Public policy concerns invalidate AOL forum selection clause

Dix v. ICT Group, Inc., — P.3d —-, 2007 WL 2003407 (Wash. July 12, 2007)

Dix v. ICT Group was one of the first decisions discussed here at Internet Cases back in early 2005. I wrote about the Washington appellate court’s decision in the case, which reversed a lower court’s dismissal of a class action suit against AOL under Washington’s Consumer Protection Act. The Washington Supreme Court has now affirmed the appellate court’s decision. The court held that the forum selection clause in AOL’s terms of service, which called for all consumer disputes to be heard in Virginia, should not be enforced, because to do so would be against public policy of the state of Washington.

The plaintiff AOL users claim that AOL violated the Washington state Consumer Protection Act by tricking them into signing up for additional AOL accounts. The trial court dismissed the action, on grounds that the suit should have been brought in a court in Virginia, according to AOL’s terms of service. But there is a substantial problem with the situation the dismissal created — Virginia does not recognize class action suits of the type being brought by the plaintiffs. The Washington plaintiffs were thereby denied the sort of remedy they could have obtained in Washington.

The appellate court and the state supreme court observed the significance of the various plaintiffs’ interests at stake. None of the plaintiffs alleged more than $250 or so in damages. So it would not be practicable for each individual plaintiff to seek recovery against AOL. The class action mechanism would be the best way to obtain recovery for small amounts among a large number of persons. The importance of this public policy outweighed the benefits of enforcement of the forum selection clause which, under U.S. Supreme Court authority, was presumptively valid. See, e.g., The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).