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1 GUTRIDE SAFIER REESE LLP Adam J. Gutride (Cal. State Bar No.181466) 2 Seth A. Safier (Cal. State Bar No. 197427) 835 Douglass Street 3 San Francisco, California 94114 Telephone: (415) 271-6469 4 Facsimile: (415) 449-6469 5 Counsel for Plaintiff 6 7 8 9 10 DOE, Individually And On Behalf Of All Others 11 Similarly Situated, 12 13 vs. Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 07-5115 JSW PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION TO STRIKE UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(f) JUDGE: Hon. Jeffery S. White DATE: Jan. 25, 2008 TIME: 9:00 am CTRM: 2 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

14 NETWORK SOLUTIONS, LLC Defendant 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 2 3 I. 4 II. 5 III. 6 7 8 9 10 b) 11 12 13 14 15 16 17 IV. 18 19 20 21 22 23 24 25 26 27 28 C. 2.

TABLE OF CONTENTS

INTRODUCTION..............................................................................................................1 STATEMENT OF FACTS................................................................................................1 ARGUMENT......................................................................................................................1 A. B. FRCP 12(f) Standard Of Review ..........................................................................3 The Governing Law Provision..............................................................................4 1. California Law Is Applicable....................................................................4 a) Virginia Law Is Contrary To The Fundamental Policy Of California...................................................................................5 California Has A Materially Greater Interest In This Litigation.........................................................................................6

Plaintiff Did Not Waive His Right To Trial By Jury..............................7

This Court Should Hold Unenforceable The Exclusive Remedy; Time Limitation On Filing Any Claim Provision Of The Service Agreement Because It is Unconscionable. ...............................................................................8 1. 2. The Exclusive Remedy Clause Is Procedurally Unconscionable...........9 The Exclusive Remedy Clause Is Substantively Unconscionable...........................................................................................9

CONCLUSION ................................................................................................................10

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1 2 CASES 3

TABLE OF AUTHORITIES

A & M Produce Co. v. FMC Corp., 135 Cal.App.3d 473, 491 (1982)........................................... 9 4 ABF Capital Corp. v. Grove Properties, 126 Cal. App. 4th 204, 215 (2005) ................................ 4 5 America Online, Inc. v. Superior Court, 90 Cal. App. 4th 1, 16 (2001)..................................... 5, 6 6 Application Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881, 903 (1998) ....................... 6 7 Aral v. Earthlink, Inc., 134 Cal. App. 4th 544, 565 (Cal. Ct. App. 2005) ...................................... 7 8 Armendariz v. Foundation Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000).......................... 9 9 California Grocers Ass'n. v. Bank of America, 22 Cal. App. 4th 205, 214 (1994) ........................ 9 10 Corbett v. Superior Court, 101 Cal. App. 4th 649, 670-72 (2002)............................................. 5, 6 11 Davison v. Hartford Life & Accident Ins. Co., 2005 U.S. Dist. LEXIS 40711 (N.D. Cal. 2005) .. 8 12 Discover Bank v. Superior Court, 36 Cal. 4th 148, 160-61 (2005) ................................................ 6 13 Douglas v. United States Dist. Court, 495 F.3d 1062, 1066 (9th Cir. 2007).................................. 1 14 Han v. Mobil Oil Corp., 73 F.3d 872, 877 (9th Cir. 1995)........................................................... 10 15 Hanna v. Lane, 610 F. Supp. 32, 34 (N.D. Ill. 1985) ..................................................................... 3 16 Huntington Mem'l Hosp. v. Superior Court, 131 Cal App. 4th 893 (2005) ............................... 5, 6 17 Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1176 (9th Cir. 2003) ....................................... 10 18 Kinney v. United Healthcare Servs., 83 Cal. Rptr. 2d 348, 353 (1999).......................................... 9 19 Klaxon Co. v. Stentor Elec. Manufacturing Co., Inc., 313 U.S. 487, 496 (1941) .......................... 4 20 Lindblom v. Secretary of Army, 2007 WL 12378019 (E.D. Cal. 2007).......................................... 8 21 22 MZ Ventures, L.L.C. v. Mitsubishi Motor Sales of Am., Inc., 1999 U.S. Dist. LEXIS 14421, 50-45 (C.D. Cal. 1999).................................................................................................................. 7

