Aral v. Earthlink

Citation: Aral v. Earthlink, Inc., 134 Cal.App.4th 544, 36 Cal. Rptr.3d 229 (2005).

Facts
Aral alleged that EarthLink charged fees to customers for Digital Subscriber Line (DSL) service for a period prior to providing customers with the equipment necessary to utilize the service. The complaint was brought under the California Unfair Competition Law (UCL) ([Bus. & Prof. Code § 17200 et seq.),] and sought both injunctive and restitutionary relief on behalf of all California residents who were affected by this practice.

Trial Court Ruling
The trial court denied Earthlink's petition to compel arbitration on the ground that the gravamen of the complaint was injunctive relief, which could not be obtained through arbitration.

Appellate Ruling
The appellate court disagreed with the reasoning of the trial court, but affirmed the denial of the petition to compel arbitration. The court held that the arbitration provision in the DSL service agreement required California consumers with minor monetary claims to arbitrate in Georgia and forbid class actions. Under recent California Supreme Court authority, provisions in adhesion contacts that preclude class actions are unconscionable where the case involves allegations that a large number of consumers have been cheated out of a small sum of money. Moreover, a forum selection clause that discourages legitimate claims by imposing unreasonable geographical barriers is also unenforceable under California law.

The court did not hold that arbitration clauses and choice of forum clauses would be found unconscionable in all cases involving online contracts. However, under the court's analysis such provisions may not be enforceable if the plaintiff is a consumer, the amount in question is small on a per party basis, the forum selected is far away and the only viable basis for redressing the alleged wrong is through a class action.