America Online, Inc. v. Superior Court
| Citation | 108 Cal.Rptr.2d 699,90 Cal.App.4th 1 |
| Decision Date | 21 June 2001 |
| Docket Number | No. A092813.,A092813. |
| Court | California Court of Appeals Court of Appeals |
| Parties | AMERICA ONLINE, INC., Petitioner, v. The SUPERIOR COURT of Alameda County, Respondent; Al Mendoza, Jr. et al., Real Parties in Interest. |
Latham & Watkins, Everett C. Johnson, James K. Lynch, San Francisco, Randall T. Kim, for Petitioner.
Marion's Inn, Kennedy P. Richardson, Mark Palley, Sam Walker, Yvonne M. Pierrou, Oakland, for Real Parties in Interest.
This petition for writ of mandate was filed by petitioner America Online, Inc. (AOL) following the denial of its motion to stay or dismiss a putative consumer class-action lawsuit. The motion was based on a claim that California is an inconvenient forum in which to litigate the dispute concerning AOL's proprietary Internet service. In support of its motion, AOL exclusively relied on a forum selection clause in its contracts with real parties in interest, Al Mendoza, Jr. (Mendoza) and the potential class members, which designated Virginia as the jurisdiction in which all disputes arising out of the relationship would be litigated. The agreement also included a choice of law provision requiring that Virginia law be applied to any such dispute.
We conclude the court properly denied AOL's motion. First, one of the causes of action seeks class action relief under the California Consumers Legal Remedies Act (CLRA) (Civ.Code, §§ 1750 et seq.). This act contains a provision that voids any purported waiver of rights under the CLRA as being contrary to California public policy. 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 CLRA and, thus, is prohibited under California law.
Second, we conclude that Virginia law does not allow consumer lawsuits to be brought as class actions and the available remedies are more limited than those afforded by California law. Accordingly, the rights of Mendoza 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. For this independent reason, the forum selection clause is unenforceable.
A class action was filed by Mendoza for himself and others against AOL seeking compensatory and punitive damages, injunctive relief, and restitution. The complaint alleges that real parties are former subscribers to AOL's Internet service who, over the past four years, paid between $5 and $22 each month for the service. Monthly payments were made by allowing AOL to debit automatically the credit cards of class members. The class members terminated their subscriptions to AOL but, without authorization, AOL continued to debit their credit cards for monthly service fees. Mendoza individually alleged that he gave AOL notice of the cancellation of his subscription in October 1999, but AOL continued to charge monthly fees against his credit card at least through February 2000, at which time Mendoza cancelled his credit card in order to stop the debits.
The complaint alleged separate causes of action including violations of California's Unfair Business Practices Act (First Cause of Action) (Bus. & Prof.Code, §§ 17200 et seq.), violations of California's CLRA (Second Cause of Action) (Civ. Code, § 1770, subd. (a)(14)), common law conversion/trespass (Third Cause of Action), and common law fraud (Fourth Cause of Action). The complaint also prayed that the action proceed as a class action under Code of Civil Procedure section 382, Civil Code section 1781, and Business and Professions Code section 17204, and that Mendoza and the class be awarded compensatory and punitive damages,1 restitution, prejudgment interest, attorney fees and costs, and a permanent injunction halting AOL's practice, and requiring it to disseminate corrective notices.
Shortly thereafter, AOL filed a motion to stay or dismiss the action on the ground of inconvenient forum. As noted, the motion was based on the forum selection clause contained in the "Terms of Service" (TOS) agreement entered into between Mendoza and AOL at the time he subscribed to AOL's proprietary Internet service. The TOS, attached as Exhibit A in support of AOL's motion, is a %page, single-spaced, unsigned document. Paragraph 8 of the TOS entitled "LAW AND LEGAL NOTICES" states in part the following: "You expressly agree that exclusive jurisdiction for any claim or dispute with AOL or relating in any way to your membership or your use of AOL resides in the courts of Virginia and you further agree and expressly consent to the exercise of personal jurisdiction in the courts of Virginia in connection with any such dispute including any claim involving AOL or its affiliates, subsidiaries, employees, contractors, officers, directors, telecommunications providers and content providers...." Additionally, paragraph 8 contained a choice of law provision designating Virginia law as being applicable to any dispute between the parties: "The laws of the Commonwealth of Virginia, excluding its conflicts-of-law rules, govern this Agreement and your membership."
