Friday, June 22, 2001
Subscriber Suit Against AOL Should Proceed in California, C.A. Rules
By a MetNews Staff Writer
Former subscribers to America Online who claim the communications giant continued racking up monthly charges on their credit cards after their canceled their Internet subscriptions won an early round yesterday in their class action lawsuit.
The First District Court of Appeal said the case should be tried in California, where the plaintiff filed it, and not in AOL’s home state of Virginia.
Terms of service language agreed to by AOL subscribers when they sign up, that exclusive jurisdiction is to be in Virginia courts under Virginia law, is overridden by the fact that the California consumer law under which the plaintiff sued voids any purported waiver of rights, Justice Ignazio Ruvolo wrote.
“Enforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the [California Consumers Legal Remedies Act] and, thus, is prohibited under California law,” Ruvolo wrote.
The forum selection clause is further unenforceable because Virginia does not allow consumer lawsuits to be brought as class actions, and the remedies available in that state are more limited than those in California, the justice said.
“Accordingly, the rights of [plaintiff Al Mendoza Jr.] and the California consumer class members would be substantially diminished if they are required to litigate their dispute in Virginia, thereby violating an important public policy underlying California’s consumer protection law,” he said.
Mendoza, like most AOL subscribers, signed up for the service as gave the company a credit card number to have the monthly service fee deducted automatically.
He notified AOL in October 1999 that he was canceling his subscription. But he alleged that monthly fees continued to appear through February 2000, when he cancelled his credit card to stop the automatic debits.
Mendoza alleged common law fraud and conversion/trespass as well as violations of the state Unfair Business Practices Act and the CLRA.
AOL’s motion to dismiss the action on inconvenient forum grounds was rejected by the Alameda Superior Court. AOL petitioned for mandamus, and the First District denied it earlier this year. The Supreme Court granted review, then transferred the case back to the First District, which in March issued an order to show cause why the requested relief should not be granted.
Still, Ruvolo said relief was not warranted. He agreed with AOL that forum selection clauses generally should be respected for reasons of fairness, efficiency and economy.
“But this encomium is not boundless,” Ruvolo said. “Our law favors forum selection agreements only so long as they are procured freely and voluntarily, with the place chosen having some logical nexus to one of the parties or the dispute, and as long as California consumers will not find their substantial legal rights significantly impaired by their enforcement.”
He said the trial court found Mendoza did not exercise free will in agreeing to the forum selection clause, which were included in the lengthy, and unsigned, terms of service.
The case is America Online, Inc. v. Superior Court, Mendoza RPI, A092813.
Copyright 2001, Metropolitan News Company