DETROIT (Legal Newsline) - Panera's arbitration clause could help it avoid a class action lawsuit brought by a customer unhappy with restrictions on its self-service beverage subscription - the "Unlimited Sip Club."
U.S. Magistrate Judge Patricia Morris on March 6 issued a report and recommendations on the company's motion to dismiss, suggesting presiding judge Thomas Ludington invoke the arbitration clause from an agreement signed by plaintiff Ryan Lee.
The clause requires arbitration of disputes and was included in terms and conditions that could be accessed by a hyperlink displayed in a contrasting font color to a start button on the company's website.
"Plaintiff was not required to access a website to access the terms of a 'browsewrap' agreement, but rather, was warned in the paragraph directly preceding the 'Start' button that he was bound by the terms and conditions which were available for review via hyperlink that was accessible from the very same paragraph," Morris wrote.
"Even assuming that the subscription agreement could be construed as 'browsewrap' rather than modified clickwrap, the result would not change."
Lee filed suit Aug. 20 in Michigan federal court against Panera Bread Company over its Unlimited Sip Club, for which members pay a $10.99 monthly fee for coffee, tea, soda and lemonade. Customers are being misled into thinking refills are "unlimited."
One promo promises "endless NEW Charged Lemonades, coffees, teas and soda," the suit says.
"However," the suit says, the fine print reveals that the 'Unlimited" offer of "Any size. Any Time" means only 'once every 2 hours. Plus unlimited refills while you're in the cafe.'
"Consumers expect a beverage subscription represented - directly or indirectly - as an unlimited service, to allow for an unlimited number of redeemed drinks and refills."
Lawyer Spencer Sheehan is pursuing the case. It also complains subscribers have a difficult time canceling memberships after signing up for a free first month.
He also attempted to defeat the arbitration agreement by claiming it was unconscionable, but Morris noted the first page of the terms and conditions states: "If you do not agree to this Agreement, do not subscribe."