In support of its motion, AOL contended the forum selection clause was presumptively valid under California law, was a rational, voluntary, and conscionable choice, and that its enforcement would not violate any strong public policy of this state. Among the legal authorities on which it relied, AOL referred to several unpublished out-of-state cases in which the clause had been previously enforced.2
In response, Mendoza objected to Exhibit A, claiming that the document did not accurately reflect what was displayed to him when he commenced service with AOL. Instead, he described seeing displayed on his home computer monitor a "densely worded, small-size text that was hard to read on the computer screen." This objection formed the leitmotif for Mendoza's claim that the TOS was an unconscionable adhesion contract, and that under applicable rules of contract construction, the forum selection clause was unenforceable. In addition, Mendoza contended the TOS was unreasonable and unenforceable because it necessarily required him and the putative class members to relinquish legal rights in derogation of California public policy.
On September 25, 2000, the court entered its order denying AOL's motion. After discussing several of the pertinent cases bearing on the issue, the court denied the motion finding that: 1) the forum selection clause was unfair and unreasonable because it was not negotiated, it was contained in a standard form contract, and was in a format that was not readily identifiable by Mendoza; 2) AOL had failed to carry its burden of proving that the consumer rights afforded under California law would not be diminished by enforcement of the clause; and 3) the remedies available to consumers in Virginia were not comparable to those in California.
AOL filed a petition for writ of mandamus. On November 28, 2000, we issued an order to show cause why a peremptory writ of mandamus should not issue. Thereafter, on January 4, 2001, we discharged the order to show cause as improvidently granted, and denied the petition. AOL then petitioned the Supreme Court for review. On February 28, 2001, the high court granted the petition for review, and transferred the matter back to this court with directions to issue an order to show cause why the relief requested in the petition should not be granted. On March 2, 2001, we issued a new order to show cause as directed by the Supreme Court.
We begin by addressing the standard of review and which party had the burden of proof below, for even these threshold issues are disputed, and not without some muddle. In Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 131 Cal.Rptr. 374, 551 P.2d 1206 (Smith Valentino), a decision on a petition for writ of mandamus which will take on even greater importance in later discussion, the Supreme Court denied a request for mandamus concluding that the trial court "acted within its discretion" in upholding a contractual forum selection clause designating Pennsylvania as the proper forum. (Id. at p. 493,131 Cal.Rptr. 374, 551 P.2d 1206.) This statement by our high court clearly implicates a review of the lower court's decision utilizing the most deferential abuse of discretion standard. This standard of review scrutinizes lower court decisions to determine if the ruling made "`exceed[s] the bounds of reason,'" all circumstances before it being considered. (Walker "v. Superior Court (1991) 53 Cal.3d 257, 272, 279 Cal.Rptr. 576, 807 P.2d 418.) If not, the ruling will be affirmed regardless of whether the appellate court might have decided the issue differently. (Avant! Corp. v. Superior Court (2000) 79 Cal.App.4th 876, 881-882, 94 Cal.Rptr.2d 505.) The court in Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 16 Cal.Rptr.2d 417 (Cal-State), described the abuse of discretion standard as one which "measures whether the act of the lower tribunal is within the range of options available under governing legal criteria in light of the evidence before the tribunal." (Id. at p. 1680,16 Cal.Rptr.2d 417.)
Later, in Furda v. Superior Court (1984) 161 Cal.App.8d 418, 207 Cal.Rptr. 646 (Furda), the court began its analysis of the lower court's ruling denying the defendant's motion to stay or dismiss based on forum non conveniens with the following statement: "We next consider whether the superior court abused its discretion in denying Furda's motion to stay or dismiss real parties' action on the ground of forum non conveniens and the forum selection clause." (Id. at p. 424, 207...
To continue reading
Request your trial