OPINION & ORDER
The parties to this action — TradeComet.com LLC and Google, Inc. — own and operate competing internet search engines. TradeComet purchased advertising on Google’s website through Google’s Ad-Words program and now alleges that Google attempted to reduce traffic at Trade-Comet’s own website both by increasing the cost of TradeComet’s advertising and by entering into exclusive agreements with other websites, all allegedly in violation of
I. Background
The following facts are taken from the complaint; the declarations of Heather Wilburn, Daniel J. Howley, and Sara Ciarelli Walsh; and the attachments thereto, and are presumed to be true for purposes of this motion.
A. The Advertising Relationship between TradeComet and Google
TradeComet operates the website SourceTool.com, which attracts “highly-valued search traffic of businesses seeking to buy or sell products and service to other businesses,” and provides what is commonly referred to as a “B2B” (for “business to business”) directory. (Compl. ¶ 4.) Trade-Comet alleges that since its start in 2005, its website has experienced significant growth, in part based on the search traffic and advertising revenue that it generated as a result of placing advertisements for its website on Google’s competing website. (Id. ¶¶ 6, 41-44.)
Dan Savage, the founder of TradeComet, met with Google representatives in December 2005 and May 2006 to discuss use of Google’s AdWords advertising program to maximize TradeComet’s revenue. 1 TradeComet alleges that following the May 2006 meeting, Google “drastically” increased the minimum price of the keywords that SourceTool.com had purchased through the AdWords program, thus making those keywords effectively unavailable to TradeComet and depriving its website— SourceTool.com — of traffic that the use of those keywords would drive to the Source-Tool.com website. This in turn caused a drop in the revenue that TradeComet derived from advertisements on its website. (Id. ¶¶ 45-48.) Google claims that it increased the price of the relevant keywords due to its use of an algorithm that adjusts advertising prices to reflect the quality of the page to which the advertisement linked. (Id. ¶¶ 49-52.) TradeComet contends that Google dominates the market for online search, and that Google’s effective exclusion of SourceTool.com from its AdWords program starved SoureeTool.com of the traffic it needed to grow, in violation of the Sherman Antitrust Act. (Id. ¶¶ 3, 21-22, 54-55.)
TradeComet also alleges that Google has entered into exclusive agreements with other popular websites and with rival search engines in a further effort to consolidate online search at Google.com and exclude other search engines — such as SourceTool.com — from the relevant market, also allegedly violating the Sherman Antitrust Act. (Id. ¶¶ 68-74,100-01.)
Users of Google’s AdWords program must accept a set of terms and conditions in order to activate an AdWords account and they must subsequently accept any additional terms and conditions that Google later implements if the user wants to continue using its existing AdWords account. (Dep. of Heather Wilburn dated April 13, 2009 (“Wilburn Dep.”) at 13:9-11, 34:21-35:6, Ex. B to Dec. of Sara Ciarelli Walsh dated April 22, 2009 (“Walsh Dec.”).) The terms and conditions that went into effect on April 19, 2005 and May 23, 2006 include provisions stating that “[t]he Agreement must be construed as if both parties jointly wrote it, governed by California law except for its conflicts of laws principles and adjudicated in Santa Clara County, California.” (Google Inc. AdWords Program Terms dated April 19, 2005 (the “April 2005 Agreement”) ¶ 7, Ex. 2 to Dec. of Daniel J. Howley dated April 15, 2009 (“Howley Dec.”); Google Inc. Ad-Words Program Terms dated May 23, 2006 (the “May 2006 Agreement”) ¶ 9, Ex. 3 to Howley Dec.) They also include identical language directing that “Google may modify the [AdWords] Program or these Terms at any time without liability and your use of the Program after notice that Terms have changed indicates acceptance of the Terms.” (April 2005 Agreement ¶ 2; May 2006 Agreement ¶ 2.)
