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Legal Update

Arizona District Court Enforces Contractual Provision Shortening Statute of Limitations Period

23 August 2012
Mayer Brown Legal Update

On August 15, 2012, a federal court in Arizona dismissed a putative class action asserting false-advertising claims against internet domain-name registrar GoDaddy.com. See WineStyles, Inc. v. GoDaddy.com, LLC, No. 2:12-cv-00583-SRB (D. Ariz. Aug. 15, 2012). In doing so, the court enforced a contractual provision requiring particular claims to be brought within one year, holding as a matter of law that the provision was neither unreasonable nor unconscionable.

The plaintiff in the case, a wine retailer, had agreed to GoDaddy’s Uniform Terms of Service in the course of paying for domain registrations online. One of the provisions in the terms stated claims “arising out of or related to [GoDaddy’s] Site or the Services found at [its] Site” must be brought within one year of the accrual of the claim. The plaintiff subsequently filed a putative nationwide class action against GoDaddy, alleging that its practice of charging fees for automatic renewals of certain domain registrations violated state deceptive trade practices acts, the Electronic Funds Transfer Act, and various common-law doctrines.

GoDaddy moved to dismiss the lawsuit, arguing that the plaintiff’s claims were barred by the contractual one-year limitations period because the claims had accrued when the plaintiff was first charged renewal fees, which was more than one year before the plaintiff filed suit. The court agreed that the common-law claims were barred, but held that the statutory claims were timely because they also were based on other events that had occurred within the one-year period. (The court ultimately dismissed those statutory claims for other reasons.)

The plaintiff contended that the contractual one-year limitations period was unconscionable because GoDaddy’s online terms were a “contract of adhesion” and because it purported to shorten statutes of limitations. The court rejected this argument, explaining that even though this was a “contract of adhesion,” the provision reducing the applicable statute of limitations was enforceable so long as the contractual limitations period was reasonable in length. In the court’s view, a one-year period satisfied that test.

The court’s decision in WineStyles should be of interest to any business that includes (or is considering including) in its contracts with customers or other contracting parties a clause requiring that disputes be brought within a certain time frame. For additional information about the court’s decision or any other matter raised in this Legal Update, please contact , , or

Authors

  • Archis A. Parasharami
    T +1 202 263 3328
  • Kevin S. Ranlett
    T +1 202 263 3217
  • Melissa B. Francis
    T +1 212 506 2645

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