23 Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1285-87 (9th Cir. 2006) ....................................... 6 24 Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 464-65 (1992)...................................... 4, 5 25 Olsen v. Breeze, Inc., 48 Cal.App.4th 608, 621 (1996) .................................................................. 9 26 Packagenet Inc. v. Neopost, Inc., 2005 WL 146894 (N.D. Cal. 2005)........................................... 8 27 Szetela v. Discover Bank, 97 Cal. App. 4th 1094, 1101 (2002) ................................................... 10 28 Ting v. AT&T, 319 F.3d 1126, 1152 (9th Cir. 2003) ........................................................ 6, 8, 9, 10

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1 United States v. California Mobile Home Park Management Co., 107 F.3d 1374, 1378 (9th Cir. 1997) ................................................................................................................................... 7 2 Van Slyke v. Capital One Bank, 503 F. Supp. 2d 1353 (N.D. Cal. 2007)................................... 5, 6 3 STATUTES 4 Cal Civ Code § 1668....................................................................................................................... 9 5 Cal. Bus. & Prof. Code § 17208. .................................................................................................. 10 6 Cal. Civ. Code § 1751............................................................................................................... 5, 10 7 Cal. Civ. Code § 1798.84.......................................................................................................... 5, 10 8 Va. Code § 59.1-205 ....................................................................................................................... 6 9 OTHER AUTHORITIES 10 Restatement (2d) Conflict of Laws, § 187 ...................................................................................... 5 11 RULES 12 Rule 12(f) ........................................................................................................................................ 3 13 TREATISES 14 5 Wright & Miller, Federal Practice and Procedure ................................................................... 3, 7 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Plaintiff respectfully submits this Opposition to Defendant's Motion to Strike Under

2 Federal Rule of Civil Procedure 12(f) (Dkt.# 14). 3 I. INTRODUCTION 4 Defendant asks this Court to take judicial notice of a service agreement and, in the

5 context of motion to strike, enforce its draconian terms. Defendant's motion must be denied, 6 however, because the service agreement is not judicially noticeable and, in any event, is 7 unenforceable as contrary to public policy. For example, the governing law and exclusive 8 remedy provision force customers to waiver a plethora of rights, including rights that are 9 expressly not waivable. 10 II. STATEMENT OF FACTS 11 A full statement of the underlying facts giving rise to this litigation is provided in

12 Plaintiff's opposition to Defendant's motion to dismiss under Rule 12(b)(1). In summary, 13 Plaintiff registered his domain name in October 2003 and renewed the registration each year. 14 Plaintiff registered the account from his apartment in San Francisco. (Plaintiff Decl. ¶ 3.) He 15 has never been to Virginia, with the possible exception of a stopover at Dulles Airport. (Id. ¶ 1.) 16 In registering the domain he did not see or read the service agreement. (Id. ¶¶ 6-8.) The 17 agreement was not displayed to him. (Id.) Nor did he see or read the governing law provision of 18 the service agreement. Had the agreement been displayed, it would have taken up more than 50 19 pages, single spaced, in small point type. (Defendant's RFJN Exs. 1-5.) The parties did not 20 negotiate, but rather it was a "take if or leave it" proposition. (Plaintiff Decl. ¶ 4.) The entire 21 transaction took Plaintiff less than 10 minutes. (Id. ¶ 3.) 22 III. ARGUMENT 23 By way of its motion to strike, Defendant seeks to enforce select provisions of its services

1 24 agreement. Specifically, Defendant seeks to enforce the following provisions:

25

Plaintiff does not agree that these terms are applicable. Indeed, Defendant fails to establish that Plaintiff entered into any service agreement. Even if he did click a box and agree to a service 26 agreement, Defendant has not (and cannot) establish the contents of the service agreement that 27 he entered into. Moreover, parties to a contract have no obligation to check the terms on a periodic basis to learn whether they have been changed by the other side. See Douglas v. United 28 States Dist. Court, 495 F.3d 1062, 1066 (9th Cir. 2007).

