In re America Online, Inc., 00-1341.

• Decision Date: 19 April 2001
• Docket Number: No. 00-1341.,00-1341.
• Citation: 168 F.Supp.2d 1359
• Parties: In re AMERICA ONLINE, INC. Version 5.0 Software Litigation.
• Court: U.S. District Court — Southern District of Florida

168 F.Supp.2d 1359

In re AMERICA ONLINE, INC. Version 5.0 Software Litigation.

No. 00-1341.

United States District Court, S.D. Florida.

April 19, 2001.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Justin Graem Witkin, Levin Middlebrooks Mabie Thomas, Mitchell et al, Pensacola, FL, Joseph Michael Matthews, Colson Hicks Eidson Colson et al, Coral Gables, Fl, Mila F. Bartos, Finkelstein Thompson & Loughran, Washington, DC, Daniel C. Girard, Girard & Green, San Francisco, CA, Lloyd W. Gathings, II, Gathings & Associates, Birmingham, AL, Daniel R. Karon, Gallagher Sharp Fulton & Norman, Cleveland, OH, Joseph P. Danis, Carey & Danis, St. Louis, MO, Thomas Frederic Gonzalez, Charles T. Wiggins, J. Nixon Daniel, III, Beggs & Lane, Pensacola, FL, James Richard Hooper, Orlando, FL, Robert Bruce Carey, Norton Frickey & Associates, Colorado, CO, Steve W. Berman, Sean R. Matt, Hagens & Berman, Seattle, WA, Michael Hyman, Much Shelist Freed Denenberg, Ament Bell & Rubenstein, Chicago, IL, Alan Schulman, Robert S. Gans, Berstein Litowitz Berger & Grossman, San Diego, CA, Kevin P. Roddy, Hagens Berman, Los Angeles, CA, Gordon M. Fauth, Jr., A.J. De Bartolomeo, Eric H. Gibbs, Girard & Green, San Francisco, CA, William S. Lerach, Milberg Weiss Bershad Hynes & Lerach, San Diego, CA, John G. Emerson, Jr., The Emerson Firm, Houston, TX, Robert J. Berg, Bernstein Liebhard & Lifshitz, New York City, Lawrence A. Sucharow, Peter E. Zinman, Goodkind Labaton Rudoff & Sucharow, New York City, William J. Pinilis, Morristown, NJ, Lionel Z. Glancy, Los Angeles, CA, Peter S. Pearlman, Cohn Lifland Pearlman Herrmann & Knopf, Saddle Brook, NJ, Kevin Yourman, Weiss & Yourman, Los Angeles, CA, Michael D. Braun, Timothy J. Burke, Stull Stull & Brody, Los Angeles, CA, John Charles Murdock, Jeffrey Goldenberg, Murdock Beck Goldenberg & Benintendi, Cincinnati, OH, Douglas M. Brooks, Gilman & Pastor, Saugus, MA, W. Lewis Garrison, Jr., Romaine S. Scott, III, Garrison Scott Gamlbe & Rosenthal, Birmingham, AL, Jules Brody, Stull Stull & Brody, New York City, Joseph H. Weiss, Weiss & Yourman, New York City, for Ronald Kieves, Jonathan Konetz, Flo Kelly, Patrick B. North, Elizabeth Cofino, Juan Cofino, Mary Beth Bisselle, Donald L. Jaykins, Edwin Reano-Vasquez, Farhad Khazai, Howard Schuman, Christal Schmidt, Margaret P. Henshall, EZ Booking, Inc., Russell A. Hightower, Michael S. Muzio, Eric Lloyd, James M. Felker, David Parker, Michelle L. Irish, Donald T. Rubin, Garry Veak, Scott Goldberg, Olga

Vaca, David Drew, Lee Zinman, Mark Lofty, Susan Poplawski, Steven Langert, Melody Munro, Robert Kerr, Jr., Mary Jane Kerr, Vincent C. Kent, M.D., David P. Bershad, Mary D. Rennie, Jasper J. Lovoi, Jr., Joe D. Malley, Antionette Brooks, Matthew Fishman, Susan Fishman, Robin Yarnell, Merk French, Jackey Lee, Connie Dexter Kinser, Eddie Jean Harp, Alan Wayne, Galaxy Internet Services, Inc., Susan Schilling, Frosty Chuba, Scott Wise, Paul Barnes, Patsy Barnes, Custom Call Services, Inc., on behalf of themselves and all other Alabama consumers who installed America Online Version 5.0 Software, Paul Barnes, Patsy Barnes, Metropolitan Marketing Services, Inc., Custom Call Services, Inc., Taylor Robinson, Jerri K. Thaman, Jonathan Rosenblum, Consumer Plaintiffs, and Scott F. Johnson, consolidated plaintiffs.

Joseph Peter Klock, Jr., Robert C.L. Vaughan, Steel Hector & Davis, Miami, FL, Terry C. Young, Lowndes Drosdick Doster Kantor & Reed, Orlando, FL, Roman P. Wuller, Robert J. Wagner, Thompson Coburn, St. Louis, MS, B. John Pendleton, Jr., McCarter & English, Newark, NJ, Mia Higgins, Kirkland & Ellis, New York City, Eugene F. Assaf, Thomas D. Yannucci, Kirkland & Ellis, Washington, DC, James Eugene Burke, Keating Muething & Klekamp, Cincinnati, OH, Michael J. Beck, Clerk of the Panel, Judicial Panel on Multidistrict Litigation, Washington, DC, John A. DeSisto, Featherstone DeSisto, Denver, CO, Andrew J. Berman, James T. Fousekis, Lisa M. Sitkin, Steinhart & Falconer, San Francisco, CA, George Allan Van Fleet, Vinson & Elkins, Houston, TX, for America Online, Inc., defendants.

