Finally, Instagram attempted to take preventive steps to avoid class action lawsuits: its new terms of service require users with a legal complaint to submit to arbitration for most claims, rather than to commence litigation in court, and prohibit them from joining a class action lawsuit under most circumstances. Other proposed changes included a liability cap of $100 for all damages of any kind and a one year statute of limitations within which to bring claims against Instagram.
Not everyone overlooked the significance of these new provisions. On Friday, December 21, a San Diego law firm commenced a purported class action litigation in California, challenging Instagram’s class action waiver and liability cap and alleging that Instagram unfairly forced users who did not agree with its new terms to delete their accounts and give up rights to the photos they had previously shared using the service. The complaint alleges that Instagram’s proposed new terms would "transfer valuable property rights to Instagram while simultaneously relieving Instagram from any liability for commercially exploiting customers' photographs and artistic content, while shielding Instagram from legal liability." But class action waivers and liability limits are widely used and have been approved by the courts, including by the U.S. Supreme Court in AT&T Mobility v. Concepcion, 563 U.S. ___ (2011). Provided that they are clearly worded and conspicuously disclosed, they can be an effective and appropriate tool for business owners seeking to provide low cost or free services to consumers without high legal costs.