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 EXCLUSIVE REMEDY; TIME LIMITATION ON FILING ANY CLAIM. EXCLUSIVE REMEDY; TIME LIMITATION ON FILING ANY CLAIM. YOU AGREE THAT OUR ENTIRE LIABILITY, AND YOUR EXCLUSIVE REMEDY, IN LAW, IN EQUITY, OR OTHERWISE, WITH RESPECT TO ANY NETWORK SOLUTIONS SERVICE(S) PROVIDED UNDER THIS AGREEMENT AND/OR FOR ANY BREACH OF THIS AGREEMENT IS SOLELY LIMITED TO THE AMOUNT YOU PAID FOR SUCH SERVICE(S) DURING THE TERM OF THIS AGREEMENT. IN NO EVENT SHALL NETWORK SOLUTIONS, ITS LICENSORS AND CONTRACTORS (INCLUDING, BUT NOT LIMITED TO, THIRD PARTIES PROVIDING SERVICES AS PART OF THE SUBSCRIPTION SERVICE FOR WEBSITES FROM NETWORK SOLUTIONS) BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES EVEN IF NETWORK SOLUTIONS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. TO THE EXTENT THAT A STATE DOES NOT PERMIT THE EXCLUSION OR LIMITATION OF LIABILITY AS SET FORTH HEREIN NETWORK SOLUTIONS'S LIABILITY IS LIMITED TO THE EXTENT PERMITTED BY LAW IN SUCH STATES. Network Solutions and its licensors and contractors disclaim any and all loss or liability resulting from, but not limited to: (1) loss or liability resulting from access delays or access interruptions; (2) loss or liability resulting from data non-delivery or data misdelivery; (3) loss or liability resulting from acts of god; (4) loss or liability resulting from the unauthorized use or misuse of your account number, password or security authentication option; (5) loss or liability resulting from errors, omissions, or misstatements in any and all information or service(s) provided under this agreement; (6) loss or liability relating to the deletion of or failure to store e-mail messages; (7) loss or liability resulting from the development or interruption of your web site or your Network Solutions web site; (8) loss or liability from your inability to use our e-mail service, web site manager service or any component of the subscription service (for websites from Network Solutions); (9) loss or liability that you may incur in connection with our processing of your application for our services, our processing of any authorized modification to your domain name record or your agent's failure to pay any fees, including the initial registration fee or re-registration fee; (10) loss or liability as a result of the application of our dispute policy; or (11) loss or liability relating to limitations, incompatibilities, defects, or other problems inherent in xml, xkms, or any other standard not under Network Solutions sole control. YOU AGREE THAT REGARDLESS OF ANY STATUTE OR LAW TO THE CONTRARY, ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF GOVERNING LAW. (a) You and Network Solutions agree that this Agreement and any disputes hereunder shall be governed in all respects by and construed in accordance with the laws of the Commonwealth of Virginia, United States of America, excluding its conflicts of laws rule. You and we each agree to submit to exclusive subject matter jurisdiction, personal jurisdiction and venue of the United States District Court for the Eastern District Court of Virginia, Alexandria Division for any disputes between you and Network Solutions under, arising out of, or related in any way to this Agreement (whether or not such disputes also involve other parties in addition to your and Network Solutions.) If there is no jurisdiction in the United States District Court for the Eastern District of Virginia, Alexandria Division, for any such disputes, you and we agree that exclusive jurisdiction and venue shall be in the court of Fairfax Country, Fairfax Virginia. (b) Reserved (c) The parties hereby waive any right to jury trial with respect to any action brought in connection with this Agreement.

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OUR SERVICES MUST BE FILED WITHIN ONE (1) YEAR AFTER SUCH CLAIM OR CAUSE OF ACTION AROSE OR SUCH CLAIM SHALL BE FOREVER BARRED.2 On the basis of the foregoing service agreement provisions, Defendant asks this Court to

4 strike the following from Plaintiff's Complaint: 5 6 · · Plaintiff's jury demand; and All claims for compensatory, punitive, statutory and other damages.

7 Defendant also requests that this Court impose, on Plaintiff, and those similarly situated, a one8 year statute of limitations on each of his claims. Each of Defendant's requests should be 9 rejected. 10 11 A. FRCP 12(f) Standard Of Review Rule 12(f) authorizes the court to order stricken from any pleading "any redundant,

12 immaterial, impertinent, or scandalous matter." "`Immaterial' matter is that which has no 13 essential or important relationship to the claim for relief or the defenses being pleaded." 5 Wright 14 & Miller, Federal Practice and Procedure § 1382, at 706-707. 15 Motions to strike portions of a complaint are generally viewed with disfavor, and will

