Scarcella v. AOL

Citation: Scardella v. America Online, Inc., 4 Misc. 3d 1024(A), 798 N.Y.S.2d 348 (2004).

Factual Background
Russell Scarcella, a New York lawyer, signed up online for AOL service. He was not happy and brought a small claims action against AOL in the NYC Civil Court. AOL moved to dismiss, relying on the forum selection clause in its Membership Agreement which said that all actions must be brought in Virginia.


 * “The Membership Agreement presented to plaintiff is 11 single-spaced pages and 11 double-spaced pages. But Defendant considerately made it very easy to avoid going to the trouble of slogging through all of that text. The customer can bypass all that bother by simply pressing the ‘OK, I Agree’ button. If the customer nonetheless bites the bullet and presses the ‘Read Now’ button, Defendant affords him or her a second opportunity to skip over what will become the contract between the parties, showing the customer a screen that says, in pertinent part:


 * Because TOS and ROR are detailed, they are lengthy, and while we encourage you to take the time to read them now, we understand if you are eager to just go explore the service. That’s OK, but you agree to read these documents once online, so you’ll understand what this community is all about. Click on your choice below.

“The customer is then given a second chance to press the ‘OK, I agree’ button or if not deterred by the warning that it is ‘detailed’ and ‘lengthy,’ accompanied by assurances that ‘if you are eager to just go and explore the service. . . That’s OK’ to press the ‘Read Now’ button (which, by this point, might as well be subtitled ‘For Nerds Only.’)” [Parenthetical comment by the court.]

The judge concluded that she did not have to decide whether AOL had engaged in a deceptive practice, nor consider that plaintiff did not specifically deny that he had read and understood the forum selection clause. Rather, she turned to public policy, citing cases in which public policy trumped contractual forum selection clauses, and concluded that “[e]nforcement of the forum-selection clause in this case would contravene the strong public policy embodied in the small-claims provisions of the Civil Code Act (§§ 1801 et seq.).”

This decision was affirmed on appeal, the Court noting that New York Small Claims courts can award up to $5000, but Virginia allows only $2000, and, perhaps must importantly, “Virginia law allows the defendant to transfer the matter out of the small claims court.”

Choice of Forum

Case

Case-U.S.-State

Case-U.S.-Contract