Henk Brands, Kellogg Huber Hansen Todd & Evans, Washington, DC, for Software & Information Industry Association.

ORDER ON DEFENDANT'S MOTIONS TO DISMISS

GOLD, District Judge.

THIS CAUSE is before the court upon the defendant America OnLine, Inc's ("AOL") motions to dismiss (DE # 95. 97). There are two classifications of plaintiffs in this case: the individual consumers ("consumers") and the Internet Service Providers ("ISPs"). Each of these plaintiff groups has filed a complaint against AOL, and these cases have been consolidated under the above-captioned case number.¹ The court has federal question and supplemental jurisdiction over both cases pursuant to 28 U.S.C. §§ 1331 and 1367. AOL has filed motions to dismiss both of the plaintiffs' complaints pursuant to Federal Rule of Civil Procedure 12(b)(6). On March 3, 2001, the court heard oral argument on the motions to dismiss. Upon consideration of the pleadings and the arguments of counsel, AOL's motions to dismiss the consumers' (DE # 95) and Galaxy's complaints (DE # 97) are granted in part and denied in part.

Factual Background

I. Nature of Case

This case involves claims by individuals and corporations who allegedly were injured by AOL's Internet and online access software version 5.0 ("AOL 5.0"). The consumers have brought a class action on behalf of similarly situated consumers who installed AOL 5.0 into their personal computers.² Their complaint is a consolidation of cases pending in various district courts across the United States. The consumers have asserted seven counts against AOL: count I, violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030(a)(5); count II, violation of state consumer protection acts, brought under the laws of all fifty states and the District of Columbia; count III, unfair and deceptive acts and practices and consumer fraud; count IV, product liability for defective design; count V, product liability for failure to warn; count VI, negligence; and count VII, negligent misrepresentation.

Galaxy Internet Services, Inc. ("Galaxy"), the representative ISP, has brought a class action on behalf of similarly situated ISPs that have subscribers who have downloaded or installed AOL 5.0.³ Galaxy's complaint contains four counts count I, attempted monopolization of the Internet service market in violation of 15 U.S.C. § 2; count III, violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; count V, unfair or deceptive business practices, brought primarily under M.G.L. c. 93A § 11 and comparable statutes of other states; and count VI, tortious interference with existing and prospective contractual relationships.⁴ This complaint was originally filed in the United States District Court for the District of Massachusetts, but it was transferred to the Southern District of Florida and consolidated with the consumers' complaint.

II. Factual Allegations

A. The Consumers' Complaint⁵

AOL is an ISP that establishes Internet connections through a dial-up Internet account provided by the corporation. By June 30, 1999, AOL had become the world's largest ISP to residential homes, providing 34,311,550 residential online subscribers with its services. Cons.Compl. at ¶¶ 33, 35. While the six largest ISP operators account for 78.9% of online subscribers, AOL alone accounts for 52% Cons. Compl. at ¶ 35.

According to the consumers, AOL's intent for the past six years has been to monopolize the market for online services to American households. Cons.Compl. at ¶ 39. One way AOL has attempted to meet this goal is by providing a free disc of its program to every household with a computer, accompanied by a "free trial subscription." Cons.Compl. at ¶ 40. Another marketing technique has been to negotiate with computer manufacturers so that a consumer receives AOL when it purchases a new computer system. Cons. Compl. at ¶ 40. A purchaser of such a system need only click on the AOL icon of its computer to install and configure AOL's Internet access software. Cons. Compl. at ¶ 40. The consumers claim that AOL carefully calculated that, once AOL's Internet access programs had been installed into residential computers, consumers would be unlikely to change ISPs. Cons Compl. at ¶ 43. According to the consumers, AOL recognized that most consumers would suffer through many inconveniences, including poor reliability, bad service, and higher prices, rather than cancel their AOL service and go through the process of starting over again with another ISP. Cons.Compl. at ¶ 44. Moreover, once installed, AOL's software would "take over" the consumer's desktop computer through numerous icons, default applications pop-up windows, and a window covering an entire screen. Cons.Compl. at ¶ 46.

On October 5, 1999, AOL announced the release of its fifth generation of Internet access software. AOL 5.0. Cons.Compl. at ¶ 49. In a massive marketing campaign, AOL distributed millions of copies of its software and made AOL 5.0 available online. Cons.Compl. at ¶ 50. AOL told consumers that AOL 5.0 was "risk free," "cost [] nothing," and "provided superior benefits." Cons.Compl. at ¶¶ 2.50-59. The consumers claim that AOL knew these representations were false because AOL chose to distribute its 5.0 version disks to consumers despite its knowledge that the program included substantial bugs. Cons. Compl. at ¶¶ 60, 61, 81, 82.

According to the complaint by installing AOL 5.0 into their computers, consumers unknowingly have exposed and continue to expose their computer systems and software to a defectively designed and/or unreasonably dangerous software installation process that "changes" the host system's communications configuration and settings so as to interfere with any non-AOL communications and software services. Cons. Compl. at ¶ 62. AOL 5.0 allegedly causes three kinds of damage to computers. First, AOL 5.0 cuts off non-AOL...