Volume III

Issue : 4: February 24, 2005

• Canadian Federal Court of Appeal Issues Judgment in Privacy Case (Englander v. Telus)
• Online Information Broker Sued for Failing to Protect Confidential Database
• New Zealand Restaurant Fined for Out-of-Date Menu Information on its Website
• Canadian Competition Bureau Sweeps Internet for Scams and Spam
• First SPIM Arrest
• Court Finds Jury Members Should not Use Internet for Coming to Decisions
• Dutch Court Prohibits Web-based Gambling
• Motion Picture Association of American Shuts Down File-Swapping Site
• Record Fine for DJ's MP3 Piracy
• Washington State Court Denies AOL Choice of Jurisdiction Clause
• EU Parliament Rejects Proposed Law on Software Patents
• Canadian Federal Government Publishes Its Secure Electronic Signature Regulations
• Lawsuit Alleges eBay's Bidding Practices are Illegal

Home > Volume III > Issue 4: February 24, 2005 > Washington State Court Denies AOL Choice of Jurisdiction Clause

Washington State Court Denies AOL Choice of Jurisdiction Clause

The Washington State Court of Appeals recently held that a forum selection clause in AOL's Terms of Service Agreement was not enforceable because it undermines the public policy expressed in the Washington Consumer Protection Act.

Two plaintiffs brought a class action suit against AOL in Washington State relating to membership and billing practices. The plaintiffs claimed that even though they did not choose to create new secondary accounts, AOL nevertheless created such accounts and billed the plaintiffs for them. Further, the third-party customer service company used by AOL which took the plaintiffs' complaint calls did not believe that the plaintiffs did not create the secondary accounts, and offered only two months of free service rather than a full refund for the incorrect bills.

The Trial Court dismissed the suit on the basis of a forum selection clause in the AOL Terms of Service Agreement, which stated that members agree to the exclusive jurisdiction of the Virginia courts.

On appeal, the plaintiffs argued that enforcing the forum selection clause violated Washington State's public policy as expressed in Washington's Consumer Protection Act. Class action suits are not available in Virginia, and since the amount of damages suffered by each member of the class is probably under $250, Washington consumers would have little incentive to litigate in Virginia. This violates the public policy of protecting Washington citizens from unfair and deceptive business practices.

This issue had not been previously addressed in Washington, but the Court considered cases from California, Maryland and Florida that dealt with similar arguments. In the end, the Court decided that the Consumer Protection Act offers broad protection to the citizens of Washington from unfair or deceptive acts or practices, and requiring the plaintiffs to litigate in Virginia without the benefit of a class action procedure undermines this purpose. Therefore, the forum selection clause was unenforceable.

This case makes clear that forum selection clauses will not always be enforced, and that ISPs (or others) may very well find themselves liable under local laws even if their membership contracts specify an exclusive jurisdiction.

For additional information, visit:
http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=231844MAJ