Insurrection, Contracts, and the Cannabis Industry
Following the storming of the United States Capitol during the first week of 2021, Amazon Web Services (“AWS”) sent a notice to conservative social media company Parler (that was allegedly leaked to BuzzFeed before being e-mailed to Parler) that it was being suspended, effective immediately, from AWS’s cloud-hosting service.
In the lawsuit Parler filed against Amazon last week, Parler alleges a variety of claims which are based on the contractual terms that govern the parties’ relationship – including AWS’s Customer Agreement.
These terms are critical each time your business hosts a user on its website, provides a product to a customer, and also when a dispute arises (see also, our blogs on Product Liability and Class Actions). A detailed analysis and application of the terms of the parties’ agreements will control the outcome of the litigation.
Thus, you can both empower and protect your business by ensuring your own Terms of Service (as well as the methods by which you update and notify third parties of any material changes) are comprehensive, well-advised, and legally insightful.
II. The Parler v. AWS Lawsuit
A. Claims & Defenses
Parler’s lawsuit does not claim Parler has not breached the contract between itself and AWS; Parler argues instead that AWS is the party in breach of it’s own contract terms. As set forth in the Complaint: “AWS is also breaching its contract with Parler, which requires AWS to provide Parler with a thirty-day notice before terminating service, rather than the less than thirty-hour notice AWS actually provided.”
As stated above, the exact terms of the parties’ contract— that is, AWS’s Customer Agreement — will determine the outcome of these claims. In sum, our office’s analysis of these issues is: the plain language of these terms permit Amazon to take the action of removing Parler from it’s cloud-hosting service effective immediately as a result of the activity taking place on Parler’s website both before, during, and after the insurrection of January 6, 2021.
This is because the parties’ Customer Agreement (which, again, is a binding contract) expressly permits AWS to suspend Parler or any Parler user’s access or use of AWS services immediately upon notice if Parler’s or any Parler user’s conduct, among other things, “could subject [AWS], our affiliates, or any third party to liability, or […] could be fraudulent; [or] you are, or any End User is, in breach of this Agreement.” (AWS Customer Agreement, Section 6.)
The e-mail sent to Parler by AWS, as posted on Buzzfeed, asserts temporary suspension on this basis: “It’s clear that Parler does not have an effective process to comply with the AWS terms of service” with respect to policing violent content and calls for violence.
B. Shady Conduct Highlights Fundamental Flaw in Parler’s Case
While reviewing the complaint through the lens of litigation, our office also discovered something of note in Exhibit B attached to the Complaint:
Exhibit B is the AWS Customer Agreement, and within this document is “Section 4: Your Responsibilities.” These provisions set forth in no uncertain terms that Parler is “responsible for all activities that occur under your account, regardless of whether the activities are authorized by you or undertaken by you, your employees or a third party (including your contractors, agents or End Users) […]” (Section 4.1).
Interestingly, Section 4.2 of this agreement is the only section not included in its entirety. This subsection squarely places responsibility for End User conduct on Parler, and appears to be “cut off” the page. Hmmmm…
It is difficult to imagine this important omission was made in error.
The content mission from Section 4.2 is underlined as follows: “Your Content. You will ensure that Your Content and your and End Users’ use of Your Content or the Service Offerings will not violate any of the Policies or any applicable law. You are solely responsible for the development, content, operation, maintenance, and use of Your Content.” Further, Section 4.5 makes clear: “You are responsible for End Users’ use of Your Content and the Service Offerings. You will ensure that all End Users comply with your obligations under this Agreement and that the terms of your agreement with each End User are consistent with this Agreement. If you become aware of any violation of your obligations under this Agreement caused by an End User, you will immediately suspend access to Your Content and the Service Offerings by such End User.”
C. A Lawsuit Destined to Fail
Parler contends that Amazon has breached the contract because Amazon effectively “terminated” the could-hosting contract with Parler, but did not follow the process for termination as set forth in the Customer Agreement. Amazon argues that Parler violated the terms of the same contract by failing to meet it’s own responsibility (not AWS’s responsibility, as set forth in the Customer Agreement) of monitoring Parler’s own users, including removing violative content and also to suspending offending end users’ access to Parler (in compliance with Section 4.5), which Parler allegedly has not done with the exception of a small number of cases, and after being legally goaded by AWS.
This breach of contract on the part of Parler thus contractually justifies AWS’s immediate suspension of services. Again, this is because the parties’ Customer Agreement (which, again, is a binding contract) provides Amazon with this power: it expressly permits AWS to suspend Parler or any Parler user’s access or use of AWS services immediately upon notice if Parler’s or any Parler user’s conduct, among other things, “could subject [AWS], our affiliates, or any third party to liability, or […] could be fraudulent; [or] you are, or any End User is, in breach of this Agreement.” (AWS Customer Agreement, Section 6.)
Indeed, AWS alleges in support of suspension that: “It’s clear that Parler does not have an effective process to comply with the AWS terms of service” with respect to policing violent content and calls for violence, and thus was likely well within its contractual rights to suspend Parler immediately upon notice in compliance with Section 6 therein.
III. Application to the Cannabis Industry
As discussed above, when a dispute arises between parties— whether it be two or more businesses, or a business and persons (see our blogs on Product Liability and Class Actions)— a detailed analysis and application of the terms of the parties’ agreements will control the outcome of the litigation. As a result, it is critical that cannabis businesses ensure their Terms of Service (as well as the methods by which they update and notify third parties of any material changes) are not only well-advised, but also fully empower and protect each business to the fullest extent of the law.