Facebook Beats TCCWNA Claims With California Choice-Of-Law Clause
In order to access Facebook users must agree to the Terms of Service, which contains provisions that, among other things, disclaim liability for negligent and willful misconduct, bar claims for “personal and economic injury,” and ban consumers from bringing claims for deceptive and fraudulent conduct.
U.S. District Judge Haywood S. Gilliam Jr. did not address the second question in his Jan. 9 decision to dismiss the lawsuit with prejudice, holding instead that Facebook’s choice-of-law clause was enforceable and the plaintiffs were therefore precluded from suing under the TCCWNA.
California’s test for enforcing a choice-of-law clause begins by asking whether California has a “substantial relationship” to the parties. This requirement was met because Facebook is headquartered in California. The second question was whether the plaintiffs could show that applying California law would violate “fundamental New Jersey policy.” Ruling the plaintiffs had failed to meet this burden, the judge noted California’s consumer protection laws have been recognized as among the strongest in the country and arguably go even further than the TCCWNA.
“Accordingly, the Court finds that the TCCWNA and California consumer protection law aim to accomplish the same end, and thus California law is not contrary to fundamental New Jersey policy.”
The judge rejected the plaintiffs argument that California law was contrary to New Jersey because the laws afforded different rights and remedies, saying courts shouldn’t refrain from applying the chosen just because it would lead to a different result.
This case comes amid a recent wave of class action lawsuits from plaintiffs alleging that sellers of products and services violate the TCCWNA. While each company’s situation is different, the decision gives hope to non-New Jersey retailers, especially those headquartered in California, who have choice-of-law clauses in their terms of service that they will be able avoid such lawsuits.