The news out of New York finds Google winning another lawsuit using carefully constructed language in its terms and conditions. The good news is you can do the same if you learn the simple lesson offered up by the Google victory.
As you might imagine, Google gets sued a good bit if for no other reason than it is such a significant presence online. While most of the lawsuits are frivolous, occasionally one focuses on a legitimate topic. The question Google and your online business face is how to minimize the cost associated with defending baseless lawsuits. The answer is a carefully crafted terms and conditions agreement.
Choice of Forum Clause
How does Google try to limit the number of lawsuits against it? It uses a forum selection clause in the terms and conditions a person agrees to when signing up for one of its services.
A forum selection clause consists of language detailing the geographic location where any dispute between the complaining party and Google must be litigated. The location is usually a county within a particular state. A recent lawsuit filed against Google in New York reveals the value of such a clause.
In Rudgayzer v. Google, Inc., 2013 WL 6057988 (E.D.N.Y. Nov. 15, 2013), the plaintiff filed suit against Google for violating the Electronic Communications Privacy Act. The lawsuit is rather humorous if for no other reason that it is so dated that the dispute revolves around Google Buzz, one of Google’s social media false starts. The lawsuit is so dated, in fact, that both the named plaintiff Rudgayzer and Buzz are no longer with us! [Why is the lawsuit continuing? There are other individuals involved.]
Rudgazyer v. Google is still of significance, however, in that it reveals once again how important the terms and conditions are for your website. In this litigation, Google moved to halt the New York proceeding by arguing to the judge:
- The plaintiffs had agreed to Google’s terms and conditions when signing up for Buzz,
- The terms and conditions contained a forum selection clause, and
- The choice of forum clause was reasonable.
The actual choice of forum clause in Google’s terms read:
“You and Google agree to submit to the exclusive jurisdiction of the courts located within the county of Santa Clara, California to resolve any legal matter arising from the Terms.”
The judge agreed with the argument put forth by Google that the case could only be litigated in Santa Clara, California and dismissed the New York lawsuit. Does this mean the lawsuit is over? Not necessarily. The remaining plaintiffs have the option of refiling it in California, but must incur the added cost of travel and so on. Given we are talking about Google, the remaining plaintiffs may well decide to continue the case since a victory in the lawsuit might be lucrative.
The story is different for most smaller online businesses. The legal claims tend to be for monetary damages small enough that just forcing a changed forum results in the suing party dropping the case. For example, a person suing you for a faulty product purchased for $399.00 is not going to pick up and travel to another state halfway across the country to continue a lawsuit. Even if they prevail in the lawsuit, the cost is more than they can recover.
Google is worth many billions of dollars. It can afford to be sued, pay legal fees and pay any resulting judgments or settlements.
Can you say the same for your business?
Most online businesses can’t afford to defend a lawsuit. Consider the average trial for, say, a copyright infringement claim. You are going to spend $50,000 to $100,000 in legal fees. If you lose the action, you could face an additional $150,000 in damages. In total, you are looking at $200,000 in outlays. Even in a best-case scenario where you win the lawsuit, you will be down $50,000 to $100,000 in legal fees.
It is important to understand the legal system in the United States favors giving people their day in court. From a practical perspective, this means any loon can file a form complaint against you by paying a filing fee of a few hundred dollars. Consider a few infamous cases:
- In a Washington D.C. lawsuit, a judge sued a dry cleaning store for $67 million dollars for losing his pants. A JUDGE! The case went to trial where the dry cleaning service prevailed.
- A woman sued Universal Studios over its Halloween Horror Night production. Her claim? It was too scary. Seriously. She asked for $100,000.
- A Nebraska State Senator tried to sue God for causing natural disasters. In the politician’s defense, he filed the lawsuit to point out how easy it is to abuse the legal system.
Is there a solution to this problem? As the Google case bears out, carefully worded terms and conditions are critical to your legal health. A DMCA policy and agent can cut off most copyright claims before they start. A forum selection clause can also put a quick end to the vast majority of lawsuits against online businesses. While it is easy to walk down to the local courthouse to file a lawsuit against a website, it is entirely another thing to fly across the country to pursue a legal claim.
The Rudgayzer v Google case bears out how important it is to obtain customized terms and conditions for your online property. As the adage goes, you can pay me now or you can pay me later. The cost to have your terms properly prepared is a small fraction of the cost to defend a lawsuit in some other state.
If you are unsure about the quality of your website terms or, god forbid, don’t have any, contact me today for a consultation.
Richard A. Chapo, Esq.