9th Circuit finds AOL's forum selection clause unenforceable

AOL's forum selection clause is unenforceable with respect to customers suing the company for violating federal electronic privacy law, the 9th Circuit has ruled in reversing a U.S. District Court.

After AOL made publicly available the Internet search records of more than 650,000 of its members, the plaintiffs filed suit in federal court, alleging violation of federal electronic privacy law.

Under AOL's member agreement, the plaintiffs agreed to a forum selection clause that designates the "courts of Virginia" as the proper forum for disputes between AOL and its members. The agreement also contains a choice of law clause stating that Virginia law will govern disputes.

AOL moved to dismiss the suit for improper venue, claiming that the plaintiffs could re-file in state or federal court in Virginia.

The plaintiffs contended that the forum selection clause limits them to Virginia state court, where a class action remedy would be unavailable to them. This, they contended, violates California public policy favoring consumer class actions and renders the forum selection clause unenforceable.

The court agreed, and remanded the case for further proceedings.

"[T]he plain meaning of the forum selection clause's designation of the 'courts of Virginia' is the state courts of Virginia; it does not include federal district courts located in Virginia," the court said.

"California public policy is violated by forcing ... plaintiffs to waive their rights to a class action and remedies under California consumer law. ... [T]he forum selection clause in the instant member agreement is unenforceable as to California resident plaintiffs bringing class action claims under California consumer law."

U.S. Court of Appeals, 9th Circuit. Ramkissoon v. AOL, No. 07-15323. Jan. 26, 2009. Lawyers USA No. 993-383.

Credit: Lawyers USA Staff