Tech Law Journal Daily E-Mail Alert
June 22, 2001, 8:00 AM ET, Alert No. 214.
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Calif. Court Refuses to Enforce Forum Selection Clause in AOL's TOS
6/21. The California Court of Appeal (1/2) issued its opinion [PDF] in AOL v. Superior Court affirming the trial court's denial a AOL's motion to stay or dismiss a class action suit brought by AOL subscribers in California state court, despite a choice of forum clause in AOL's Terms of Service (TOS) designating Virginia as the jurisdiction for all litigation.
Facts and Procedure. Al Menendez and other former AOL subscribers filed a complaint in the Superior Court of Alameda County, California, against AOL alleging unauthorized billing of credit card accounts in violation of several California state statutes. Plaintiffs seek class action status. AOL's TOS contains both a choice of forum clause, and a choice of law clause. Both designate Virginia, the home of AOL. Significantly, Virginia state law does not allow consumer lawsuits to be brought as class actions. The Superior Court denied AOL's motion. AOL then brought this petition for writ of mandate.
Holding. The California Court of Appeal denied AOL's petition on the basis the AOL's choice of forum clause is unenforceable. The Court wrote that "Our law favors forum selection agreements only so long as they are procured freely and voluntarily, with the place chosen having some logical nexus to one of the parties or the dispute, and so long as California consumers will not find their substantial legal rights significantly impaired by their enforcement." It continued that "enforcement of AOL's forum selection clause, which is also accompanied by a choice of law provision favoring Virginia, would necessitate a waiver of the statutory remedies of the CLRA, in violation of that law's anti-waiver provision (Civ. Code, ß 1751) and California public policy. For this reason alone, we affirm the trial courtís ruling."
Trade Promotion Authority Hearings
6/21. The Senate Finance Committee completed two days of hearings on granting the President trade promotion authority, formerly known as fast track. Sen. Max Baucus (D-MT), the new Chairman of the Committee, said in his opening statement [PDF] on June 20 that he supports trade promotion authority, but is pessimistic that it will pass this year. He continued that "In the 1980s, the issue was intellectual property. And on this issue, there is great parallel with the current discussions on labor rights and environmental standards. Initially, developing countries hotly opposed the U.S. position on intellectual property. And they wanted it addressed through the largely ineffective World Intellectual Property Organization. In our own country, many argued that trying to address this issue "muddied the waters." But after years of hard negotiation, the developing world relented, and intellectual property protection became an integral part of trade agreements. It remains so today. Now the issue is standards on labor and the environment." See also, Sen. Baucus' opening statement from June 21.
Sen. Charles Grassley (R-IA), the ranking Republican, said in his opening statement [PDF] on June 20 that "Unfortunately, whenever we have attempted to talk about the benefits of international trade during the last six months, the discussion has soon been diverted into a discussion on labor and the environment. These are important issues. We have to address them in some fashion. I hope to do that in a constructive, bipartisan way this year. But they are not, and should not be, the central focus of the trade debate."
USTR Robert Zoellick stated in his prepared testimony of June 21 that "If the Congress cannot or will not act, the United States will pay a price. Since the Congressional grant of authority to negotiate trade agreements expired in 1994, America has fallen behind." He also said that "It really will not help working men and women at home or abroad -- or environmental causes -- to paralyze trade negotiations with cumbersome limits or sanctions or pressures. Together, we want to achieve results, not procedural breakdowns."
See also, prepared testimony of June 20 witnesses: Harold McGraw (McGraw-Hill Companies), Chuck Merja (National Association of Wheat Growers), John Sweeney (AFL-CIO), Mark Van Putten, President and CEO, National Wildlife Federation), Robert Hormats (Goldman Sachs), Peter Scher (Mayer, Brown & Platt), Alan Wolff (Dewey Ballantine), Clayton Yeutter (Hogan and Hartson).
Powell Advocates Policy Based on Market Economics
6/21. FCC Chairman Michael Powell gave a speech to the Federal Communications Bar Association in Washington DC. This was another in a series of addresses in which he advocated "building policy that is centered around market economics."
He stated that "Market systems, far from being the bane of consumers, have unquestionably produced more consumer welfare than any other economic model devised by mankind. How is it that anyone can argue that the pro-market policies of the United States have not yielded enviable productivity in our economy, jobs for our citizens, a higher standard of living than nearly any other country in the world, and a tradition of innovation and invention that has brought new products, tools and services to our citizens?" However, he also stated that "deregulation for its own sake is not responsible policy." He also stated that "responsible government policy must acknowledge that consumers can be harmed by market abuses and we must have a robust and effective consumer protection component at the FCC."
Rep. Sessions Condemns FCC Central Planning
6/20. Rep. Pete Sessions (R-TX) inserted a statement in the Congressional Record criticizing the FCC's spectrum allocation policies. He asked, "are our telecom regulators and regulations serving the New Economy or burdening it?" He also inserted a copy of an editorial published in the Wall Street Journal on the subject of Northpoint's dealings with the FCC. That editorial stated that "The allocation system may have worked well enough when it was designed 80 years ago to broadcast first radio and later TV. But a proliferation of wireless innovations has led to increased demand for spectrum space, and the current method of doling it out, like all attempts at central planning, has resulted in an artificial shortage. Wireless technologies, we'll add here, are but another way to shake America's thirst for broadband Internet access, and we suspect that the slothful deployment of broadband has played a significant role in Nasdaq's struggles of late and the dot-com skid in general. In effect, government control of the airwaves has helped to create virtual queues." See, Congressional Record, June 20, 2001, Page E1167.