16 usually be denied unless the allegations in the complaint have no possible relation to the 17 controversy, and may cause prejudice to one of the parties. See 5 Wright & Miller, Federal 18 Practice and Procedure § 1380; see also Hanna v. Lane, 610 F. Supp. 32, 34 (N.D. Ill. 1985). If 19 the court is in doubt as to whether the challenged matter may raise an issue of fact or law, the 20 motion to strike should be denied, leaving an assessment of the sufficiency of the allegations for 21 adjudication on the merits. See 5 Wright & Miller, supra, at § 1380. 22 In this instance, each of Defendant's requests to strike are predicated on an

23 unenforceable, inadmissible agreement. They each also raise issues of fact and law. 24 Defendant's motion to dismiss should be denied. 25 26 As Defendant selectively edits this clause, Plaintiff includes the full version of the clause that existed, as of December 14, 2007, on Defendant's website. (See 28 http://www.networksolutions.com/legal/static-service-agreement.jsp) 27
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B. The Governing Law Provision 1. California Law Is Applicable. As explained in detail in his oppositions to Defendant's Request For Judicial Notice and

4 Defendant's Motion to Dismiss or Transfer, this Court may not take judicial notice of the service 5 agreement. Plaintiff does not here repeat his arguments but rather incorporates them by 6 reference. Even if this Court elects to take notice of the service agreement, it must refuse to 7 enforce the provisions upon which Defendant relies, because they contravene California public 8 policy. 9 Because this court is sitting in a diversity action, it must apply the choice-of-law rules of

10 California, the forum state. See Klaxon Co. v. Stentor Elec. Manufacturing Co., Inc., 313 U.S. 11 487, 496 (1941). California courts apply a governmental interest approach. See ABF Capital 12 Corp. v. Grove Properties, 126 Cal. App. 4th 204, 215 (2005). When there is a valid, bargained13 for choice-of-law provision in a contract,3 California courts apply the approach outlined in the 14 Restatement Second of Conflict of Laws §187. See, e.g., Nedlloyd Lines B.V. v. Superior Court, 15 3 Cal. 4th 459, 464-65 (1992). 16 17 18 19 20 21 22 23 Rest.2d Conf. of Laws, § 187. Here, Plaintiff does not dispute that Virginia has a substantial 24 relationship to the parties because Defendant is domiciled there. See Nedlloyd, 3 Cal. 4th at 46525 66. But because the application of Virginia law would be contrary to a fundamental policy of 26 Plaintiff disagrees that the clause is valid. Indeed, Plaintiff asserts that the service agreement is a contract of adhesion and unenforceable. See Opposition to Defendant's 12(b)(3) motion to 28 dismiss at footnote 5; see also infra. 27
3

Section 187 provides, in pertinent part, the following: The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction an there is no other reasonable basis for the parties' choice, or (b) the application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of Section 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

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1 California, and because California has a materially greater interest than Virginia in the 2 determination of this case, the governing law clause may not be enforced. 3 4 5 a) Virginia Law Is Contrary To The Fundamental Policy Of California. Enforcing the governing law provision would be contrary to a fundamental policy of the

6 state of California. If Virginia law were applied to this action, it would effectively serve as a 7 contractual waiver of certain California consumer protections. See America Online, Inc. v. 8 Superior Court, 90 Cal. App. 4th 1, 16 (2001). Were Virginia law applicable, for example, it 9 would eliminate Plaintiff's CLRA, UCL, and Customer Records Act claims. The CLRA, 10 however, contains an anti-waiver provision that states that "[a]ny waiver by a consumer of the 11 provisions of this title is contrary to public policy and shall be unenforceable and void." Cal. Civ. 12 Code § 1751. Similarly, the Customer Records Act provides that "any waiver of a provision of 13 this title is contrary to public policy and is void and unenforceable." Cal. Civ. Code § 1798.84. 14 An attempt to waive these provisions violates California's public policy. See, e.g., Van Slyke v. 15 Capital One Bank, 503 F. Supp. 2d 1353 (N.D. Cal. 2007); see also Corbett v. Superior Court, 16 101 Cal. App. 4th 649, 670-72 (2002); Huntington Mem'l Hosp. v. Superior Court, 131 Cal App. 17 4th 893 (2005). 18 Enforcing the Virginia choice-of-law provision also could effectively eliminate Plaintiff's

19 ability to pursue a class action, particularly if the case must proceed in Virginia state court. See 20 AOL, 90 Cal. App. 4th at 15-16 (explaining that Virginia's failure to permit class actions violates 21 California public policy and makes a Virginia choice of forum unenforceable). Plaintiff would 22 have to individually litigate his claim in a distant forum, the effective death knell for any 23 consumer claim. Id. California courts have routinely found class-action waivers in adhesion 24 contracts with companies unconscionable. See, e.g., Discover Bank v. Superior Court, 36 Cal. 25 4th 148, 160-61 (2005). 26 Indeed, the Ninth Circuit has applied California public policy to deem unenforceable

27 contracts that would have the effect of waiving class actions, even if those contracts do not 28 expressly waive such actions. For example, in Ting v. AT&T, 319 F.3d 1126, 1152 (9th Cir.

