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Earthlink Inc. v. Eaves

The trial court properly granted class certification on the plaintiffs' claims asserting that an internet service provider's early termination fees are unenforceable penalties.

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In this internet service agreement dispute, the defendant appeals from the trial court’s judgment granting the plaintiffs’ motion for class certification, disallowing the defendant to file counterclaims against two named plaintiffs and absent class members, and holding that placecountry-regionGeorgialaw applies to all of the plaintiffs’ claims, including the conversion and unjust enrichment claims. For the reasons which follow, we affirm the trial court’s grant of class certification, affirm in part and reverse in part the ruling disallowing the counterclaims, and affirm the decision to apply placecountry-regionGeorgialaw. EarthLink provides internet access to its subscribers. Some subscribers sign a contract for a minimum term, usually 12 months. Those contracts provide that subscribers who terminate their contracts before the term ends must pay an early termination fee “ETF”. The ETF is $149 for digital subscriber line “DSL” service, and $399 for satellite service.

Subscribers Deborah Eaves, William O’Hara, and David Tegart, on behalf of themselves and others similarly situated, sued EarthLink asserting claims of breach of duty of good faith and fair dealing, unconscionability, unjust enrichment, and conversion. The plaintiffs contended the ETFs are unenforceable penalties imposed to deter cancellation rather than to compensate EarthLink for actual or estimated costs it incurs as a result of early termination.

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