Sen. Frist Addresses Telecom Act and Local Competition
6/20. Sen. Bill Frist (R-TN) spoke in the Senate regarding the Telecommunications Act of 1996, and the state of local competition. He stated that "it is imperative that we maintain a stable regulatory framework." He also stated that "Making fundamental changes to the structure of the 1996 Act will destabilize the already shaky competitive local exchange industry, depriving consumers of even the prospects for meaningful choice.
SEC E-SIGN Act Interpretation
6/21. The SEC published an interpretation in the Federal Register regarding the Application of the Electronic Signatures in Global and National Commerce (E-SIGN) Act to record retention requirements pertaining to issuers under the Securities Act of 1933, the Securities Exchange Act of 1934, and Regulation S-T.
People and Appointments
6/21. President Bush nominated Harris Hartz to be a Judge of the U.S. Court of Appeals for the Tenth Circuit. See, release.
6/21. President Bush nominated Jon Huntsman to be a Deputy United States Trade Representative. See, release.
6/21. The Senate Finance Committee held a hearing on several nominations, including Allen Johnson (Chief Agricultural Negotiator, USTR), William Lash (Asst. Sec. of Market Access and Compliance, DOC), Brian Roseboro (Asst. Sec. of Financial Markets, Treasury).
US Will Not Renew NTT Procurement Agreement
6/21. USTR Robert Zoellick announced that the U.S. "will not renew the bilateral Nippon Telegraph and Telephone (NTT) Agreement with Japan covering NTT procurement due to substantive progress on this issue. The agreement is set to expire July 1, 2001. Instead, the United States will actively monitor NTT's procurement practices and purchases from U.S. suppliers through information provided by U.S. industry." See, USTR release. See also, TIa release.
Lofgren Introduces Patent Reexamination Bill
6/19. Rep. Zoe Lofgren (D-CA) introduced HR 2231, the Patent Reexamination Enhancement Act of 2001. The bill was referred to the House Judiciary Committee, of which Rep. Lofgren is a member. She stated that the bill is supported by Rep. Howard Coble (R-NC), Chairman of the Courts, Internet and Intellectual Property Subcommittee.
Rep. Lofgren described the bill in a release. "Under the current patent system, individuals can challenge a patent conveyed by the Patent and Trademark Office by two methods, an extremely flawed patent reexamination process or through costly court battles. A patent challenge may come about when one inventor believes that a newly conveyed patent to another person infringes on his/her existing patent. Lofgrenís bill would fix the flaws in the patent reexamination process to help keep challenges from resulting in costly and time-consuming court fights."
"This legislation does not remove the availability of external litigation in cases that have complex factual or legal issues," said Rep. Lofgren. "It simply enhances the internal reexamination process to provide an effective option without being forced into costly court challenges."
Friday, June 22
The House will meet at 9:00 AM for legislative business. No votes are expected past 2:00 PM. The Senate will continue consideration of S 1052, the Patients' Bill of Rights.
12:00 NOON. The Progress and Freedom Foundation will host a panel discussion on antitrust policy of the Bush administration. The speakers will be Robert Atkinson, (Progressive Policy Institute), Thomas Lenard (Progress and Freedom Foundation), and Kenneth Starr (Kirkland & Ellis). See, notice. Location: Room B340, Rayburn Building.
Monday, June 25
12:00 NOON - 3:00 PM. National Science Foundation's Advisory Committee for Cyberinfrastructure will hold a meeting. There will be open teleconferencing. Persons who plan to attend should contact Richard Hilderbrandt at 703-292-7093 or rhilderb@nsf.gov. See, notice in Federal Register. Location: Room 320, National Science Foundation, 4201 Wilson Blvd., Arlington, VA.
Stearns Subcommittee Holds Another Privacy Hearing
6/21. The House Commerce Committee's Subcommittee on Commerce, Trade, and Consumer Protection held a hearing titled Information Privacy: Industry Best Practices and Technological Solutions. This was its fifth hearing on privacy related issues this year. Rep. Cliff Stearns (R-FL), Chairman of the Subcommittee, stated that "technological solutions designed to reach information privacy concerns of the consumer are a critical ingredient of whatever is the recipe to the solution for the problem. ... The second component of the private sector response to the American consumerís information privacy concerns is the adoption of self-regulatory measures." See also, prepared statement of Rep. Billy Tauzin (R-LA), the full committee Chairman.
See also, prepared testimony of witnesses: Michael Wallent (Microsoft), Austin Hill (Zero-Knowledge), Frances Schlosstein (Webwasher), Stephen Hsu (SafeWeb), John Schwarz (Reciprocal), Trevor Hughes (Engage), Jerry Cerasale (Direct Marketing Association), Steven Cole (Council of Better Business Bureaus), Jerry DeVault (Ernst & Young), and Marc Rotenberg (Electronic Privacy Information Center).
Quote of the Day
"The feeling of techno overload. You know the feeling. You have heard this before. When you hear a voice -- Does everybody have a Palm Pilot? Why don't I have a RIM? What does the size of my mobile phone say about me? In this area smaller is better."

FCC Chairman Michael Powell, June 21 address to the FCBA.
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