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Thursday, October 20, 2005

Court Enforces AOL's Forum Selection Clause

Elaine Abramson sued America Online in the Northern District of Texas; she claimed that the e-mail address she used for business purposes was used as the purported originator of "thousands of emails . . . with a pornographic or otherwise lascivious content."  AOL moved to dismiss, arguing that, under the forum selection clause in the Member Agreement, Virginia was the exclusive jurisdiction for such disputes.  In response, Abramson argued that the Member Agreement was not enforceable because she did not agree to be bound by it -- her son set up her AOL account for her.  Further, Abramson argued that the forum selection clause should not be enforced because dismissal would result in some of her claims being barred by statutes of limitations, and she would suffer financial hardship if forced to reinitiate her suit in Virginia.

The court denied AOL's motion to dismiss and, instead, transferred the case to the Eastern District of Virginia.

First, the court held that the Member Agreement was enforceable even if Abramson's son set up the account for her.  Abramson's son appeared to be acting as her agent and, even if not, Abramson had ratified the Member Agreement by accepting the benefits of the account.

Next, the court addressed the forum selection clause, and noted that the question was not whether the contract, itself, was the product of fraud or overreaching.  Rather, the focus was "whether the inclusion of the forum selection clause in the contract was fraudulent or coerced." Abramson failed to show fraud or coercion in connection with the forum selection clause.  She argued that the clause was "overreaching because it consist[ed] of a boilerplate provision in a contract of adhesion."  The court, however, held that this allegation was not particular to the forum selection clause:

[t]he form nature of the contract and alleged disparity of bargaining power apply to the Member Agreement as a whole. Abramson has not alleged that Defendant's insertion of the forum selection clause into the Member Agreement was, in isolation, an act of overreaching.

Abramson v. Am. Online, Inc., 2005 U.S. Dist. LEXIS 10095 (May 25, 2005).

[Meredith R. Miller]

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