CA Court Enforces Forum Selection Clause in Mortgage Servicer’s Website Terms of Use
A California federal court ruled that a forum selection clause in the terms of use for a large national mortgage servicer’s website mandated transfer of venue in a data privacy class action.
The complaint states that the California-based plaintiff’s mortgage loan was serviced by the defendant servicer, and that the servicer encouraged customers to use its website for activities such as accessing account information, making payments, obtaining information about loan servicing, and obtaining quotes or applying for refinances. Allegedly unbeknownst to customers, the servicer’s website used third-party tracking technology to collect and share users’ personal and financial information with third parties without authorization. The plaintiff filed a class action complaint against the servicer in the U.S. District Court for the Southern District of California, which included claims under state and federal consumer protections and data privacy statutes, as well as common law claims such as negligence and breach of contract.
The servicer moved to transfer venue to the U.S. District Court for the Northern District of Texas—where it is headquartered—based on a forum selection clause in its website’s terms of use (TOU). The servicer asserted that when the plaintiff created his account for the servicer’s website, he clicked on a button, above which was the statement “By clicking ‘Save & Continue’ you agree to the Terms of Use for [the servicer]’s website.” The words “Terms of Use” provided a link to open the full TOU. The TOU stated that by accessing the website, users agreed to be bound by the TOU. Further, a section of the TOU on “Limitation Of Liability” included a forum selection clause stating that “the user agrees that venue shall be located in Dallas County, Texas.”
The court found that the TOU’s forum selection provision was valid and enforceable, encompassed the plaintiff’s claims, and that public interest factors did not overwhelmingly disfavor transfer. Although the servicer did not contend the plaintiff had actually read the TOU, inquiry notice of the TOU was sufficient. A reasonable consumer would expect that registering with a new website to access mortgage account information and to make mortgage payments would be accompanied by new terms and conditions. The placement, text size, and color of the statement about users agreeing to the TOU (and the link to the full TOU) was conspicuous and a reasonably prudent Internet user would have seen it. Likewise, the plaintiff manifested assent by clicking on the “Save & Continue” button referenced in the statement about agreeing to the TOU. Accordingly, the court found that the TOU forum selection clause warranted transfer.
