Antitrust Claims Against Google Properly Dismissed Based on Forum Selection Clause

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Antitrust claims against Internet search engine Google, Inc. brought by an operator of a business-to-business (B2B) website participating in Google’s “AdWords” search engine advertising platform were properly dismissed based on a forum selection clause in an agreement between the parties, the U.S. Court of Appeals in New York City decided recently.

AdWords is an advertising platform that enables advertisers to have their ads appear when Internet users perform searches containing specified search terms on Google’s website. The complaining website operator used AdWords to generate online traffic for its own search engine website, “SourceTool.com.” Over the course of the complaining website operator’s participation in the AdWords program, Google issued three agreements delineating its terms and conditions. An August 2006 agreement provided that 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.”

Taking issue with the prices Google charged for its participation in the AdWords program, the website operator brought antitrust claims in the federal district court in New York City. Google sought dismissal pursuant to Federal Rules of Civil Procedure 12(b)(1) and (3) for lack of subject matter jurisdiction and improper venue. It argued that the complaining website operator had accepted the terms and conditions associated with participation in its AdWords program, which included the forum selection clause. The federal district court granted Google’s motion to dismiss based on the forum selection clause ( (CCH) 2010-1 Trade Cases ¶76,941).

Google was entitled to seek enforcement of the forum selection clause in its agreement with the complaining website operator through a Rule 12(b) motion to dismiss, the appellate court held. The appellate court rejected the argument that a district court may only enforce a forum selection clause by transferring the case pursuant to 28 U.S.C. § 1404, when the clause specifies that claims must be brought in a forum other than the one in which they have been brought, yet permits those claims to be brought in a different federal forum. A motion to transfer pursuant to 28 U.S.C. § 1404(a) was not the only appropriate vehicle for enforcing the forum selection clause.

Enforceability of Forum Selection Clause

In a separate summary order, the appellate court rejected the complaining website operator’s arguments against enforcement of the forum selection clause. The complaining website operator accepted the terms of the agreement. Moreover, the forum selection clause broadly included any claim arising under or related to the “Google Programs,” irrespective of whether it arose prior to or subsequent to the acceptance of the agreement. The court did not agree with the website operator’s contention that the district court erred by “retroactively” applying the agreement containing the clause to Google’s alleged anticompetitive conduct. Lastly, enforcement of the forum selection clause would not have been unconscionable or against public policy. Because Google held a “special interest” in making sure that it was not subject to suit in numerous different fora for claims arising from its agreements with over a million advertisers, a reasonable forum selection clause was permissible. Moreover, the mere existence of a federal antitrust claim did not void a forum selection clause as against public policy, the appellate court held.

The July 26, 2011, published decision and summary order in TradeComet.com LLC v. Google, Inc., No. 10-911-cv, will be published at (CCH) 2011-2 Trade Cases ¶77,537 and (CCH) 2011-2 Trade Cases ¶77,538, respectively.