For most corporations, standard forum and venue "home court advantage" clauses are par for the course. For companies with an expansive reach like Google's, they are essential. Google has long included these clauses in its standard terms of use, and courts have enforced them to dismiss potentially expensive cases at the earliest stage of litigation. The recent Rudgayzer v. Google putative class action makes clearer that companies should follow Google's successful example when drafting and litigating forum and venue clauses.
The Google terms of use specify that disputes arising from the use of Google products will be litigated in Santa Clara County, California, near Google's Mountain View headquarters. Google requires all users to click a button indicating that the user has reviewed and agrees to the terms of use. These agreements are "clickwrap" contracts of adhesion that require assent as a prerequisite for use of the service. While clickwrap contracts must provide users adequate notice of their terms and meet the criteria for enforceability of a unilateral form contract, clickwraps have been widely upheld.
In Rudgayzer, Google added to its track record of enforced forum and venue selection clauses, and this time in a case that had the potential to be a costly class action.1 The Rudgayzer suit had drawn attention for its claims alleging improper notice to the class after a 2010 settlement agreement. However, Judge I. Leo Glasser, for the Eastern District of New York, declined to address those issues, and instead, dismissed the lawsuit on the ground that the case was brought in the wrong court.
Plaintiffs' complaint alleged that Google violated user's privacy by publishing frequent email contacts on the Google "Buzz" social networking platform in 2010. Buzz displayed contact lists for Google Gmail users who had created public Google profiles. Plaintiffs contested this unauthorized use of their data, arguing it was illegal under the Stored Communications Act ("SCA"), a federal law prohibiting electronic communication services from disclosing the contents of messages they store.
In November 2010, Google settled a first class action alleging these Google Buzz privacy violations. The settlement agreement required Google to make Buzz an opt-in service and to pay $8.5 million to internet privacy nonprofits. After the settlement, Plaintiffs in Rudgayzer brought a new suit, purporting to represent users who were unable to opt out of the settlement agreement, or who would have done so if they had known about the defective class notice. Google moved to dismiss or transfer, arguing in part that plaintiffs lacked standing and that their claims were precluded. Those points were contested at oral argument in June 2013.2 However, Judge Glasser's opinion on the motion provides only a clear holding that Google's forum and venue provisions are enforceable. Judge Glasser dismissed the putative class action because Google's user agreement contained a "plainly mandatory" forum and venue selection clause. Moreover, these clauses apply "not only to agreements between businesses, but also to contracts of adhesion between a business and a consumer."
This is not the first win on the issue for Google. In 2007, a lawyer advertising his firm with Google AdWords alleged that Google was liable for profits gained from "click fraud"–the practice of competitive third parties repeatedly clicking on ads to drive up prices for advertisers.3 The Eastern District of Pennsylvania found that the forum selection clause in the Google terms of use was enforceable, and transferred the suit to the Northern District of California. That finding has been echoed in other courts, generally in the context of business-to-business disputes.4
Now, a Google forum and selection clause has been enforced again to impede a potentially costly class action. Rudgayzer makes it clearer that Google's example should be followed to keep terms of use litigation in your home court.
Footnote
1 Rudgayzer v. Google, Inc 2013 WL 6057988 (E.D.N.Y. Nov. 15, 2013).
2 http://www.law360.com/articles/449173/google-buzz-class-notice-claims-not-precluded-judge-told
3 Feldman v. Google, Inc, 2007 WL 966011 (E.D. Pa. March 29, 2007)
4 E.g., TradeComet.com LLC v. Google, Inc.,647 F.3d 472 (2d. Cir 2011). [case available here] ; Flowbee International, Inc. v. Google, Inc., No. 4:10-cv-00668-LB (S.D. Tex. Feb. 8, 2010). [case available here]
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