Quick Summary
Lawrence Feldman (plaintiff) filed a lawsuit against Google, Inc. (defendant), alleging that he was a victim of click fraud in Google’s AdWords program. The plaintiff claimed that Google charged him for fraudulent clicks on his ads and failed to take appropriate measures to prevent click fraud.
The defendant sought to enforce a forum selection clause in the online AdWords agreement, requiring any disputes to be adjudicated in Santa Clara County, California.
Facts of the Case
Lawrence Feldman (plaintiff), an attorney, purchased advertising through Google, Inc.’s (defendant) AdWords program to attract potential clients who may have been harmed by drugs under scrutiny by the F.D.A. The program allowed advertisers to bid for keywords or “Adwords,” their ads would appear when internet users searched for those keywords on the Google search engine.
Feldman alleged that he was a victim of click fraud, where competitors or pranksters repeatedly clicked on his ads to drive up his advertising costs and discourage him from advertising. He claimed that Google could track and prevent click fraud but failed to do so.
Feldman argued that Google charged him over $100,000 for AdWords and sought damages, disgorgement of profits obtained through unlawful conduct, and restitution of money paid for fraudulent clicks.
Procedural Posture and History
- On March 9, 2006, Feldman initiated legal action by filing a writ of summons in the Common Pleas Court of Philadelphia County.
- On June 14, 2006, it was transferred to a federal district court based on diversity jurisdiction.
- On August 9, 2006, Responding to developments, Feldman amended the complaint, introducing new legal theories.
- On November 1, 2006, An Oral argument was conducted, leading the court to convert the motion to dismiss into a motion for summary judgment.
- On January 26, 2007, Feldman replied to the defendant’s response, further shaping the trajectory of the legal proceedings.
I.R.A.C. Format
Issue
Whether a forum selection clause in an online agreement between the parties was enforceable and if the dispute should be transferred to the specified forum.
Rule of Law
Forum selection clauses are generally enforceable if there is reasonable notice and mutual assent to the terms.
Reasoning and Analysis
The court determined that the online AdWords agreement constituted a valid express contract between the parties. It determined that Feldman had reasonable notice of the agreement’s terms and had manifested assent by clicking “Yes” to indicate agreement during the sign-up process.
The court rejected Feldman’s argument that the agreement was unconscionable, finding that provisions like the forum selection clause were not unreasonable. The court also concluded that the forum selection clause in the AdWords agreement was mandatory rather than permissive.
It held that the clause required litigation to be adjudicated exclusively in Santa Clara County, California. Since the venue was proper in both districts and given the forum selection clause’s enforceability, the court analyzed whether transfer under Section 1404(a) was appropriate.
Conclusion
The court denied Plaintiff’s Motion for Summary Judgment and granted Defendant’s Motion to Transfer. It concluded that the forum selection clause was enforceable and mandated transfer to the Northern District of California, Santa Clara County, as provided in the AdWords agreement.
Key Takeaways
- Internet “clickwrap” agreements can be enforceable if there is reasonable notice and mutual assent to the terms.
- Forum selection clauses in online agreements may be upheld if they are not unreasonable or unconscionable.
- Procedural unconscionability depends on unequal bargaining power and lack of meaningful choice.
- Substantive unconscionability applies if contract terms result in overly harsh or one-sided outcomes.
- An enforceable forum selection clause can lead to a transfer of venue under 28 U.S.C. Section 1404(a).
Relevant FAQs of this case
What factors make an internet "clickwrap" agreement enforceable?
An enforceable clickwrap agreement requires reasonable notice of terms and clear user assent, often indicated by clicking “Yes.”
How does the court decide if a forum selection clause is mandatory or permissive?
A mandatory forum selection clause exclusively designates a venue, while a permissive one allows but doesn’t mandate litigation in a specified location.
References
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