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Judge Okays Class Action Suit Against AOL

26 June 2000

A judge in Miami last week approved a class-action lawsuit against American Online Inc. [NYSE: AOL] on behalf of an estimated 2.5 AOL subscribers who pay the Internet service provider by the hour for Internet access.

The two plaintiffs, Hampton Booker and Arthur Sweeney, Jr., reside in the State of Florida and are bringing the lawsuit on behalf of all AOL hourly subscribers. A trio of attorneys, Andrew Tremont, Honey Kober and Abbey Kaplan, represents the plaintiffs.

In making the ruling, the court determined that it was in the interests of the parties as well as the court that the case be heard as a class-action suit, rather than by the alternative method of each plaintiff bringing separate action individually.

The subscribers claim that unsolicited messages, called "pop-up" advertisements, appear on their computer screen during the time they are online. These advertisements, plaintiffs maintain, interferes with and disrupt their Internet access.

While the pop-up advertisements can be removed, the subscribers must initiate action to do so, and Tramont said that a subscriber's children may not be as quick to click off the ads, or may read each ad, thereby increasing the time spent online, for which the subscriber is billed.

A copy of the plaintiffs' amended complaint, obtained by Newsbytes, details plaintiffs' claims that AOL has been "bombarding members with extensive advertising at the outset of member sessions, after members 'connect' to AOL, but before members are able to access any online services."

Tramont told Newsbytes the original lawsuit was filed against AOL in March 1999, but that various motions filed by AOL delayed the court's class-action ruling until June 20.

According to Tramont, AOL first tried to get the matter moved from the Florida state court to a federal district court. When that attempt proved unsuccessful, Tramont said that AOL tried to have the venue of the case moved from Florida to Virginia, where AOL maintains its headquarters.

Tramont said that in trying to move the case to Virginia, AOL was relying on a provision in its subscriber terms-of-service agreement stating that any dispute between subscribers and AOL would be heard in Virginia. According to Tramont, the Florida judge refused to uphold that provision of the subscriber agreement.

Tramont mentioned that AOL had tried several times to get the action either transferred or dismissed. He said that the various motions and hearings prevented the state court from ruling on whether the case deserved class action status until just recently.

According to Tramont, AOL has taken the position that even if it acted wrongfully, the monetary damages suffered by each subscriber was "insubstantial." Tramont acknowledges that while each subscriber might have incurred a relatively small amount of damages, perhaps as low as $1, when these damages are multiplied by the 2.5 million members in the class, it becomes substantial.

Tramont said that the exact amount of damages could not be determined as yet due to the fact that plaintiffs have been prevented from conducting any investigation because the case has been tied up in various time-consuming motions.

The Dade County court stated in its decision finding that a proper class existed, that AOL maintains, "it can charge for any time that a customer is connected to the AOL network, regardless of whether subscribers can access the Internet or other online services during that time."

Rich D'Amato, a spokesperson for AOL, told Newsbytes that how AOL bills its subscribers should come as no surprise to them since it is clearly spelled out when a new subscriber signs up.

D'Amato also says that AOL plans to appeal not only the state court's determination about the suit's class-action status, but also the question of jurisdiction.

Reported by Newsbytes, www.newsbytes.com.

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