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1 2003), where plaintiffs had brought claims under the CLRA, the Ninth Circuit held that an 2 arbitration provision in a long-distance service contract was unconscionable because it would 3 effectively foreclose plaintiffs from vindicating class action rights under California law. 4 Similarly, in Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1285-87 (9th Cir. 2006), an 5 arbitration clause in a franchise agreement was held unconscionable under California contract 6 law. 7 Virginia consumer protection laws generally do not allow for class actions. See AOL, 90

8 Cal. App. 4th at 17; see also Va. Code § 59.1-205. Class-action remedies, however, are readily 9 available and even favored under California's unfair competition law.4 See Corbett, 101 Cal. 10 App. 4th at 670-72; see also Huntington Mem'l Hosp., 131 Cal App. 4th 893. There is 11 accordingly a real risk that a California fundamental public policy in favor of class actions would 12 be harmed by applying Virginia law. See Van Slyke, 503 F. Supp. 2d 1353; Van Slyke, 503 F. 13 Supp. 2d at 1368 (California has a strong public policy favoring consumer remedies, particularly 14 in the class action setting). 15 16 b) California Has A Materially Greater Interest In This Litigation. In determining which state has a greater interest, courts should consider factors such as

17 "(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of 18 performance, (d) the location of the subject matter of the contract, and (e) the domicil[e], 19 residence, nationality, place of incorporation and place of business of the parties." Application 20 Group, Inc. v. Hunter Group, Inc., 61 Cal. App. 4th 881, 903 (1998). Here the contract was 21 entered into in California. (Plaintiff Decl. ¶ 3.) There was no negotiation. (Id. ¶ 4.) The 22 Plaintiff resides in California and Defendant is a Delaware LLC but has its place of business in 23 Virginia. Each of the above-factors tip in favor of California maintaining a materially great 24 interest in this litigation. 25 Finally, California has been held to "no doubt" have a "materially greater interest" where

26 a choice of law provision would force "consumers to travel to a far location and depriving them 27 Moreover, Defendant's demand for a one year statute of limitation and jury waiver similarly violate California public policy. See infra. 28
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1 of any hope of class litigation would pose an insurmountable barrier to recovery of small sums 2 unjustly obtained, and undermine the protections of the UCL." See Aral v. Earthlink, Inc., 134 3 Cal. App. 4th 544, 565 (Cal. Ct. App. 2005), citing Rest.2d Conf. of Laws, § 187, subd. (2). 4 5 2. Plaintiff Did Not Waive His Right To Trial By Jury The right to a jury trial in federal court is governed by federal law. See Telum, Inc. v.

6 E.F. Hutton Credit Corp., 859 F.2d 835, 837 (10th Cir. 1988). Although the Constitution 7 protects the right to jury trial, a party may waive that right . See Fed. R. Civ. P. 38 (party failing 8 to timely demand jury trial waives right). A contractual agreement, for example, can operate to 9 waive the right to jury trial. See 5 Wright & Miller at § 2321. But such agreements are strictly 10 and narrowly construed. See, e.g., Paracor Fin., Inc. v. General Elec. Cap. Corp., 79 F.3d 878 11 (9th Cir. 1996). Indeed, courts "must indulge every reasonable presumption against the waiver 12 of the jury trial." United States v. California Mobile Home Park Management Co., 107 F.3d 13 1374, 1378 (9th Cir. 1997). 14 The factors courts use to consider contractual jury-trial waivers are as follows: (1) the

15 relative bargaining power of the parties; (2) the extent to which the party opposing the waiver 16 understood that provision; (3) the extent to which the provision was negotiated; and (4) the 17 conspicuousness of the provision. See, e.g., id.; MZ Ventures, L.L.C. v. Mitsubishi Motor Sales 18 of Am., Inc., 1999 U.S. Dist. LEXIS 14421, 50-45 (C.D. Cal. 1999). Courts place the burden of 19 establishing these factors on the party seeking to enforce a waiver provision. See id. 20 In this instance, Plaintiff had no bargaining power regarding the purported waiver.

