Originally posted on ARS Technica by Jon Brodkin at April 25, 2018.
Verizon is forcing users of Yahoo services to waive their class-action rights and agree to resolve disputes through arbitration. Yahoo users who don’t agree to the new terms will be cut off from the services, though Verizon hasn’t said exactly when the cutoff date is.
The change happens as Verizon fights lawsuits related to a 2013 data breach that affected all three billion Yahoo accounts. The company could try to use the new class-action waiver to fight such lawsuits after any future incidents.
Verizon completed its $4.48 billion acquisition of Yahoo’s operating business in June 2017, and the company formed a new subsidiary called “Oath” that combines Yahoo and the Verizon-owned AOL.
The new Oath terms of service “contain a binding arbitration agreement and class action and jury trial waiver clauses…, which are applicable to all US users,” the terms say.
Congress has considered legislation to ban many mandatory arbitration clauses, but it hasn’t followed through yet and the practice remains legal.
The AOL terms already contained a binding arbitration clause and class-action waiver before Verizon bought that company. But the Yahoo terms didn’t previously contain such clauses.
Class action suit and settlement
Yahoo must still face a previously filed lawsuit over the data breach, a federal judge ruled last month. The suit is a putative class action on behalf of Yahoo users.
Separately, Yahoo agreed to an $80 million settlement of a class action filed by Yahoo investors, who alleged that Yahoo violated securities laws by making “false and misleading” statements about Yahoo security and the data breach.
No class actions, even in arbitration
Oath’s new binding arbitration agreement contains the following language:
You understand that by agreeing to these terms, arbitration or a small claims action will be the sole and exclusive means of resolving any dispute between us. You also understand that by agreeing to these terms, you and Oath are giving up the right to bring a claim in court or in front of a jury (except for matters that may be brought in small claims court), and that you and Oath are giving up the right to proceed with any class action or other representative action.
Oath arbitration will be administered by the American Arbitration Association. Collective arbitrations will not be allowed.
“These terms do not allow class or collective arbitrations, even if the [American Arbitration Association] procedures or rules would,” the Oath terms say. “Notwithstanding any other provision of these terms, the arbitrator may award money or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide the relief warranted by that party’s individual claim.”
The Verizon Wireless customer agreement has similar arbitration requirements.
The Oath terms vaguely acknowledge that the class-action waiver requirement might not always be enforceable. “Any question regarding the enforceability or interpretation of this paragraph will be decided by a court and not the arbitrator,” the terms say.
But in any case, the terms say that Oath users won’t have the option of a jury trial. “If for any reason a dispute proceeds in court rather than through arbitration, you and oath agree that there will not be a jury trial,” the terms say. Instead, litigation would come via “a trial by the court.”
A federal judge recently revived a putative class-action lawsuit against AT&T because of a California Supreme Court ruling that invalidated certain forced arbitration agreements.
Email scanning and targeted ads
Yahoo was already scanning emails in order to deliver targeted ads, though. Yahoo was sued over the practice in 2013, and as a result the company settled a class-action lawsuit in 2016. Despite the settlement, Yahoo did not agree to stop scanning emails. Instead, the company agreed that mail content would be “only sent to servers for analysis for advertising purposes after a Yahoo Mail user can access the email in his or her inbox.”
The Oath email to Yahoo Mail users says the company has “updated how we collect and use data,” which includes “analyzing content and information (including emails, instant messages, posts, photos, attachments, and other communications) when you use our services” and “linking your activity on third-party sites and apps with information we have about you.”