Caspi v. Microsoft Network, L.L.C.

732 A.2d 528 (1999)

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Nature of the Case

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Facts

A class action complaint sought relief against Microsoft (D) for breach of contract, fraud, and consumer fraud for the way in which D had rolled over MSN memberships into more expensive plans. P claimed that D engaged in unilateral negative option billing, a practice condemned by attorney generals in 21 states with regard to AOL. P alleged that D without notice or permission charged increased membership fees attributable to a change in service plans. Ps moved for multi-state class action certification. D moved to dismiss the amended complaint for lack of jurisdiction and improper venue by reason of a forum selection clause, which D contends, is in every MSN membership agreement. The agreement was to be governed by the laws of the State of Washington, and each MSN member consented to exclusive jurisdiction and venue of the courts in King County Washington. The complaint was dismissed by the trial judge. It held that each member agreed to the clause when they hit the 'I Agree' button when signing on. The court also observed that forum selection clauses are prima facie valid (McNeill) unless the clause is a result of fraud or overweening bargaining power, the enforcement would violate a strong public policy of the state, or enforcement would seriously inconvenience a trial (Wilfred). The burden falls on the party objecting to enforcement to show that the clause in question fits within one of the exceptions. The trial judge also followed the Carnival precedent and found no fraud or overweening bargaining power. The clause was found to be reasonable, clear and that it contained no material misrepresentations. The mere inclusion of such a clause is a consumer contract is not per se overweening bargaining power and that the focus is on whether such an imbalance in size resulted in an inequality of bargaining power that was unfairly exploited by the more powerful party (Hodes). The trial court then found that P had shown just a size difference and nothing more and that the online business had many competitors and P had meaningful choices. The court also found that P, like in Carnival, had retained the option of rejecting the contract with impunity. The clause was not found to contravene public policy and its enforcement would not inconvenience the trial and that the inconvenience to all parties is on greater in Washington than anywhere else in the country. P appealed.