Bagg v. Highbeam Research, Inc.

862 F.Supp.2d 41

Robert BAGG, et al., Plaintiffs

v.HIGHBEAM RESEARCH, INC., The Gale Group, Inc., & Cengage Learning, Inc., Defendants.

No. 11–cv–30199–MAP.

United States District Court, D. Massachusetts.

May 17, 2012.

Jeffrey S. Morneau, Connor Morneau & Olin, LLP, Springfield, MA, for Plaintiffs.

Justin E. Klein, James Rittinger, Satterlee, Stephens, Burke & Burke LLP, New York, NY, Patrick J. Markey, O'Shea Getz P.C., Springfield, MA, for Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANTS' MOTION TO DISMISS (Dkt. No. 10)

PONSOR, District Judge.

I. INTRODUCTION

This is a putative class action brought by a group of consumers against Defendants HighBeam Research, Inc. (“High Beam”), The Gale Group, Inc. (“Gale”), and Cengage Learning, Inc. (“Cengage”). The Amended Complaint alleges that Defendants used deceptive and misleading tactics to trick consumers into purchasing monthly or yearly subscriptions to an online research database and charged consumers' credit cards without their knowledge or consent. The Amended Complaint contains claims for violations of Massachusetts and Illinois consumer protection laws as well as a claim for unjust enrichment.

Defendants have filed a motion to dismiss (Dkt. No. 10), arguing that a forum selection clause contained in a “clickwrap agreement” on the HighBeam website—an agreement whereby assent is given by clicking an “I agree” button on the screen—requires that all actions relating to the agreement be litigated in Illinois. Plaintiffs oppose the motion on the grounds that the forum selection clause does not apply. For the reasons stated below, the court will (1) deny the motion to dismiss, without prejudice, (2) give the parties a brief period to conduct limited discovery to resolve several easily resolvable factual disputes, and (3) establish a timetable for Defendants to re-file an appropriate dispositive motion if needed.

II. BACKGROUND

Defendants provide online research services on www. High Beam. com. Plaintiffs allege that they signed up for free seven-day trial subscriptions for these services and were subsequently charged for monthly or yearly subscriptions without their knowledge or consent. Plaintiffs allege that Defendants failed to disclose all of the material terms of the free trials, including that the trials would automatically convert into paid monthly or yearly subscriptions unless the consumer took affirmative action to cancel during the trial period. Plaintiffs further allege that Defendants did not obtain consumers' express informed consent before charging them for subscriptions and did not provide consumers with a simple mechanism for stopping recurring charges for the subscriptions.

Plaintiffs have not alleged entering into any contract with Defendants or offered any explicit claims in their Amended Complaint for breach of contract. However, according to Defendants, all consumers must click “I agree to the terms and conditions” on the HighBeam website in order to enroll in their free trial. The phrase “terms and conditions” is hyperlinked to the HighBeam Research, Inc. User Agreement (“Agreement”), which purports to be “between HighBeam Research, Inc..... and you as a user ... who accesses or establishes a connection to our services ....” (Dkt. No. 11, Ex. B, § 1.1.) The Agreement also applies to HighBeam's “successors, trustees, and assigns.” ( Id. § 12.1.) This type of agreement is commonly referred to as a “clickwrap agreement.”

While Plaintiffs have not alleged entering into this Agreement and have not attached a copy of the Agreement to the Amended Complaint, the Amended Complaint contains a brief mention of the “terms and conditions form.” (Am. Compl. ¶ 46(f) (“Defendants placed some material terms in the terms and conditions form that it knew or should have known that consumers did not typically read.”).)

The version of the Agreement attached to Defendants' motion contains a forum selection clause, which mandates that all disputes relating to the Agreement be handled in the Northern District of Illinois:

You expressly consent to the exclusive forum, jurisdiction, and venue of the Courts of the State of Illinois in Cook County and the United States District Court for the Northern District of Illinois in any and all action, disputes, or controversies relating to this Agreement.

(Dkt. No. 11, Ex. B, § 11.1.)

