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In re eBay, Inc., 2010 WL 2695803 (Tex. App. Ct. July 8, 2010) (full-text).
Factual Background Edit
Richards, the plaintiff, alleges in 2007 he purchased a vehicle through eBay in a transaction covered by eBay’s Vehicle Protection Program. Richards later discovered that the purported seller, Dean E. Stull, was not the registered owner of the vehicle and Richards sued eBay, Stull, and the owner of the vehicle. The plaintiff's claims against eBay arose out of a contract that contains a forum selection clause. EBay contended that the User Agreement to which Richards agreed when he registered with eBay required that any suit against eBay must be filed in Santa Clara County, California. The trial court refused to enforce the forum selection clause contained in the contract.
Appellate Court Proceedings Edit
The eBay User Agreement provided that “any claim or dispute you may have against eBay must be resolved exclusively by a state or federal court located in Santa Clara County, California.” Before using eBay’s services an individual must register and accept the User Agreement, and an individual’s acceptance of the User Agreement must be confirmed by entering a code supplied to the user through an e-mail. The User Agreement allows eBay to amend the User Agreement by posting the revised terms on its website.
Richards did not object nor challenge the accuracy of the exemplar contract in his own affidavits. Richards did not question the existence of a forum selection clause during the hearing. The trial could not deny eBay’s motion on the argument Richards advanced before this court that eBay’s exemplar copy of the agreement failed to prove the existence of forum selection clause. Simply being unaware of a forum selection clause does not make it invalid.
In determining whether a forum selection clause applies to a particular case, the court considered the language in the agreement to determine whether the substance of the plaintiff’s claims falls within the scope of the forum selection clause. The forum selection clause in issue stated that it covered “any claim or dispute you may have against eBay.”
A party seeking to avoid a forum selection clause bears the burden of establishing that (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for reasons of fraud or overreaching, (3) enforcement would contravene a strong public policy of the forum where the suit was brought, or (4) the selected forum would be seriously inconvenient for trial.
Texas law states that mere expense will not render enforcement of a forum selection clause unjust. By entering into an agreement with a forum selection clause, the parties effectively represent to each other that the agreed forum is not so inconvenient that enforcing clause will deprive either party of its day in court, whether for cost or other reasons.
The choice-of-law clause in the User Agreement provided that California law governed the agreement. As a contractual defense, unconscionability may apply to an arbitration provision. It is unconscionable to require “individual consumers from throughout the country to travel to one locale to arbitrate claims involving such minimal sums.” Richards did not seek to consolidate his claims with the claims of other users, and his claims was not too small to pursue individually. The expense of traveling to California would not be more than he could afford.
Richards failed to overcome the presumption of validity of the forum selection clause and Richards did not demonstrate that the enforcement of the forum selection clause would be unconscionable under either Texas or California law. The trial court was not authorized to refuse eBay’s request to enforce the forum selection clause.