Brodsky v. Match.com: Court Upholds Forum Selection Clause Contained in Click-Wrap Agreement
Digital media law update: A judge in the Southern District of New York has upheld a clause contained in a click-wrap user agreement that required any suit regarding use of the Match.com site to be brought in north Texas. The opinion actually commended Match.com for including this forum selection clause in its User Agreement. It noted that Match.com's headquarters are in Dallas, Texas and that failure to include such a clause in its User Agreements would have subjected Match to suit in all 50 states.
The case is Brodsky v. Match.com LLC, S.D.N.Y., No. 1:09-cv-05328, a class action that alleged that subscribers to Match.com allegedly suffered harm from a misleading distinction between users and subscribers and from problems with email communications between these two groups. The complaint alleged causes of action under RICO, New York's deceptive trade practices and false advertising laws, and common law, for breach of contract and fraud. The plaintiffs included people from around the country, including persons from New York, California, Connecticut, Michigan and Florida.
Prior to completing the registration process, each of the class members was required to check a box on the website which stated "I agree to the Match.com terms of use." This statement was hyperlinked to an 11-page User Agreement. The first paragraph of the User Agreement stated, "If you object to anything in this Agreement or the Match.com Privacy Policy, do not use the Website or the Service." The User Agreement also contained a choice of law clause in favor of Texas law and a forum selection clause in favor of jurisdiction in Dallas or Collin County -- adjacent counties in north Texas.
On Match.com's motion, Judge Naomi Buchwald ordered that the case be transferred to the Northern District of Texas.
In the 2nd Circuit, determining whether a forum selection clause is enforceable requires a three-party inquiry: whether the clause was reasonably communicated, whether the clause is mandatory or permissive, and whether the claims involved are subject to the clause. Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2nd Cir. 2007). A plaintiff can rebut the 2nd Circuit's presumption of enforceability of such clauses by showing that: (1) the incorporation of the clause into the agreement was the result of fraud of overreaching, (2) if the plaintiff will be deprived for all practical purposes of his day in court, due to inconvenience or the unfairness of the specified forum, (3) the fundamental unfairness of the law in the specified forum will deprive the plaintiff of a remedy, or (4) the clause is against the public policy of the state in which the plaintiff brought his suit. Roby v. Corporation of Lloyds, 996 F.2d 1353, 1361 (2d. Cir. 1993).
Judge Buchwald found that the forum selection clause had been reasonably communicated, was mandatory, and covered the claims in the complaint. She also found the plaintiffs' arguments against the applicability of the clause unpersuasive:
• While the plaintiffs had pleaded that the entire User Agreement was obtain via fraud, this was not sufficient to render the forum selection clause unenforceable. According to Judge Buchwald, "general allegations that the contract as a whole was tainted with fraud are insufficient to invalidate a forum selection clause where, as here, a plaintiff has not alleged fraudulent inducement with respect to the forum selection clause itself."
• While the plaintiffs complained that Texas has a shorter statute of limitations for its consumer protection laws, this did not mean that the plaintiffs would be deprived of a remedy. If the case were moved there, the plaintiffs could still proceed under other legal theories. Moreover, 2nd Circuit precedent holds that the mere fact that a statute of limitations may have expired in the court specified in a forum selection clause is not sufficient to warrant taking the case from that forum.
Ultimately, Judge Buchwald found that it was not unreasonable for Match.com to have decided that any disputes about its website should be litigated in Texas. Texas is the State where Match.com is headquartered and where all its employees reside. Moreover, "Match.com would appear to have no practical alternative than to include a forum selection and choice of law clause in its User Agreement, since otherwise Match could potentially be subject to suit in any of the fifty states arising from its website or service."
This ruling is in line with many others that have upheld such clauses in the absence of evidence of injustice to the plaintiffs. Judge Buchwald's opinion indicates that while plaintiffs' counsel preferred to keep the case in New York, they signaled their begrudging willingness to have the case transferred to the Northern District of Texas. So perhaps the real reasons for their objections to the transfer were personal convenience and a desire to avoid sharing the case with a second set of lawyers.
David D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.
