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Internet Goliath America Online lost a battle against a pro se opponent, New York attorney Russell Scarcella, last month when a New York civil court judge ruled invalid the forum-selection clause in the company’s online service contract. The court denied AOL’s motion to dismiss Scarcella’s small-claims action, in which he seeks $5,000 in compensation for AOL’s misrepresentations regarding its customer service and for what he says was the resultant loss of his e-mail contacts list. “The general policy of giving effect to forum-selection clauses must yield to the scheme enacted by the Legislature specifically to ensure that civil justice is meaningfully accessible to those seeking the adjudication of small claims,” wrote Judge Debra Samuels in her eight-page decision. AOL filed a notice of appeal on Sept. 24. According to Scarcella, a commercial litigator with a six-attorney firm, he filed his claim in response to AOL’s poor customer care. “My AOL service doesn’t work properly and I’ve called and called and called and they take forever to get on the phone,” Scarcella says in an interview. “And then you finally get somebody and they don’t know what they’re doing.” An AOL representative told Scarcella to delete a specific folder, which he did, and then lost 1,500 e-mail addresses, he says. “They didn’t provide the services they promised in their contract, that they advertise, and as a result I lost my address book,” Scarcella says. Exasperated and convinced that he could get the problem addressed if he attracted the attention of AOL’s legal department, Scarcella filed a claim in Manhattan’s small claims court. AOL, represented by the Manhattan firm of Schlam, Stone & Dolan, responded by filing its motion for dismissal. The motion contended that the court lacked subject-matter jurisdiction over the claim because of the member agreement signed by Scarcella. Paragraph 11 of the agreement reads, in part, “Member expressly agrees that the exclusive jurisdiction for any claim or dispute resides in the courts of the Commonwealth of Virginia.” AGREEING IN MIDCONTRACT Scarcella argued that the company’s 91-page online agreement is deceptive because it features two “OK, I Agree” buttons midway through the document, which, when clicked, allow customers to “sign” the agreement before reaching its end. “AOL encourages its members to skip the [agreement] with no expectation that you will actually go back and read it, yet comforted in their knowledge that you clicked the correct box in order for them to cloak themselves in the protection of the contract they drafted,” wrote Scarcella in his response to AOL’s motion. Samuels appeared to agree with this argument regarding the member agreement, adding that customers may also be deterred by the “warning that [the agreement] is ‘detailed’ and ‘lengthy,’ accompanied by the assurance that ‘if you are eager to just go and explore the service . . . That’s OK.’ “ Such language, she suggested, “might as well be subtitled ‘For Nerds Only.’ “ Nonetheless, wrote Samuels, “The court need not decide whether Defendant has, as Claimant alleges, engaged in a ‘deceptive practice’ that vitiates Claimant’s ostensible consent to the terms of the Member Agreement.” Rather, the court ruled that a “contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by decision,” quoting the U.S. Supreme Court decision in Bremen v. Zapata. THE COURT’S PURPOSE Here, the clause would contravene the very purpose of the small claims court, wrote Samuels. “The essential features of a small claims court are extremely low costs or none at all, no formal pleadings, no lawyers, and the direct examination of parties and witnesses without formality by a trained judge who knows and applies the substantive law,” wrote Samuels, citing the Civil Court Act, which quotes the 1971 book Justice and the Poor by Reginald H. Smith. Here, AOL did not establish that Virginia would offer Scarcella such benefits. Furthermore, she wrote, being forced to travel to Virginia would be a costly burden to Scarcella. The court, therefore, denied AOL’s motion. Scarcella says he is pleased with the decision but that all he wants is his list of contacts back. “After the first time in court, I pulled the [AOL] attorney aside and said, ‘Get a tech and assign him to get my program working correctly,’ ” and he would drop the suit, he says. The attorney, Scarcella says, rejected the offer. Schlam Stone partner Jeffrey Eilender, calling himself “lead counsel for AOL on this small claims matter,” says that the company is standing up for an important, well-settled point. “I’ve been doing these cases for at least five years, and this is the first time to my knowledge that any court had held that AOL’s forum-clause is unenforceable,” Eilender says. The company is pursuing its appeal because case law clearly supports its position and because it wants to avoid spending its “resources litigating all over the country,” adds Eilender. “AOL like anyone else is entitled to the benefit of the bargain,” he says. Mark Fass is a staff writer for the New York Law Journal , the ALM newspaper where this article first appeared.

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