Subway scored a recent victory when a federal court dismissed a putative class action brought by two customers over a free sandwich promotion alleging violations of the Telephone Consumer Protection Act (“TCPA”) after allegedly receiving a text message offering a free 6” Oven Roasted Chicken sub.
Subway moved to compel arbitration, seeking to enforce the arbitration provision in the plaintiffs’ contracts with their mobile phone carrier. The clause mandated arbitration for “any and all claims or disputes in any way related to or concerning this [agreement].” The plaintiffs could have opted out from the clause within 30 days of activating their phones. They did not.
In granting Subway’s motion, the court found that the text message was within the scope of the arbitration agreement, the agreement was not procedurally or substantively unconscionable, and that – under California law – equitable estoppel applied to allow Subway, a non-signatory of the arbitration agreement, to enforce the agreement. Because the court decided that all of the plaintiffs’ claims must be sent to arbitration, the court exercised its discretion and dismissed the case.
Takeaway: Companies who engage in direct marketing through consumer technology products should be mindful that a consumer’s user agreement may offer them protection from suits arising out of such marketing.