I like that. They should use that argument in their brief.

What should be noted is that just because you sign the terms of a contract does not automatically make it enforceable - especially with many cases of software or services. Judges - especially in California - are more than likely to side with the consumer on even borderline restrictions that serve no clear purpose or that simply make life difficult for the consumer. It should also be kept in mind that contract law is torte law: nothing is "illegal" per se, only unenforceable. Illegal applies to law only - not contracts.

Things that are unenforceable in a contract:
1) provisions requiring one party to break the law. "Contract hits" are completely unenforceable.
2) unduly giving up Constitutional rights. This one you have to be careful with interpreting carte blanche, but the basic premise is that the business has to have a REALLY good reason to infringe on Constitutional rights. Free speech is usually the big one, and the rule of thumb is that unless you are an agent of the company (management or PR), your social views are pretty protected. That doesn't mean the company can't fire you for a rant about your boss on Facebook (that's generally a bad idea unless you quit), however.
3) promises that affect a third party. You can't enter into a contract that specifies action by a third party without them being a party. The general exception to this are hiring clauses stating that you can't work for the competition for X amount of time after leaving the company, but even these have been struck down by judges if they prevent people from working at all.

The best rule of thumb is to always read what you are going to sign. If you see something in there that is questionable at all, seek clarification (in writing is best) or don't do business with that company or individual. Professionals never put clauses into a contract that would cause you to question their integrity, but there are plenty of companies that will take the stance of throwing in things that are borderline so as to shift the burden of proof to you if the contract is violated. Most are depending on you NOT wanting to challenge the contract's provisions in court.

A cautionary tale indeed. We went BK in 1999, and had one of the banks place a did not pay note in our credit record, despite it being discharged, and we had paid the debt in full. They had a class action lawsuit against all three majors, and it still has not been settled, the Judge got upset with the settlement where out of 350 million, 250 million went to lawyers. The Credit Reporting system is an illegal breach of privacy, with no recourse due an individual by the Constitution and Bill of Rights, and is in bad need of serious reform. I hate to say anything needs government, but some things ARE worse than Government (ack, pooh), Credit Reporting Agencies are one.