KlearGear Defends $3,500 Non-Disparagement Fee, Says Court Order Doesn’t Count

The KlearGear Terms of Sale still have this ridiculous Non-Disparagement Clause, though you first have to find a link to these terms on the company’s Help page.

Last week, a federal court in Utah issued a default judgment in favor of consumers who had been slapped with a $3,500 “non-disparagement fee” from e-tailer KlearGear.com because they wrote something negative about a failed transaction online. The company failed to show up to court to defend itself, but now claims it will fight that judgment because mail about the case was sent to the wrong address.

In an e-mail to ArsTechnica, someone claiming to represent KlearGear and its parent company, Descoteaux Boutiques (DBS), alleges that the plaintiff’s attorney at Public Citizen knowingly failed to serve DBS in France meaning, per the e-mail, that the defendant was “never properly served under the Hague Convention” and that the plaintiff allegeldy “concealed this information critical of the court to improperly obtain a judgment by default.”

“Once DBS has been served, we will vacate the judgment and litigate,” states the e-mail.

While everything on the KlearGear site indicates that it is located in Grandville, MI, the e-mail writer contends, “Our only presence in the United States and Canada has been via a network of third-party contractors, as DBS outsources several key business functions of our businesses on foreign markets including order fulfillment, warehouse operations, customer service, marketing, legal, payment processing and collections,” and that “Any mail that is sent to Kleargear in care of any third-party vendor, including our fulfillment centers operated by Amazon Services and Chenal Brands, will be refused.”

Of course, how is anyone to know of the company’s actual address? As we mentioned above, everywhere you look on KlearGear.com mentions the same address in Michigan.

There’s the standard footer on the bottom the page:

There’s the “About Us” page, which includes no address but does have this photo of a building:

That image shown in the above screengrab looks an awful lot like what you get from Google Maps when you check out the Grandvile mailing address:

What about the precious Terms of Use page? Surely that would mention DBS and its Frenchy address, right? Wrong:

In a statement to Consumerist, the plaintiff’s attorney, Scott Michelman of Public Citizen, says the allegations that he misled the court are “entirely false,” and that all federal and state rules of procedure were following in serving the complaint at the Michigan address repeatedly listed on the KlearGear site.

“The email’s statement that KlearGear lacked notice of the case is difficult to believe, given the widespread national and international press coverage over six months and the fact that news reports from the fall of 2013 contain statements from KlearGear itself,” writes Michelman, who points out that the e-mail from KlearGear admits that it learned of the lawsuit on April 14, but that the company took no action in the three weeks between that date and the court ruling in early May.

“Most important, Monday’s e-mail does not answer the claims at the heart of this case,” says Michelaman, “that KlearGear used one-sided contractual fine print to try to bully unsatisfied consumers into silence,” and damaged the plaintiffs’ credit rating by wrongly sending them to collection for a debt they do not owe. “If KlearGear decides to appear in court at long last, we welcome the opportunity to demonstrate that the Palmers are entitled to relief, either because of the company’s default or on the merits.”

In the e-mail, KlearGear contends that it has proof that the “Non-Disparagement Clause,” which charges customers $3,500 if they write something negative about the site online, was indeed in place when the plaintiffs made their purchase. However, as we pointed out in our previous story, that clause is not on the page that comes up when you click “Terms of Use,” nor is it on the page that is directly linked from the checkout page. Instead, those links take you to a “help” page that looks a lot like a Terms of Use page. Within that page, there is buried a link to an actual Terms of Sale page that contains the clause in question.

We really hope that KlearGear does try to fight this in court, because we’d love to hear an explanation for how it could possibly be legal to insert such a restrictive clause two levels down in the customers’ terms.

by Chris Morran via Consumerist