First Year Civil Procedure: As bright eyed students we learned that a lawyer not knowing their civil procedure could kill a case before it had a chance to begin, no matter how meritorious the facts of that lawsuit. Cases such as Carnival Cruise Lines, Inc. v. Shute highlighted this point with the power of a forum selection clause to sink a lawsuit.[1] This long held principle has entered uncharted waters since most businesses include forum selection clauses in online transactions.
A forum selection clause specifies the jurisdiction for a lawsuit in a business transaction. Forum selection clauses give a company “contractual predictability,” thus have the potential to reduce the cost of doing business and theoretically passing savings onto consumers.[2]
People like to buy things online. We can purchase airline tickets, music downloads, and gifts all over the Internet. In the event of a lawsuit, the first questions a lawyer should ask is where the case should be litigated.
The “Clickwrap” Iceberg
A Federal Court in Pennsylvania upheld a “clickwrap” forum selection clause and transferred the case to San Jose, California. The plaintiff, a law firm, purchased “AdWords” that when searched on Google showed the firm’s name in the results. The plaintiff brought suit in Pennsylvania and challenged Google’s “clickwrap” forum selection clause.[3]
The plaintiff claimed damages from “click fraud,” a situation where competitors or pranksters click on the plaintiff’s ad to drive up costs.[4] The plaintiff claimed Google could have tracked those committing “click fraud” that drove up plaintiff’s costs $100,000. The defendant moved to dismiss or for a transfer of venue to Santa Clara County, California, pursuant to the forum selection clause.[5]
The Court upheld the forum selection clause and transferred venue to San Jose, California. The “clickwrap” agreement gave the plaintiff reasonable notice of the forum selection clause, because the entire agreement appeared on the screen and required “yes” to be clicked.[6] Moreover, the Court did not find any form of unconscionability in the forum selection agreement.
Navigating Uncharted Waters
We are in an age of online commerce and collaboration. People have the power to buy movie tickets or a car over the Internet. When litigation arises from online commerce, lawyers need to consider any jurisdictional challenges from an online forum selection clause.
