A federal judge in Texas recently dismissed a consumer's lawsuit against an out-of-state Internet business by enforcing the forum selection clause found in the Terms of Use published on the defendant's Web site. Greer v. 1-800-Flowers.com, Inc., Civil Action No. H-07-2543, 2007 WL 3102178, at *1 (S.D. Tex. Oct. 3, 2007). While the enforcement of the forum selection clause was not novel (see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991), the holding is surprising because it requires a consumer to seek legal redress in a foreign jurisdiction even though the transaction at issue took place entirely in the consumer's home state. This may signal a trend among jurists to treat consumers who do business online no differently than businesses.
The facts giving rise to this case are humorous and the people involved have received significant notoriety as a result. Plaintiff Leroy Greer, a married man, ordered flowers from 1-800 Flowers to be delivered to his girlfriend. Wanting to ensure that no record of the transaction would ever be divulged to a third party, especially his wife, Mr. Greer actually read the company's Privacy Policy on the defendant's Web site before making his flower delivery order over the telephone. The Privacy Policy also contained a link to the company's Terms of Use in which the forum selection clause appeared.
A few months after the transaction was completed, 1-800 Flowers sent a gracious thank you letter to Mr. Greer's home along with a coupon for 15 percent off his next purchase. Unfortunately for Mr. Greer, his wife received the note, read it, and immediately inquired about the flower delivery. 1-800 Flowers faxed Mrs. Greer a detailed receipt for the delivery including the recipient's name and address, the date of the order, and the full text of the note sent with the flowers, which read, "Just wanted to say that I love you and you mean the world to me! Leroy."
Mrs. Greer filed for divorce and Mr. Greer promptly sued 1-800-Flowers.com in the United States District Court for the Southern District of Texas for breach of contract and violating the Texas Deceptive Trade Practices Act alleging that divulging the details of his transaction to his wife breached the Privacy Policy. Mr. Greer attached to the complaint a copy of the Privacy Policy that he alleged he read before placing his telephone order. 1-800 Flowers responded to the lawsuit by filing a motion to dismiss based on improper venue as the forum selection clause found in the Terms of Use provided for venue solely in the state and federal courts of Nassau or Suffolk counties in New York.
The court granted the motion requiring Mr. Greer, a Texas resident, to pursue his claims in the New York courts. In doing so, it rejected Mr. Greer's two principal arguments against enforcement of the clause: 1) the Terms of Use only apply to Internet orders and not his order placed over the telephone; and, 2) the Terms of Use were unreasonable and unenforceable under the standards set forth by the Supreme Court in Carnival Cruise Lines. The Court summarily dismissed the first argument because Mr. Greer did visit the Web site when he read the Privacy Policy, which had a clear link to the Terms of Use. The court rejected the latter argument because the Web site's Privacy Policy clearly stated that it is part of the Terms of Use that were easily accessible on the company's Web site. Mr. Greer's failure to read the Terms of Use did not render the forum selection clause inapplicable.
Mr. Greer and his lawyer appeared on NBC-TV's "Today" program after the court dismissed his case and announced that he would not appeal the decision. Rather, Mr. Greer intends to pursue his legal remedy in the New York courts.
Vendors, including franchisors and distributors, who utilize forum selection clauses and who are engaged in direct commerce with consumers either over the Internet or otherwise should find comfort in this decision and others like it. See Feldman v. Google, Inc., 513 F.Supp.2d. 229 (E.D. Pa. 2007); Person v. Google, Inc., 456 F.Supp.2d 488 (S.D.N.Y. 2006). One wonders, however, if the court would have ruled differently had Mr. Greer not accessed the Web site and deliberately read the Privacy Policy in order to make sure his transaction would not be disclosed to his wife or had he sued 1-800 Flowers solely under a state consumer protection statute.
Forum selection clauses are valid and enforceable unless the party opposing their enforcement shows that enforcement would be unreasonable. One of the factors federal courts consider in determining the reasonableness of a forum selection clause is whether the "party seeking to escape enforcement will for all practical purposes be deprived of his day in court because of grave inconvenience or unfairness of the selected forum." See Haynesworth v. The Corporation, 121 F.3d 956, 962 (5th Cir.1997) (quoting Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991)).
A consumer who contracts with a Web-based business does not ordinarily read the Privacy Policy or the Terms of Use even though the sales transaction process routinely requires consumers to check a box indicating that they have. A consumer seeking a legal remedy from a Web-based business, especially under a state consumer protection statute, ought to be able to argue effectively that he or she should not be forced to undertake the expense and inconvenience of pursuing a lawsuit in a foreign jurisdiction. Apparently, Mr. Greer did not make that argument (at least not vigorously enough to warrant a discussion of it in the opinion). Perhaps, in his case, litigating a suit closer to NBC's television studio did not seem to be such a grave inconvenience.
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