Net2Phone, Inc. v. Superior Court

In this mandamus proceeding, we hold that where a private plaintiff which has itself suffered no injury files a representative action under California’s unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) alleging that certain of defendant’s contractual provisions subject its customers to an “unlawful, unfair or fraudulent business . . . practice” and the contract contains a forum selection provision, the plaintiff is bound by that provision just as defendant’s customers would be bound had they filed the action themselves.

*586 Facts and Procedural History

Net2Phone, Inc., provides internet telecommunication services, commonly known as “telephony services,” that allow a computer user to place phone calls over the Internet, either to another computer or to a regular telephone. Net2Phone has a worldwide customer base, but its principal place of business is in New Jersey. Customers who wish to utilize Net2Phone’s services must download software from Net2Phone’s Web site. The software has links to an “End User License Agreement” and “Terms of Use.” The customer must accept both in order to use the software. Net2Phone also offers a direct calling card, also…

I respectfully dissent.

A trial court’s decision to enforce or not enforce a forum selection clause is reviewed for an abuse of discretion. (Bancomer, S. A. v. Superior Court (1996) 44 Cal.App.4th 1450, 1457 [ 52 Cal.Rptr.2d 435 ]; but see Cal-State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1680-1681 [ 16 Cal.Rptr.2d 417 ] [substantial-evidence test].) For the following reasons, I do not believe the trial court abused its discretion in refusing to enforce the forum selection clauses in this case.

*591 The New Jersey forum selection clause in the contracts between defendant Net2Phone, Inc. (Net2Phone), and various consumers is not applicable or enforceable as to claims brought by plaintiff Consumer Cause, Inc. (Consumer Cause), under .California’s unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL). 1 The enforcement of such forum selection clauses to divest California of private attorney general cases under the UCL is contrary to California public policy. If such clauses are enforceable, private attorney general actions under California regulatory statutes could be frustrated. In addition, the plaintiff is not a party to any contract…

Morse Mehrban and Law Offices of Morse Mehrban, Los Angeles, for Real Party in Interest.

In this mandamus proceeding, we hold that where a private plaintiff which has itself suffered no injury files a representative action under California's unfair competition law (UCL) (Bus. & Prof.Code, § 17200 et seq.) alleging that certain of defendant's contractual provisions subject its customers to an "unlawful, unfair or fraudulent business ... practice" and the contract contains a forum selection provision, the plaintiff is bound by that provision just as defendant's customers would be bound had they filed the action themselves.

Net2Phone provides internet telecommunication services, commonly known as "telephony services," that allow a computer user to place phone calls over the Internet, either to another computer or to a regular telephone. Net2Phone has a worldwide customer base, but its principal place of business is in New Jersey. Customers who wish to utilize Net2Phone's services must download software from Net2Phone's website. The software has links to an "End User License Agreement" and "Terms of Use." The customer must accept both in order to use the software.…