## Facts

- Joe Douglas purchased long-distance telephone service through AOL.
- Talk America, Inc. acquired AOL’s long-distance business and continued providing service to former AOL customers, including Douglas.
- Talk America unilaterally added terms to the service contract, including additional charges, an arbitration clause, a class-action waiver, and a New York choice-of-law provision.
- Talk America posted the revised terms on its website but did not notify Douglas that the contract had changed.
- Douglas’s account was paid automatically, and he did not visit Talk America’s website.
- Douglas continued using the service for several years without knowledge of the revised terms and later discovered additional charges.
- Douglas filed a putative class action alleging violations of the Federal Communications Act, breach of contract, and California consumer-protection statutes.
- Talk America moved to compel arbitration based on the posted arbitration clause and class-action waiver.
- The district court granted the motion to compel arbitration.
- Because the FAA barred an interlocutory appeal from an order compelling arbitration, Douglas petitioned the Ninth Circuit for a writ of mandamus to vacate the arbitration order.

## Issues

1. Whether mandamus was appropriate to review and vacate a district court order compelling arbitration when the FAA precludes an interlocutory appeal.
2. Whether a service provider can bind a consumer to materially revised contract terms by posting them on a website without notice, and treat continued service use as acceptance.

## Decision

- The Ninth Circuit granted the petition for a writ of mandamus.
- The court vacated the district court’s order compelling arbitration.
- The court held the revised terms were not enforceable against Douglas because he had no notice of the changes and therefore did not assent to them.

## Legal Principles

- Mandamus may issue when the petitioner lacks an adequate alternative means of relief and the challenged order is clearly erroneous as a matter of law; satisfaction of all mandamus factors is not required in every case.
- Under basic contract principles, an offeree cannot accept terms of which the offeree is unaware; assent requires knowledge of the offered terms.
- A party cannot unilaterally modify an existing consumer service contract by merely posting revised terms online without giving notice to the other party.
- Continued use of a service does not constitute acceptance of new terms when the user lacks notice that new terms have been proposed, including arbitration and class-action waiver provisions.
- An arbitration clause is enforceable only if it is part of a valid agreement formed through notice and assent.

## Conclusion

The Ninth Circuit used mandamus to correct a clearly erroneous compelled-arbitration order and held that website posting alone, without notice, could not bind a consumer to materially revised contract terms, including an arbitration clause and class-action waiver.


Douglas v. U.S. District Court for the Central District of California, 495 F.3d 1062 (9th Cir. 2007)