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Valerie Mathias, et al. v. America Online, Inc.

No. 79427 (Ohio Court of Appeals, Eighth District, Feb. 28, 2002)

Appellate Court affirms decision of trial court, dismissing breach of contract and fraud claims advanced by plaintiffs arising out of difficulties they encountered when using defendant America Online’s services.  Plaintiffs had agreed to pay defendant American Online $19.95 per month for unlimited usage of AOL’s services.  Because of the increased demand engendered by this offer, defendant apparently did not have the capacity to provide unlimited access to its services, which in turn, resulted in plaintiffs experiencing difficulties in signing on (accessing) AOL’s services, and also in plaintiffs’ usage being interrupted by AOL when plaintiffs were bumped off AOL’s service.  In granting AOL summary judgment, the Appellate Court held that such occurrences did not breach plaintiffs’ contracts with AOL, pursuant to which AOL only agreed to provide service on an “as is, as available basis.”  The court further held that AOL did not fraudulently induce plaintiffs to sign-up for its services, both because AOL warned users that they could experience such difficulties while AOL was expanding its network capacity, and because unlimited usage, which is what plaintiffs claim was promised, does not equal unlimited 24/7 access.

In December, 1996, AOL offered users of its service a new pricing plan, pursuant to which they could have unlimited use of AOL’s service in exchange for a monthly payment of $19.95.  Under previous pricing plans, users received a set amount of usage time in exchange for a monthly fee, with additional usage being billed at an hourly rate.

AOL expected that its new pricing plan would increase the demand for its services, which in turn would require it to add capacity to its network so as to be able to appropriately service it.  While AOL was adding such capacity to its system, it anticipated that users would experience “some temporary traffic congestion.”  AOL warned those using its services of this possibility in a notice.  A second notice, dated December 2, 1996, expounded on the problems users may experience due to this increased traffic.  These problems included “busy signals when you try to connect to AOL or delays during the connection process.”  This notice further described AOL’s efforts to alleviate this problem by “ramping up our system capacity.”

Users who wished to take advantage of this pricing plan had to agree to be bound by AOL’s Terms of Service.  Among other things, the Terms of Service provided that “AOL , AOL’s e-mail services and AOL software are provided on an as is, as available basis without warranties of any kind, either express or implied, unless such warranties are legally incapable of exclusion.”

Each of the plaintiffs signed up for AOL’s unlimited pricing plan, and agreed to be bound by AOL’s Terms of Service.  During the period immediately after this new pricing plan was offered, the plaintiffs claimed that they experienced difficulties with AOL’s service, “the most typical problems [being] busy signals when trying to log on or being knocked off the system after they had gained access.”  Seeking redress, plaintiffs bought suit, alleging that defendant breached the contract between the parties as a result of AOL’s failure to provide unlimited access to its service.  The plaintiffs further alleged that defendant had fraudulently induced plaintiffs to enter into user agreements by representing it could provide something - unlimited access - which it could not, given the new demands on AOL’s system caused by the unlimited pricing plan.

On AOL’s motion for summary judgment, the trial court dismissed these claims, a determination the Appellate Court affirmed on appeal.

The Appellate Court held that AOL did not breach its contract with the plaintiffs because that contract only gave plaintiffs the right to use AOL’s service whenever it was available.  The contract did not obligate AOL to provide plaintiffs with unlimited access to AOL’s service on a 24/7 basis.  Said the Court:

The TOS is also straightforward that no warranty accompanies the service contract and that members accept services at their sole risk and on an ‘as is’ as available basis. … AOL cannot be held to have breached the TOS because, immediately upon accepting the new $19.95 monthly rate, members acknowledged that services would be provided on an availability basis.

The Appellate Court further held that AOL did not fraudulently induce plaintiffs to sign up for this service by promising unlimited access which it could not deliver.  First, noted the court, AOL warned prospective users that they may encounter usage difficulties while AOL was building network capacity to meet increased demand.  Second, held the court, defendant did not promise “unlimited access” when it offered “unlimited use.”  The two phrases cannot be equated, held the court, particularly in light of AOL’s usage difficulty warnings.  Finding no fraud, the Appellate Court affirmed the dismissal of plaintiffs’ fraud claim as well.

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