Clicking “Deny” on Transferring Venue Based on an Online Forum Selection Clause

The Defendant in Dunstan v. Comscore, Inc., was a company that offered “free” screen savers and games that monitor a user’s Internet usage, which is then sold for marketing research or analysis of online behavior.

After being sued for purportedly improperly obtaining personal information in violation of the Stored Communication Act, along with other allegations, moved to dismiss a lawsuit or transfer to from the Northern District of Illinois to the Eastern District of Virginia.  Dunstan v. Comscore, Inc., 2011 U.S. Dist. LEXIS 115988 (N.D. Ill. Oct. 7, 2011).

As with virtually all software downloads, before anyone can install the Defendant’s products, a user must click they have read the “terms and conditions of the Privacy Statement and User License Agreement” and agree to the Defendant’s forum-selection clause.  Dunstan, at *2-3.

Case law requires a plaintiff to show the venue it selected is proper.  Dunstan, at *3.

A party challenging a forum-selection clause must demonstrate the enforcement of the clause is unreasonable under the circumstances.  Dunstan, at *3-4.

“Reasonableness” includes whether the forum-selection clause was “’was reasonably communicated to the plaintiff.” Dunstan, at *4.

 

The Plaintiff successfully argued the Defendant’s forum-selection clause, specifically the terms of service hyperlink, was obscured so that the average user could not find it.  Dunstan, at *4.

As the Court explained, “it is not reasonable to expect a user casually downloading free software to search for such an agreement if it is not immediately available and obvious where to obtain it.”  Dunstan, at *7.

As the Court stated in its holding:

As the Second Circuit noted, “[w]hen products are ‘free’ and users are invited to download them in the absence of reasonably conspicuous notice that they are about to bind themselves to contract terms, the transactional circumstances cannot be fully analogized to those in the paper world of arm’s-length bargaining.” Specht v. Netscape Commc’ns Corp., 306 F.3d 17 at 32 (2d Cir. 2002). Consequently, under the circumstances alleged here, including that the location of the license agreement was not readily apparent, the court concludes that the forum-selection clause was not reasonably communicated to the plaintiffs Harris and Dunstan.

Dunstan, at *7. 

The Court both denied the motion to dismiss and the alternate motion to transfer.

Bow Tie Thoughts

I have thought about the reasonableness of online forum-selection clauses since first reading Carnival Cruise in law school.  The effectiveness of online forum selection clauses is imperative for businesses conducting online sales to have the predictability of where they can be subject to litigation. The prospect of an online company being subject global general jurisdiction is simply acidic e-commerce.  However, as with so many other standards in the law, reasonableness is key on whether a forum-selection clause is valid.

Josh Gilliland is a California attorney who focuses his practice on eDiscovery. Josh is the co-creator of The Legal Geeks, which has made the ABA Journal Top Blawg 100 Blawg in 2013, 2014, and 2015, and was nominated for Best Podcast for the 2015 Geekie Awards. Josh has presented at legal conferences and comic book conventions across the United States. He also ties a mean bow tie.

2 comments

  1. I just wanted to thank you for posting this article. I am doing research right now in a related area and your post offered a lot of great information and insight. I agree with your assessment that there needs to be a balance between the burden on online companies as well as the reasonableness of the forum selection clauses for potential plaintiffs. Thank you again!

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