Court Rejects Unconscionability Challenge to YouTube Terms

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By Joseph Wright

Dec. 2 — YouTube Inc.'s liability disclaimer and one-year limitations period for claims under its terms of service are not unconscionable, the U.S. District Court for the Northern District of California held Dec. 2.

Judge Ronald M. Whyte said that the Alphabet Inc.-owned video hosting site's users have a meaningful choice to reject the terms and post their videos elsewhere, despite the site's market power.

Turning to the plaintiff's claim that it was defamed by a takedown notice that YouTube posted on its video, the court ruled that the notice was not defamatory because it concerned the video and not the entity that posted it.

Videos Moved, View Counts Reset

Plaintiff Darnaa LLC is a recording company that brought claims for breach of contract, tortious interference and defamation against YouTube for removing and relocating one of recording artist Darnaa's videos. YouTube also reset the video's view count to zero. YouTube claimed Darnaa violated the terms of service by using automated systems to inflate the video's view count.

YouTube moved to dismiss the claims as untimely as well as on their merits.

Terms Weren't Unconscionable

The court found YouTube's terms weren't unconscionable. YouTube had no specific hold over Darnaa, the court said, which had a meaningful choice to post videos elsewhere. The court wasn't swayed by Darnaa's argument that YouTube is the “dominant, outcome-determinative website” for music videos.

Darnaa argued that two aspects of the terms were substantively unconscionable: the shortened limitations period and the disclaimer of liability.

Reasonable limitations period provisions are valid under California law, the court said, and the one year period specified by YouTube was reasonable. The court dismissed Darnaa's claims as untimely under the clause with leave to amend to plead that the claims should be equitably tolled.

Contractual liability limitations for negligent wrongs are routinely upheld, particularly for free services, the court said. Such provisions violate California public policy as declared in Cal. Civ. Code § 1668, however, to the extent they purport to waive liability for intentional wrongs. In this case, the court said, the contractual limitations period applied to Darnaa's negligent contractual interference claim but not other claims alleging intentional conduct.

YouTube Takedown Notice Not Defamatory

Darnaa argued that YouTube's publicly posted removal notice was defamatory per se. The court rebuffed the argument, stating that Darnaa failed to establish that the notice was “of or concerning” the company or artist. Here, it said, the notice referred to the video rather than to Darnaa.

The court also rejected Darnaa's contention that the takedown statement contained defamatory meaning. At least two courts have found the identical language lacked defamatory meaning, including Song fi Inc. v. Google Inc., 2015 BL 183696, N.D. Cal., No. 14-5080 , 6/10/15. Bare assertions of contract breaches or policy violations aren't defamatory without additional facts to show the assertions had a particular meaning or innuendo that made them defamatory in context, the court said.

Finally, the court, in what was a modest victory for Darnaa, said that YouTube's terms of service are ambiguous on the subject of content removal. The terms are ambiguous regarding the site's ability to remove videos for violations other than intellectual property infringement, the court said. Such ambiguities are generally resolved against the provision's drafter, under canons of contract interpretation.

The court granted Darnaa 20 days to file an amended complaint to shore up its defamation and breach of contract claims.

David H. Kramer of Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif. represented YouTube. Terran T. Steinhart of Steinhart Law Offices in Los Angeles represented Darnaa.

To contact the reporter on this story: Joseph Wright in Washington at

To contact the editor responsible for this story: Thomas O'Toole at

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