When Your Ad Goes Wrong
By D. Carlos Kaslow
Over the past year, several storage operators have called us concerning problems with their Yellow Pages advertisement. Either the ad did not appear, or it contained an error, such as the wrong phone number or wrong address. A mistake like this can be a problem for a mature self-storage facility and a disaster for one just opening.
For most storage facilities, the Yellow Pages ad is the number-one source of new business. The Self Storage Association has recently published Self-Storage Usage: A Study, which reports more than 70 percent of customers would consult the Yellow Pages to find a self-storage facility, and more than 30 percent found the facility where they stored their goods through the directory.
Deck Stacked Against Advertiser
What legal rights does a storage operator have when the Yellow Pages makes a mistake? A review of current law and past disputes indicates that the deck is stacked heavily in favor of the phone company. In most cases, an advertiser will not only have his or her business injured, but he finds little relief from the directory or the courts.
Yellow Pages providers use a number of contractual devices to protect themselves from liability for mistakes. The two most common contract provisions are 1.) making acceptance of the advertisement conditional on publication and 2.) limiting liability for mistakes to the amount charged for the advertisement. The courts in most jurisdictions enforce such provisions.
Acceptance of Application: It is mutually understood and agreed that the publication of the advertising requested in the telephone directory shall constitute acceptance of this application by the telephone company. Otherwise, this application is not binding on either of the parties.
This provision simply says that a binding placement contract does not exist until the ad appears in the Yellow Pages directory. If the company fails to include the ordered advertisement, no binding contract exists, and no breach of contract has occurred. This is a powerful defense to customer claims for breach of contract. The Yellow Pages publisher's defense is that no contract existed. Not including the ad is an effective rejection of the advertiser's proposed contract.
The limitation of liability, which is common in such contracts, will be more familiar to most self-storage operators. It is similar to the limitation of liability contained in your rental agreement. The following is an example of such a limitation from a BellSouth Yellow Pages contract:
| In most cases, an advertiser will not only have his or her business injured, but he finds little relief from the directory or the courts. |
BellSouth Advertising & Publishing Corporation's liability and the telephone company's liability (if any) on account of omission or errors in such advertising shall, in no event, exceed the amount of charges for the advertising which was omitted or in which the error occurred in the current directory issue and such liability shall be discharged by abatement of the charges for the particular listing or advertisement in which the omission or error occurs.
| In only three states--Alabama, Michigan and Wisconsin--have courts allowed advertisers to collect damages from a Yellow Pages publisher... |
This type of provision effectively says that the Yellow Pages publisher has no liability if it does not publish or incorrectly publishes an advertisement. If the publisher makes an error, the advertiser is relieved of paying for the omitted or incorrect advertisement. This may seem like little relief to a storage operator whose advertisement contains an incorrect phone number or does not appear at all, given the devastating effect this can have on his or her business. It can take six months to a year for a Yellow Pages advertisement to be corrected.
Courts in more than 26 states, including California, Florida, New York and Texas, will generally enforce liability limitations provisions. In only three states- Alabama, Michigan and Wisconsin- have courts allowed advertisers to collect damages from a Yellow Pages publisher who either left out or incorrectly published an ad. The courts held that the contractual limitations were either contrary to public policy or unconscionable and, therefore, unenforceable.
Judicial Attitudes May Be Changing
A Florida case indicates that even in states that uphold Yellow Pages liability limitations, a publisher may not be completely immune to the consequences of its errors. For example, a Florida Yellow Pages advertiser found that his advertisement contained an incorrect telephone number. He immediately contacted the publisher and reported the mistake. While upset, he apparently wasn't in a mood to sue. His attitude changed when the next year's directory came out with the same error.
The Florida Court of Appeal upheld the publisher's contractual liability limitation for the erroneous advertisement that ran in the first directory. However, the court concluded that while the first error might have been a mistake, to make the same error in the second year was more than mere negligence, and the advertiser could sue for damages.
Any self-storage operator who is the victim of Yellow Pages publisher negligence will have a difficult time collecting damages. The Yellow Pages-publishers have contractual defenses that are usually effective, and in most jurisdictions the suit will be dismissed without a trial. However, some recent cases indicate that the courts are becoming more willing to consider such suits and hold the Yellow Pages publishers liable for their errors.
The following article was excerpted from The Self Storage Legal Review, a bimonthly newsletter on legal issues pertaining to the self-storage industry. For more information or to obtain a subscription, contact Carlos Kaslow at 2203 Los Angeles Ave., Berkeley, CA 94707; (510) 528-0630.
Opinions on legal matters are those of the editor and others; professional counsel should be sought before any action based on this material is taken.