In a Case of First Impression Under North Carolina’s Automatic Renewal Statute, Judge Dismisses Some Claims but Allows Others to Proceed

A U.S. district court recently granted in part and denied in part the New York Times's motion to dismiss claims that its subscription renewal terms violated North Carolina's little-used Automatic Renewal Statute. The plaintiff, on behalf of a putative class, claimed that the Times subscription process failed to adequately disclose the automatic renewal and cancellation options as required by the statute. The court dismissed several of the plaintiff's claims, but the case was allowed to proceed on allegations that the methodology for canceling was not clearly and conspicuously disclosed, and that the terms of subscription price increases were not provided in the format required by the statute.

The plaintiff in the case, Perkins et al v. New York Times Co., 22-cv-5202, 2023 WL 3601489 (SDNY, May 23, 2023), claimed that after signing up for a subscription to the Times in 2020 while she was in North Carolina, her subscription was automatically renewed numerous times, and that the automatic renewal provision was not sufficiently identified on the sign-up screens or the email confirming her subscription. She alleged this violated North Carolina's Automatic Renewal Statute, N.C.G.S. § 75-41(a) (the "ARS"), which applies where a seller's contract "automatically renews unless the consumer cancels the contract[.]" N.C.G.S. § 75-41(a). The statute requires that the seller must "clearly and conspicuously" disclose an automatic renewal clause, as well as how the automatic renewal can be canceled. It also requires that if the contract terms can change on renewal, those terms must be disclosed in at least 12-point, bold text. Though the statute had been in place since 2007 and amended in 2016, neither the parties nor the court were able to locate any decisions interpreting the North Carolina ARS. The court noted that while California had a heavily litigated automatic renewal statute, Cal. Bus. & Prof. Code § 17602, its provisions materially differed from North Carolina's ARS and did not provide guidance as to how "clearly and conspicuously"-an undefined term-should be interpreted.

In this case, even though the text was not in bold type, the court found that the automatic renewal provision itself was sufficiently disclosed because the Times's subscriber checkout page included two statements that the subscription would renew until cancelation. The court therefore dismissed that part of plaintiff's claim. However, the court allowed the case to proceed regarding the method for cancellation. The court acknowledged that the Times's Cancellation and Refund Policy was presented as a link on the subscriber checkout page. But the court noted that "the methods for cancellation are not highlighted and do not stand out from the dense, surrounding text" of the twelve-paragraph policy. Similarly, the court also permitted plaintiff to proceed with claims that disclosures about contract changes in the form of subscription price increases were not in the appropriate format. Despite allowing these claims to go forward, the court noted sua sponte that beyond the pleading stage, for Article III standing purposes the plaintiff would need to show not just that she suffered a concrete harm in the form of auto-subscription payments, but that it was the Times's non-compliance with the remaining claims under the ARS that caused her harm. Finally, the court dismissed plaintiff's claim under North Carolina's unfair and deceptive trade practices law, N.C.G.S. § 75-16, finding that allegations that the disclosures were not conspicuous were insufficient to allege egregious or inequitable conduct required by statute, as well as plaintiff's unjust enrichment claim on the basis that it was already governed by a contract.