Motion Date: 12/23/97

The following papers numbered 1 to 5 were read on this motion to dismiss the complaint.

PAPERS NUMBERED

Notice of Motion/Affirmation/Memorandum of Law 1-3
Memorandum of Law in Opposition 4
Reply Memorandum of Law 5

Upon the foregoing papers it is ordered that this motion is granted.

Plaintiff is a subscriber to the Internet service owned and operated by defendant. At the time he first became a subscriber, he was required to agree to various contractual terms set forth in defendant’s Terms of Service (TOS) and Rules of the Road (ROR). Contained in those agreements were directions concerning telephone line access to the network, and disclosures concerning the possibility that the telephone services which provide such access may do so at non-local billing rates.

After using defendant’s service for a period of time, plaintiff received billings from the telephone company whose lines he used for accessing the network, which charged him long-distance rates, as a result of which he incurred a debt of $170.00 in one month’s time. Contending that defendant engaged in misleading business practices by failing to properly warn subscribers that they may be charged long-distance rates for access over phone lines which appear to be of local origin, plaintiff commenced this action against defendant.

In his original complaint, plaintiff asserted causes of action for both breach of contract and violation of General Business Law §349(h) (hereinafter "§349"), which he brought as a purported class action. Defendant responded to the original complaint by moving to dismiss. Thereafter, plaintiff amended his complaint which now sets forth a single class action claim under §349(1). Now before this Court is defendant’s motion to dismiss the amended complaint.

Defendant offers three grounds in support of its application for dismissal. First, it claims that the action may not be brought in this State because plaintiff is bound by a forum selection clause providing for all disputes to be litigated in the Commonwealth of Virginia. Second, defendant asserts that the amended complaint fails to state a cause of action. Finally, it argues that dismissal is required under the doctrine of forum non conveniens. Upon review of the papers submitted and the applicable case law, the Court agrees that plaintiff cannot maintain his action in New York, and on that ground, the complaint must be dismissed.

The forum selection clause at issue in this case is set forth in one of the "screens" which appears on the subscriber’s computer when the service is first accessed. As an initial step in the process of becoming a subscriber, the individual is informed that in order to do so, he or she must agree to be bound by the terms of the TOS and the ROR. After he indicated his agreement to be so bound by pressing a certain computer button which interacted with the screens, the full provisions of the TOS and the ROR were then presented for plaintiff’s review.

Several screens into the display of the terms of the TOS the tenth paragraph, entitled "LAW", was set forth. That provision states, insofar as relevant hereto, that:

The TOS and your membership shall be governed by the laws of the Commonwealth of Virginia, excluding its conflicts of law rules. Member expressly agrees that exclusive jurisdiction for any claim or dispute resides in the courts of the Commonwealth of Virginia. Member further agrees and expressly consents to the exercise of personal jurisdiction in the Commonwealth of Virginia in connection with any dispute or claim involving AOL Inc. (emphasis supplied).

As is apparent, this provision includes both a selection of forum clause and a choice of law provision.

While our courts had, at one time, "been reluctant to enforce forum selection agreements on the theory that such provisions may improperly divest a court of jurisdiction" (DiRuocco v. Flamingo Beach Hotel & Casino, Inc., 163 A.D. 2d 270,271 (2d Dept. 1990]), it is now well-established that such clauses are "prima facie valid" (Hirschman v. National Textbook Company, 184 A.D. 2d 494,495 [2d Dept. 1992]). Therefore, "[i]n order to set aside such a clause, a party must show either that enforcement would be unreasonable and unjust or that the clause is invalid because of fraud or overreaching, such that a trial in the forum set in the contract would be so gravely difficult and inconvenient that the challenging party would, for all practical purposes, be deprived of his or her day in court" (ibid.) A party challenging a forum selection provision must make "a strong showing that it should be set aside", failing which the provision will be controlling (DiRuocco v. Flamingo Beach Hotel & Casino. Inc., 163 A.D. 2d, at 272; see, The Bremen v. Zapata Off-Shore Co., 407 U.S. 1,12 (1972)).

In this case, plaintiff does not attempt to argue that the selection of the Commonwealth of Virginia as the forum state for any disputes with defendant was the result of fraud (see, Matter of Fidelity & Deposit Company of Maryland v. Altman, 209 A.D. 2d 195 [1st Dept. 1994]; cf. DeSola Group Inc. v. Coors Brewing Company 199 A.D. 2d 141,142-143 [1st Dept. 1993] [Forum selection clause unenforceable because, inter alia "plaintiff’s allegations of fraud pervading the Agreement would render the entire Agreement void"). Instead, he offers three other bases for not enforcing the forum selection clause to which he agreed when he became one of defendant’s network subscribers.