During a hearing on the motion to dismiss, Plaintiffs raised the possibility that the text of the terms and conditions form they agreed to when signing up for free trials between 2006 and 2010 ¹ was different from the text of the Agreement currently before the court. Plaintiffs claim that they do not know whether they assented to any agreement and, if they did, whether that agreement contained a forum selection clause. Plaintiffs also raised questions about the process of signing up for free trials, suggesting that Plaintiffs may have been required to provide Defendants access to their credit card information before having the opportunity to read and assent to the Agreement language containing the forum selection clause.

III. DISCUSSION

Defendants, as noted, have moved to dismiss the Amended Complaint on the basis of the forum selection clause. Plaintiffs argue that the court may not consider the clause or any other part of the Agreement on a motion to dismiss, and that the clause does not apply to Plaintiffs' claims in any event, since their claims are not contractual in nature. Plaintiffs also argue that, even if their claims fell within the scope of the forum selection clause, the Agreement applies only to Defendant HighBeam.

Plaintiffs' substantive arguments regarding the applicability of the forum selection clause are unconvincing. However, several disputed factual issues—easily resolvable through modest discovery—must be resolved before the court can issue a ruling on any preliminary dispositive motion. The court's analysis of the parties' substantive arguments not requiring discovery is below.

A. Whether the Court May Consider the Agreement on a Motion to Dismiss.

“The fate of a motion to dismiss under Rule 12(b)(6) ordinarily depends on the allegations contained within the four corners of the plaintiff's Complaint.” Young v. Lepone, 305 F.3d 1, 11 (1st Cir.2002). Plaintiffs argue that Defendants have impermissibly gone outside of the pleadings by citing the Agreement, which is not referenced in or attached to the Amended Complaint.

There are, however, some exceptions to the general rule that a motion to dismiss must be limited to the allegations in the complaint. Of particular relevance here, “[w]hen ... a complaint's factual allegations are expressly linked to—and admittedly dependent upon—a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss under Rule 12(b)(6).” Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir.1998). Plaintiffs' claims are all essentially dependent upon the Agreement, or in any event inextricably entwined with it. The court may therefore consider the terms of the Agreement in ruling on the motion to dismiss, assuming the Agreements before Plaintiffs at the time they entered in the “free” trial period are substantively identical to the one proffered by Defendants as part of their motion to dismiss.

Apart from arguing that this court should not consider the Agreement at all, Plaintiffs, as noted, point out that Defendants may not be offering the correct Agreement. Moreover, Plaintiffs claim that they do not know whether the HighBeam website required consumers to assent to an agreement when Plaintiffs used HighBeam's services and, if it did, whether the version of the Agreement attached to Defendant's motion is the same as the version Plaintiffs agreed to from 2006 to 2010. Defendants' counsel stated during oral argument that he believed no substantive changes have been made to the Agreement between 2006 and today. However, Defendants have offered no evidence that the Agreement that Plaintiffs assented to, if any, was identical to the Agreement that is currently before the court. Without clear evidence that Plaintiffs assented to an agreement that contained a forum selection clause, this court cannot enforce any such clause. To bring these issues into focus, the court will deny Defendants' current motion to dismiss without prejudice, set a schedule permitting the parties to conduct limited discovery, and establish a timetable for a further dispositive motion.

Plaintiffs attempt to make the argument that, even if discovery reveals a substantive identity between the Agreements in force when they entered into their trial periods and the one currently offered by Defendants, the court would still be barred from considering the Agreement, because their claims are not linked to or dependent upon it. For reasons that will be discussed now this argument is unpersuasive.

B. Whether the Forum Selection Clause Applies to Plaintiffs' Claims.

Forum selection clauses are valid and enforceable, unless the resisting party shows that enforcement would be unreasonable under the circumstances.²Silva v. Encyclopedia Britannica Inc., 239 F.3d 385, 386 (1st Cir.2001).³ With regard to forum selection clauses in clickwrap agreements—despite the fact that probably less than one person in 10,000 ever reads them, or has the slightest idea what they say—courts routinely hold that they are valid and enforceable. See, e.g., Hughes v. McMenamon, 204 F.Supp.2d 178, 181 (D.Mass.2002) (“Forum selection clauses of the type used by AOL, sometimes referred to as ‘clickwrap’ agreements, have been upheld as valid and enforceable.”). The question at issue here is whether Plaintiffs' claims fall within the scope of the forum selection clause.

The forum selection clause states that “any and all actions, disputes, or controversies relating to this Agreement” must be brought in the Northern District of Illinois...