Effective August 22, 2006, Google issued a revised set of terms and conditions that contains the same language regarding modifications to the terms along with a broader forum selection clause as follows:
THE AGREEMENT MUST BE CONSTRUED AS IF BOTH PARTIES JOINTLY WROTE IT AND GOVERNED BY CALIFORNIA LAW EXCEPT FOR ITS CONFLICTS OF LAWS PRINCIPLES. ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE GOOGLE PROGRAM(S) SHALL BE LITIGATED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF SANTA CLARA COUNTY, CALIFORNIA, USA, AND GOOGLE AND CUSTOMER CONSENT TO PERSONAL JURISDICTION IN THOSE COURTS.
(Google Inc. Advertising Program Terms dated August 22, 2006 (the “August 2006 Agreement”) ¶ 9, Ex. 1 to Howley Dec. (capitalization in original).) Representatives for TradeComet have accepted those terms and conditions. (See Dec. of Heather Wilburn dated March 30, 2009 (‘Wilburn Dec.”) ¶¶ 6-7; Ex. D-F to Walsh Dec.)
As noted, Google has now moved to dismiss the complaint on the grounds that the August 2006 forum selection clause requires TradeComet to bring its claims in a court located in Santa Clara County, California, not in the U.S. District Court for the Southern District of New York. TradeComet, on the other hand, contends that the forum selection clause contained in the April 2005 and May 2006 Agreements — not the August 2006 Agreement— governs because it was in effect at the time of Google’s alleged violations of the Sherman Antitrust Act. Because Google is correct that the August 2006 forum selection clause governs and because Trade-Comet’s claims “relat[e] to ... the Google Program(s),” Google’s motion to dismiss the complaint is granted. 2
There is a split of authority in the Second Circuit regarding the appropriate procedural mechanism by which to enforce a forum selection clause. The proper vehicle is a motion to dismiss the complaint for either (1) lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), see
AVC Nederland B.V. v. Atrium Inv. Partnership,
The burden on a plaintiff opposing enforcement of a forum selection clause is similar to that “imposed on a plaintiff to prove that the federal court has subject matter jurisdiction over his suit or personal jurisdiction over the defendant.”
New Moon Shipping,
III. Analysis
The parties contest both which forum selection clause applies to this action and whether either forum selection clause requires dismissal or transfer.
A. Which Forum Selection Clause Applies
The parties contest which forum selection clause — i.e., that found in the April 2005 and May 2006 Agreements or the clause found in the August 2006 Agreement — governs this motion. TradeComet contends that, because the conduct alleged in the complaint began in mid-2006, when the narrower forum selection clause found in the April 2005 and May 2006 Agreements was in effect, that clause governs. Google responds by pointing to the language in those earlier agreements that “Google may modify the [AdWords] Program or these Terms at any time without liability and your use of the Program after notice that Terms have changed indicates acceptance of the Terms” to argue that the forum selection clause in the August 2006 Agreement replaced and superseded those found in the earlier agreements. (April
Under California state law, the fundamental goal of contract interpretation is to give effect to the mutual intent of the parties as it existed at the time of contracting. Cal. Civ.Code § 1636;
City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Furthermore, “the fact that one party reserves the implied power to terminate or modify a unilateral contract is not fatal to its enforcement, if the exercise of the power is subject to limitations, such as fairness and reasonable notice.”
Asmus v. Pacific Bell,
The plain language of the agreements indicates that TradeComet accepted the modifications to the forum selection clause found in the August 2006 Agreement when it accepted that agreement.
See Stute v. Burinda,
B. Dismissal Based on a Forum Selection Clause
“The scope of the forum selection clause is a contractual question that requires the courts to interpret the clause and, where ambiguous, to consider the intent of the parties.”
New Moon Shipping,
To obtain dismissal based on a forum selection clause, the party seeking enforcement of the clause must demonstrate that: (1) the clause was reasonably communicated to the party resisting enforcement, (2) the clause was mandatory and not merely permissive, and (3) the claims and parties involved in the suit are subject to the forum selection clause.
