AOL member agreement unenforceable in California

23 Jan AOL member agreement unenforceable in California

The provision of the AOL service agreement limiting lawsuits against the internet provider to the state courts of Virginia is invalid in California according to the 9th Circuit Court of Appeals. California has a strong interest in the availability of class actions and other consumer remedies to its citizens, the court held, and refused to allow the dismissal of a class action brought in the federal courts in California.

The decision points out the impact of the boilerplate provisions in consumer credit contracts which specify where disputes must be resolved and which state’s law applies. It should be no surprise that Virginia’s law, AOL’s choice, is not consumer friendly and bars consumer class actions. Good reason why a large entity would want to have unhappy customers sue it, one at a time, in the court of its choice.

The 9th Circuit held that to enforce the forum selection clause in the AOL agreement would be an impermissible waiver of the rights of Californians embodied in the Consumer Legal Remedies Act. Civil Code 175. In a future post, I’ll consider what other kinds of remedies are implicated by this decision.

As an aside, my clients often want to know what “the law” is on a given subject, as though the law is straight forward, unvarying, and clearly understood. Note that the three judges involved in the Ramkissoon v. AOL case wrote three different opinions explaining and qualifying the decision! They all agreed in the result in the present case, but differed on how it should be applied both in that litigation and other suits. So, tell me, what is “the law” here?

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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