eBay wins appeal, forum-selection clause to be enforced

Justices presiding over the Ninth Court of Appeals recently ordered an Orange County judge to enforce a forum-selection clause in a breach of contract lawsuit filed against the popular Internet auction site eBay.

Last November, the Southeast Texas Record reported on litigation brought by Roddy Richards, an Orange County resident who sued eBay and two other men, Dean Stull and Craig Mancin, alleging he was defrauded out of $18,000 and a new pickup truck.

Court papers show that on Nov. 15, 2007, Richards placed a bid on a 2007 Chevy Silverado listed by Stull. Stull notified him later that he won the truck and Richards submitted an $18,000 payment through eBay.

However, after he completed the transaction, Richards learned the truck belonged to a third party, Mancin, who allegedly refused to deliver the truck, court papers say.

In his suit, Richards asserts eBay had a duty to make sure such fraud doesn't transpire on its website, and that, even though eBay refuses to compensate him, the sale was covered by eBay Vehicle Purchase Protection for up to $20,000.

Last year, eBay petitioned Judge Pat Clark, 128th Judicial District, to enforce a forum-selection clause contained in a contract between the auction site and Richards, arguing that the user agreement requires that suits against eBay must be filed in Santa Clara County, Calif.

Following several hearings and additional motions, court papers show Judge Clark refused the request on March 11, leading eBay to file an appeal in May.

On appeal, Richards contended that Judge Clark did not abuse his discretion because eBay merely produced an exemplar user agreement that is effective for all users as of Sept. 29, 2009, court papers say.

However, eBay brought evidence before the judge establishing the existence of a forum-selection clause in the company's user agreement with Richards, according to eBay's appeals brief.

Richards also argued that eBay cannot rely on the forum-selection clause because it denies that his purchase occurred on its website.

On July 8 Ninth Court justices issued a per curiam opinion stating that the claims against eBay arise out of a contract that contains a valid forum-selection clause and Richards failed to satisfy his burden to establish that enforcing the forum-selection clause would be unconscionable.

"We hold that Richards failed to overcome the presumption of validity of the forum-selection cause, and that Richards did not demonstrate that enforcement of the forum-selection clause would be unconscionable under either Texas or California law," states the court's opinion.

"Under these circumstances, the trial court was not authorized to refuse eBay's request to enforce the parties' contract. Accordingly, we conditionally grant mandamus relief. We are confident that the trial court will promptly vacate its order of March 11, 2010, and that the trial court will proceed to enforce the parties' forum-selection clause in accordance with this opinion."

eBay is represented by Beaumont attorneys Michael T. Bridwell and H. Scott Alexander of the Strong Pipkin Bissell & Ledyard law firm.

Richards is represented by Orange attorney Stephen Williams.

Orange County trial case No. A-090579-c
Appeals case No. 09-10-00265-CV