Id.
at 383-84. After the party seeking enforcement has established these three conditions, the burden shifts to the party resisting enforcement to rebut the presumption of enforceability by “making a sufficiently strong showing that ‘enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.’ ”
Id.
(quoting
M/S Bremen v. Zapata OffShore Co.,
The U.S. Court of Appeals for the Second Circuit has discussed — but not decided — what law to apply to a forum selection clause when the contract also contains a choice of law provision.
See Phillips,
494
1. The forum selection clause was reasonably communicated to plaintiff.
The Second Circuit “regularly enforce[s]” forum selection clauses as long as “the existence of the clause was reasonably communicated to the parties.”
D.H. Blair & Co. v. Gottdiener,
District courts in this Circuit have found that clickwrap agreements that require a user to accept the agreement before proceeding are “reasonably communicated” to the user for purposes of this analysis.
See, e.g., Person v. Google Inc.,
Google bears the burden of demonstrating that it reasonably communicated the forum selection provision to Trade-Comet,
Phillips,
2. The forum selection clause is mandatory.
The relevant forum selection clause requires that claims “shall be litigated exclusively in the federal or state courts of Santa Clara County, California.” (August 2006 Agreement ¶ 9.) “A forum selection clause is viewed as mandatory when it confers exclusive jurisdiction on the designated forum or incorporates obligatory venue language.”
Phillips,
Here, the forum selection clause clearly contains compulsory language specifying venue, which is sufficient to make the clause mandatory for purposes of this analysis.
3. Plaintiff’s claims are subject to the forum selection clause.
TradeComet contends that its antitrust claims do not fall within the scope of the forum selection clause, whereas Google argues that the claims stem from Google’s pricing and administration of its AdWords program, and thus fall within the scope of the Agreement. The August 2006 Agreement provides that “[a]ll claims arising out of or relating to this agreement or the Google Program(s)” shall be litigated in Santa Clara County, California. (August 2006 Agreement ¶ 9.) The Court need not determine whether TradeComet’s antitrust claims arise out of or relate to the agreement because they clearly arise out of and relate to Google’s AdWords program.
The Second Circuit has held consistently that forum selection clauses are to be interpreted broadly and are not restricted to pure breaches of the contracts containing the clauses.
See, e.g., Roby v. Corp. of Lloyd’s,
In
Phillips,
the court found that a plaintiffs claim for breach of copyright did not “arise out of’ his licensing agreement with the defendant because the rights he sought to enforce did not originate from the recording contract.
Phillips,
Both the language of the forum selection clause found in the August 2006 Agreement and the factual allegations of the complaint distinguish this action from
Phillips.
As noted above, the agreement here requires that “[a]ll claims arising out of or relating to this agreement or the Google Program(s)” shall be litigated in Santa Clara County, California. (August 2006 Agreement ¶ 9.) Thus, the clause at issue here specifically employs one of the broader terms that the
Phillips
court noted — i.e., “all claims ... that ... ‘relate to’ ” — in contrast to the narrower “aris[ing] out of’ provision at issue in that case.
See Phillips,
TradeComet sets forth three counts in its complaint. By their plain language, each claim “relat[es] to” Google’s advertising programs.
See generally Universal Grading Serv. v. eBay, Inc.,
No. 08 Civ. 3557,
First, TradeComet alleges that Google has violated Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, by excluding TradeComet from the market for online search in order to protect Google’s own monopoly. (Compl. ¶¶ 105-08.) While Count One does not identify the specific behavior that Google engaged in to maintain its purported monopoly and exclude SourceTool.com from the online search market, this count incorporates previous allegations, including those regarding Google’s manipulation of the AdWords pricing formula to prevent SourceTool.com from advertising on Google’s website. Thus, the facts alleged in support of Count One “re-latte] to” Google’s advertising programs.
