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Judge Rules eBay Can Name Forum in Contract With Users
The Legal Intelligencer
October 27, 2009
If you plan to sue eBay Inc., you'd better know the way to San Jose.
In a growing trend, federal judges are enforcing the "forum selection clause" in eBay's standard user agreement, which calls for any dispute between eBay and its users to be resolved through a court action filed in Santa Clara County, Calif.
"EBay operates around the world and it is not shocking for it to want to focus its legal defense in a particular forum rather than have to litigate in potentially hundreds or thousands of other jurisdictions," U.S. District Judge C. Darnell Jones II wrote in Tricome v. eBay Inc.
Jones, who sits in the Eastern District of Pennsylvania, rejected the argument by plaintiff Domenic Tricome that being forced to litigate in California would be unreasonably burdensome.
"Although it may be challenging, the court is not convinced that litigating this dispute in California would be prohibitively difficult," Jones wrote.
Jones noted that eBay has promised to accommodate the plaintiff through telephonic or video appearances and the scheduling of depositions near his home in Pennsylvania.
The Oct. 19 decision by Jones echoes the rationale espoused by U.S. District Judge Charles P. Sifton of the Eastern District of New York, whose 57-page decision in Universal Grading Service v. eBay Inc. handed down in June 2008 transferred a proposed class action antitrust case against eBay to the Northern District of California.
In the Universal Grading Service case, eBay was accused of conspiring with a group of coin dealers to monopolize the market for certain collectible coins by adopting new rules that said coins would have to be graded by one of five approved grading services. According to the suit, coins graded by the plaintiff and other small grading companies could not be listed or sold on eBay as "certified."
Sifton concluded that since some of the plaintiffs were registered eBay users who had agreed to eBay's forum selection clause, the entire case should be transferred.
"Plaintiffs have not shown that the forum selection clause is the result of fraud or overreaching, nor have they shown that enforcement of the clause would result in grave inconvenience or unfairness," Sifton wrote.
"Accordingly, I conclude that plaintiffs have failed to rebut the presumption that the forum selection clause is enforceable," Sifton wrote.
Similarly, Jones concluded that eBay's forum selection clause is presumptively valid and that Tricome was a sophisticated businessman who, in the process of registering as an eBay user, had checked a box indicating that he accepted the terms.
"Had plaintiff not clicked that box, he would not have been allowed to register," Jones wrote.
According to the suit, Tricome is the owner of an online store that sells vitamins and fitness supplements who also listed items from his store for auction on eBay. The suit says that in 2006, Tricome told eBay that he had wrongfully received "negative feedback" from one of eBay's customers "in an attempt to extort" Tricome.
The suit alleges that eBay said it could take no action on Tricome's behalf and that his only recourse would be to file a civil action against the customer. But Tricome claims that when he followed eBay's advice and filed suit against the complaining customer, eBay responded by terminating Tricome's account, and that the termination forced him to sell his business at a fraction of what it was worth. EBay's lawyers -- Darin J. McMullen and Meghan K. Finnerty of Offit Kurman -- moved for dismissal or transfer, citing the forum selection clause.
Tricome, who initially represented himself and was later represented by A. Charles Peruto Jr., argued that the case should be allowed to remain in Pennsylvania because litigating in California would be unduly burdensome.
Peruto urged Jones to declare that eBay's user agreement is a contract of adhesion and that its forum selection clause should therefore be rejected as unconscionable.
Jones disagreed, saying "a contract is not necessarily one of adhesion simply because it is a form contract ... and failure to read the terms of an agreement is not a defense."
Failure to negotiate also "does not render an otherwise valid forum selection clause invalid," Jones found, noting that the U.S. Supreme Court "has explicitly held that a forum selection clause in a standardized, non-negotiable contract may be quite permissible."
Instead, Jones said, courts have consistently held that "the touchstone for unacceptability is whether the party challenging the agreement had any meaningful choice regarding acceptance of its provisions." Jones concluded that Tricome was not lacking choice, but rather had opted to sign on to eBay's agreement in order to increase his business opportunities.
"Plaintiff had the opportunity to carefully read the User Agreement and reject the terms contained therein. ... Moreover, eBay did not engage in high pressure tactics or put external pressure on Plaintiff to accept the User Agreement -- it simply made the opportunity available to the general public," Jones wrote.
Tricome could not be reached for comment. Court records show that Peruto was recently granted permission to withdraw from the case on the grounds that there was an "irremediable breakdown" of the attorney-client relationship.
McMullen, eBay's lawyer, did not return a phone call seeking comment.