21 Plaintiff did not understand that he was waiving his right to a trial by jury. (Id. ¶¶ 4-8.) Indeed, 22 the provision was buried deep in a 50+ page service agreement that was never presented to him 23 but was only accessible by way of a hyperlink. (Id. ¶¶ 6-8; Defendant's RFJN Exs. 1-5.) The 24 parties did not negotiate about a jury trial, or for that mater, any other provision of the alleged
5 25 agreement. (Plaintiff Decl. ¶ 4.) It was, and is, a "take it or leave it" agreement.

26

Plaintiff asserts a cause of action under the CLRA. Plaintiff's CLRA claim, including the concomitant right to a trial by jury of that claim, is expressly not waivable. Plaintiff additionally 27 asserts a cause of action under Cal. Civ. Code § 1798.84 (California Customer Records Act); it 28 too, including the right to a jury trial, may not be waived.

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Defendant offers no argument to contradict the above facts. Rather, Defendant merely

2 cites three cases in support of its request that this Court strike Plaintiff's jury demand. None of 3 the cases concerned analogous facts or, for that matter, any of the same causes of action for 4 which Plaintiff requests a jury. See Lindblom v. Secretary of Army, 2007 WL 12378019 (E.D. 5 Cal. 2007) (no jury under the Age Discrimination in Employment Act); Davison v. Hartford Life 6 & Accident Ins. Co., 2005 U.S. Dist. LEXIS 40711 (N.D. Cal. 2005) (ERISA claims); 7 Packagenet Inc. v. Neopost, Inc., 2005 WL 146894 (N.D. Cal. 2005) (shareholder suit found to 8 be equitable under California law). Indeed, in each the jury request was deemed waived because 9 the particular statute did not provide for trial by jury. Here, the statutes at issue indisputably 10 provide a right to jury trial. Accordingly, no waiver occurred. 11 12 13 Defendant next argues that Plaintiff's damage claim should be stricken and a one year 14 statute of limitations imposed. Defendant specifically argues that the "Exclusive Remedy; Time 15 Limitation on Filing Any Claim" ("Exclusive Remedy") clause in the service agreement should 16 be enforced and each of the remedies provided by the State and Federal statutes be deemed 17 waived by Plaintiff and those similarly situated. Defendant's argument must be rejected because 18 the clause is unconscionable. 19 To be unenforceable on grounds of unconscionability, a contract or clause must be both 20 procedurally and substantively unconscionable, but not necessarily in the same degree. See Ting, 21 319 F.3d at 1148. Instead, courts apply a sliding scale: "[T]he more substantively oppressive the 22 contract term, the less evidence of procedural unconscionability is required to come to the 23 conclusion that the term is unenforceable, and vice versa." Armendariz v. Foundation Health 24 25 provision is both substantively and procedurally unconscionable. 26 The entire clause is also void under California Civil Code § 1668. See Cal Civ Code § 1668 27 ("all contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or 28 violation of law, whether willful or negligent, are against the policy of the law.")
6

C. This Court Should Hold Unenforceable The Exclusive Remedy; Time Limitation On Filing Any Claim Provision Of The Service Agreement Because It is Unconscionable.

Psychcare Servs., Inc., 24 Cal. 4th 83 (2000).6 In this instance, the "Exclusive Remedy"

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1. The Exclusive Remedy Clause Is Procedurally Unconscionable. Procedural unconscionability concerns the manner in which the contract was negotiated

3 and the circumstances of the parties at that time. See A & M Produce Co. v. FMC Corp., 135 4 Cal.App.3d 473, 491 (1982). "The procedural element focuses on two factors: oppression and 5 surprise. Oppression arises from an inequality of bargaining power which results in no real 6 negotiation and an absence of meaningful choice ... . Surprise involves the extent to which the 7 terms of the bargain are hidden in a "prolix printed form" drafted by a party in a superior 8 bargaining position.'" Olsen v. Breeze, Inc., 48 Cal.App.4th 608, 621 (1996); California Grocers 9 Ass'n. v. Bank of America, 22 Cal. App. 4th 205, 214 (1994); A & M Produce Co., 135 10 Cal.App.3d. at 486. 11 In this instance, oppression and surprise are manifest. There exists unequal bargaining