Second, TradeComet contends that Google has attempted to monopolize the online search market by increasing barriers to entry through the use of preferential agreements and manipulation of its advertising program to starve competitors such as SourceTool.com of search traffic, also in violation of Section 2 of the Sherman Antitrust Act. (Id. ¶¶ 110-14.) Count Two specifically alleges that Google has attempted to monopolize the online search market by, inter alia, using the pricing metrics within the AdWords program to prevent Source-Tool.com from obtaining search traffic. Again, this allegation “relat[es] to” Google’s administration of its advertising programs.
Application of California state law does not dictate a different outcome. State “courts have placed a substantial burden on a plaintiff seeking to defeat [a forum selection] clause, requiring it to demonstrate enforcement of the clause would be unreasonable under the circumstances of the case. That is, that the forum selected would be unavailable or unable to accomplish substantial justice.”
CQL Original Prods., Inc. v. Nat’l Hockey League Players’ Assn.,
Furthermore, in considering whether a plaintiffs claims are subject to a choice of law provision, the California Supreme Court has determined that a clause that “provides that a specified body of law ‘governs’ the ‘agreement’ between the parties, encompasses all causes of action arising from or related to that agreement.”
Nedlloyd Lines B.V. v. Superior Court,
4. Enforcement of the forum selection clause is neither unreasonable nor unjust.
TradeComet contends that the forum selection clause is unconscionable because— it claims — Google enforces it selectively, it is found within a contract of adhesion, and it would force TradeComet to litigate its claims in Google’s “backyard.”
As an initial matter, Trade-Comet bears the burden of showing that the forum selection clause is unreasonable or unjust.
See Phillips,
Finally, although litigating these claims in California rather than New York likely will be more burdensome for Trade-Comet, which has its principal place of business in New York, there is no suggestion that it would be so difficult as to deprive TradeComet of a fair opportunity to litigate its claims.
See M/S Bremen,
IV. Conclusion
Google has demonstrated that the August 2006 Agreement provides the forum selection clause at issue in this action, that the clause was reasonably communicated to TradeComet, that the clause is mandatory, and that TradeComet’s antitrust claims are subject to it. TradeComet has not shown that enforcement of the clause would be unconscionable. Accordingly, Google’s motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(3) is granted. The Court also denies TradeComet’s motion to strike Exhibits D through H of the Walsh Declaration.
SO ORDERED.
Notes
. The U.S. Court of Appeals for the Second Circuit has described Google’s AdWords program as follows:
AdWords is Google's program through which advertisers purchase terms (or keywords). When entered as a search term, the keyword triggers the appearance of the advertiser’s ad and link. An advertiser’s purchase of a particular term causes the advertiser’s ad and link to be displayed on the user’s screen whenever a searcher launches a Google search based on the purchased search term. Advertisers pay Google based on the number of times Internet users 'click' on the advertisement, so as to link to the advertiser’s website.
Rescuecom Corp. v. Google Inc.,
. TradeComet has moved to strike Exhibits D through H of the Walsh Declaration submitted in reply by Google because those exhibits allegedly present new material that Google should have submitted with its opening brief. These exhibits contain screenshots — images that record the visible content displayed on a computer’s monitor — on which Google relies to show that TradeComet accepted the August 2006 Agreement for its Google AdWords Ac
. In deciding a motion to dismiss pursuant to either Federal Rule of Civil Procedure 12(b)(1) or 12(b)(3), a court may consider evidentiary matters outside the pleadings, “by affidavit or otherwise,” regarding the existence of jurisdiction.
Kamen v. Am. Tel. & Tel. Co.,
. A "clickwrap” license is one that
presents the potential licensee (i.e., the end-user) with a message on his or her computer screen, requiring that the user manifest his or her assent to the terms of the license agreement by clicking on an icon. Essentially, under a clickwrap arrangement, potential licensees are presented with the proposed license terms and forced to expressly and unambiguously manifest either assent or rejection prior to being given access to the product.
Register.com, Inc. v. Verio, Inc.,
. TradeComet cites to cases that Google has litigated outside of Santa Clara County, California but does not demonstrate that those actions fell within the scope of a forum selection clause similar to the one at issue here.