Plaintiff first contends that the forum selection clause is inapplicable to his §349 cause of action because he "does not seek to enforce any rights arising out of a contract between the, parties (Mem. in Opp., p.4). In support of that position, he relies’ upon the decisions of the courts in DeSola Group. Inc. v. Coors Brewing Company (supra) and North American Foreign Trading Corp. v. P.T. Kodeco Electronics. Indonesia (236 A.D. 2d 324 [1st Dept. 1997]). A review of those cases makes plain that plaintiff’s reliance upon them is entirely misplaced. In each of the cited cases, the forum selection provisions were found to be inapplicable because the agreement giving rise to the lawsuit was independent of the agreement containing the forum selection clause. Since the claims asserted in each case arose from facts not related to the agreement which contained the choice of forum provision, there was no legal bar to commencing an action in a state other than that provided for in the parties’ agreements.

If, at bar, the language of the forum selection clause was limited to disputes arising out of the TOS and the ROR, plaintiff could proceed with his action in this State. Clearly, that is not the situation. Under the terms of the forum selection clause in this case, "exclusive jurisdiction for any claim or dispute resides in the courts of the Commonwealth of Virginia" (emphasis added). Since the very language agreed to by plaintiff requires that an action based upon any claim or dispute between the parties, and not just those arising under their agreements, be commenced in the Commonwealth of Virginia, the forum selection clause is both applicable and controlling in this case (cf., Meachum v. Outdoor World Corporation, 235 A.D. 2d 462,464 (2d Dept. 1997](Choice of law clause which "provide[d] that (the parties’ agreement) is to be governed by and interpreted under Pennsylvania law (did] not preclude assertion of (a] (S349] claim, inasmuch as th[e] claim (did] not involve any issue relating to the terms of the contract or its interpretation."]).

As his next avenue of attack upon the clause, plaintiff contends that he cannot be bound by its terms because it was not the result of arms-length negotiations, "but rather is a contract of adhesion", as to which he was given a "take-it—or—leave—it" choice (Mem. in Opp., pp.5-6, n.4). This argument is unconvincing. As made clear by the court in Matter of Fidelity & Deposit Company of Maryland v. Altman (supra), "it does not avail (plaintiff] that the clause was contained in a form agreement ... or that (plaintiff) may not have been in bargaining parity with (defendant]" (see, Carnival Cruise Lines v. Shute 499 U.S. 585 (1991] [Forum selection clause enforceable although not negotiated and set forth in form ticket contract)).

Finally, plaintiff asserts that the forum selection clause may not be enforced because it is against public policy. In this regard, plaintiff’s position is that the enforcement of the provision would permit defendant to immunize itself against this State’s declared policy of regulating businesses operating within its borders so as to ensure that they do not engage in misleading business practices which injure New York consumers.

Certainly, if defendant’s purpose in requiring agreement with its forum selection clause was to avoid application of S349 to its business operations, a basis would exist for this Court to refuse to enforce that provision (see, Armstrong v. Accrediting Council for Continuing Educ. & Training. Inc., 980 F. Supp. 53 (D.D.C. 1997] [District of Columbia consumer protection law claim barred by enforcement of standard choice of law provision in contract]; see, also, Haynsworth v. The Corporation, 121 F. 3d 956 (5th Cir. - -1997)). In this case, defendant makes the valid argument that its headquarters is located in the Commonwealth of Virginia, and that since it does business throughout the country, it sought the protection of the forum selection clause merely to avoid being subject to suit in each of the fifty states. Notably, plaintiff has offered nothing to contradict that position, or to indicate that defendant’s reliance upon the clause was for the nefarious purpose of avoiding the consumer protection laws of the State of New York.

Nor has plaintiff demonstrated that enforcement of the clause will deprive him of protection of his consumer rights pursuant to the laws of the Commonwealth of Virginia. In this regard, the Court finds it significant that plaintiff does not offer any statutory or case law authority from that jurisdiction which would support the conclusion that the conduct allegedly engaged in by defendant is not also subject to regulation in the agreed upon forum.

As is evident from the analysis set forth above, plaintiff has failed to make the "strong showing" necessary to establish that the forum selection clause to which he agreed should not be deemed controlling in this case (see, DiRuocco v. Flamingo Beach Hotel & Casino. Inc., supra, 163 A.D. 2d; at 272). For that reason, the motion to dismiss the complaint is granted. Based upon that determination, the Court does not address defendants alternate grounds for dismissal.

The foregoing shall constitute the decision and order of the Court.

Dated: White Plains, New York
January 27, 1998

____________________________
HON. JOHN P. DiBLASI, J.S.C.

cc:
Kaufman Malchman Kirby & Squire
Attorneys for Plaintiff
919 Third Avenue
New York, New York 10022

Mayer, Brown & Platt
Attorneys for Defendant
1675 Broadway
New York, New York 10019