12 power. Additionally, the clause which Defendant seeks to enforce is buried in 50+ pages of 13 legalese. (Defendant's RFJN Exs. 1-5.) It is never presented to a customer unless they click a 14 hypertext link, which Plaintiff did not do. (Plaintiff Decl. ¶¶ 6-8.) 15 16 2. The Exclusive Remedy Clause Is Substantively Unconscionable. Substantive unconscionability focuses "on overly harsh or one-sided results,"

17 Armendariz, 6 P.3d at 690, and specifically on whether "the terms of the agreement . . . are so 18 one-sided as to shock the conscience." Kinney v. United Healthcare Servs., 83 Cal. Rptr. 2d 348, 19 353 (1999). At least a "modicum of bilaterality" is required. Armendariz, 6 P.3d at 690. 20 California courts also "look beyond facial neutrality and examine the actual effects of the 21 challenged provision." Ting, 319 F.3d at 1149. 22 In this instance, the "Exclusive Remedy" has not even a "modicum" of bilaterality . In it

23 customers purportedly agree to a drastic limitation of liability as it concerns Network Solutions. 24 Network Solutions, on the other hand, is not so limited. Network Solutions similarly disclaims 25 all liability for virtually every occurrence that its attorneys could dream of. Customers have no 26 such luxury. Finally, customers purportedly agree to a one year statute of limitations. Network 27 Solutions, of course, is not so limited. 28

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Even were there bilaterality, waivers of rights and remedies such as are provided in the

2 Exclusive Remedy clause have been held substantively unconscionable. For example, granting 3 to Network Solutions a unilateral "get out of jail free" card on any liability or damages while 4 compromising important consumer rights violates public policy. See Discover Bank, 36 Cal. 4th 5 at 160 citing Szetela v. Discover Bank, 97 Cal. App. 4th 1094, 1101 (2002); see also Ting ,319 6 F.3d at 1151 (concluding class action waivers in CLRA claim violated California law, relying in 7 part on Szetela); Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1176 (9th Cir. 2003); see also 8 Cal. Civ. Code § 1751 (CLRA may not be waived); Cal. Civ. Code § 1798.84 (California 9 Customer Records Act may not be waived). Similarly, the unilateral one year limitation for 10 consumer claims should be held unconscionable because it violates, at a minimum, the non11 waivable terms set forth in the CLRA and UCL. See Han v. Mobil Oil Corp., 73 F.3d 872, 877 12 (9th Cir. 1995) ("California permits contracting parties to agree upon a shorter limitations period 13 for bringing an action than prescribed by statute, so long as the time allowed is reasonable."), but 14 see Cal. Civ. Code §§ 1751, 1783; Cal. Bus. & Prof. Code § 17208.7 15 IV. CONCLUSION 16 17 18 19 20 21 22 Defendant argues that a party may waive a statutory right where its public benefit is incidental to its primary purpose, citing DeBerard Properties, Ltd. v. Lim, 20 Cal.4th 659, 668-669 (1999). 24 DeBerard did not concern any of the statutes at issue in this case. Id. Defendant provides no additional authority to support the proposition that the statutes relied on by Plaintiff are, in fact, 25 waiveable. Indeed, enforcement of a wavier of these statutes, especially by way of an unconscionable contract of adhesion, would "seriously compromise" the public purposes they 26 were intended to serve. See id. 23 Plaintiff does not oppose the request to strike the request for statutory damages of $3000 under section 1798.84(c) of the California Civil Code, because Plaintiff has not pled a claim under 28 section 1798.83. 27
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Defendant's motion to strike should be denied.8

PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION TO STRIKE UNDER FRCP 12(f)- CASE NO. C 07-5115 JSW

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Case 3:07-cv-05115-JSW

Document 32

Filed 12/14/2007

Page 15 of 15

1 Dated: December 14, 2007 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Respectfully Submitted, GUTRIDE SAFIER REESE LLP

By:____________________ Adam J. Gutride Seth A. Safier 835 Douglas Street San Francisco, CA 94114 Telephone: (415) 271-6469 Facsimile: (415) 449-6469

PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION TO STRIKE UNDER FRCP 12(f)- CASE NO. C 07-5115 JSW

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