douglas.

Douglas continued using the service unaware of these changes until he discovered additional charges, leading him to file a lawsuit in district court for violations of the Federal Communications Act, breach of contract, and consumer protection statute violations. Talk America sought arbitration, citing the modified terms, which the district court granted.

Arbitration orders under the Federal Arbitration Act don't allow direct appeals, prompting Douglas to seek a writ of mandamus. The Ninth Circuit Court of Appeals granted this petition, ruling that the revised terms weren't binding on Douglas since he hadn't accepted them. The court emphasized that mere posting doesn't constitute an offer unless the offeree knows and accepts it.

This case highlights the legal debate over unilateral contract modifications by service providers and underscores the necessity of clear acceptance for new terms to be enforceable.