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N e w J e r s e y ( D . C . C i vi l A ct i on N o. 3- 04- cv- 02593) D i s t r i ctJ udge: H on. M aryL . C ooper Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

J anuary15, 2010 B E FO R E : A M B R O , C H A G A R E S and S T A P L E T O N , C i r cui tJudges ( O pi ni on Fi l ed: J anuary25, 2010)2 OPI NI ON O F THE COURT

ST A PL E T O N , C i r cui tJ udge: A p p e llan t A sc h W e b h o stin g , In c . (“A sc h ” ), f iled th is c iv il ac tio n a g a in st A d e lp h ia B us i nes s Sol ut i ons I nves t m entL L C , doi ng bus i nes s as T el cove ( “Tel cove” ) , al l egi ng br eac h of contr act , br eac h of the cove nantof good fa i t h and fa i rdeal i ng, and i nt ent i onal interfe ren ce w ith co n tr ac tual relati o n s. A sch ap p ea ls th e o rde r of the D istri ct C o u rt gr ant i ng s um m aryj udgm enti n favorof Tel cove. B eca us e w e w r i t e onl yfort he bene fi tof the part i es , w e as s um e fa m i l i ar i t yw i th t he fa cts o f th is ci v il ac ti o n an d the p roc ee d ing s in the D istri ct C o u rt . W e w il l aff irm e s s e n tia lly f

o r t h e re a s o n s s ta te d b yth e D is tr ic t C o u rt . I. T el cove i s an i nt ernets ervi ce pr ovi der( “I SP”) , w hi ch pur chas es capa ci t yfr om

“ up s t r e a m” pr ov i de r s of i nt e r ne ts e r vi c e s a nd s e l l s tha tc a pa c i t yt o s mal l e rI SPs “dow ns t r eam, ” l i ke A s ch. T el cove a nd A s ch ent er ed i nt o a thr ee- y earagr eement (“ A g re e m e n t”) u n d e r w h ich T e lco v e a g re e d to p ro v id e in ter n e t se rv ice s to A sc h . S h o rtly aft eract i vat i ng A s ch’ s i nt ernets ervi ce i n February2004, T el cove be gan r ece i vi ng c o m p lain ts a b o u t em a ils se n t f ro m in ter n e t p ro to c o l (“ IP ” ) a d d re ss e s a ss o c iate d w ith A s ch. T el cove e ventual l yr ece i ved nea r l yfi ft een hundr ed compl ai nt s aboutemai l s s ent3

fr om t hes e I P addr es s es . I n addi t i on, one of Tel cove’ s ups t r eam pr ovi der s not i fi ed T el cove thati tr i s ked l os i ng i t s i nt ernets ervi ce be caus e of the cont entof an e m ai l s ent fr om an I P addr es s as s oci at ed w i t h A s ch. O n A pr i l 28, 2004, T el cove i nform ed A s ch by l et t ert hati tw as t erm i nat i ng i t s i nt ernets ervi ce on A pr i l 30, 2004. T he l ett ernot i fi ed A s ch thatt he A gr eementw as bei ng t erm i nat ed i n acc or dance w i t h s ect i ons ( b) and ( g) of t he A cce pt abl e U s e Pol i cys etfor t h i n t he A gr eement . H ow ever , aft era di s cus s i on b e tw e e n c o u n se l, T e lco v e a g re e d to c o n tin u e p ro v id in g in ter n e t se rv ice to A sc h so th a t it w oul d have t i m e t o pr ocur e i nt ernets ervi ces fr om anotherpr ovi der . O n J une 10, 2004, T e lc o v e s to p p e d p ro v id in g in te rn e t s e rv ic e to A s c h . A s ch di d notr eac h agr eementw i t h anotheri nt ernetpr ovi derand ce as ed oper at i ons . A s ch then i ni t i at ed thi s ci vi l act i on agai ns tT el cove. T el cove moved for s um m aryj udgm enton t hes e cl ai m s , ar gui ng thatan exc ul pat orycl aus e i n t he A gr eement pr event ed A s ch fr om r ecove r i ng t he damages i ts ought . T he D i s t r i ctC our tgr ant ed s um m aryj udgm enti n favorof Tel cove a nd s ubs equent l ydeni ed A s ch’ s m ot i on for re c o n s id e ra tio n . A s c h f ile d a tim e ly ap p e a l.

II . T he D i s t r i ctC our tgr ant ed s um m aryj udgm enti n favorof Tel cove, concl udi ng t hat A s ch’ s cl ai m fordamages w as pr ecl uded bythe exc ul pat orycl aus e i ncl uded i n t he A gr eementbetw een the part i es and thatthe exc ul pat orycl aus e w as enfor cea bl e. U nder N ew J er s eyl aw , excul pat or ycl aus es i n pr i vat e contr act s ar e “ge ner al l ys us t ai ned s o l ongT h e p a rt ie s a g re e th a t N e w J e rs e yla w a p p lie s to th e A g re e m e n t. 1 4 as t heydo notadver s el yaff ectt he publ i c i nt er es t . ” C hem . B ank of N . J. N at ’ lA s s ’ n v. B ai l ey , 687 A . 2d 316, 322 ( N . J . Super . 1997) . T heyar e or di nar i l yuphel d i n t he 1 comm er ci al cont extbeca us e “[ t ] he j udi ci aryw i l l notunder t ake the w r i t i ng of a di ffe r ent orbet t ercontr actbetw een the part i es . ” See i d. ( quot i ng Sw is s cr af tN ovel t y C o. v. A lad R eal t y C or p. , 274 A . 2d 59, 62 ( N . J . Super . 1971) ) . T hus , an exc ul pat orycl aus e w i l l be e n f o rc e d if “ 1 ) it d o e s n o t ad v e rse lya f f e c t th e p u b lic in ter e st; 2 ) th e e x c u lp a ted p a rtyis notundera l egal dut yt o per form ; 3) i tdoes noti nvol ve a publ i c ut i l i t yorcomm on carr i er; or 4) the co ntr actdo es not gr ow ou tof u neq ual bar gaini ng po w er ori s ot herw i se uncons ci onabl e. ” G ers hon v. R egenc y D i vi ng C tr . , I

nc. , 8 4 5 A . 2 d 7 2 0 , 7 2 7 (N . J. S u p er. 2004) . A s ch ar gues t hatt he fi r s tand fourth exce pt i ons appl yt o t he exc ul pat orycl aus e at is s u e h e re . T h e e x c u lp a to ryc lau se a t issu e sta tes a s f o llo w s: W arra n ti es/ D i scl aim ers T E L CO VE ’ S I NT E RN E T S E RVI CE I S P RO VI DE D O N A N “ AS I S , AS AVAI LABLE” BAS I S UNLES S S TATED OTH ERW I S E I N THE TELCO VE’ S S ERVI CE LEVEL AG RE E M E NT ( S L A) . NO W AR RA NT I E S , E X P RE S S OR I MP L I E D , I N C L U D I N G , B U T N O T L I MI T E D T O, THOS E OF M ER CHANT AB I LI TY OR F I TN ES S F OR A P ART I CUL AR PUR P OS E, ARE M ADE W I TH RE S P EC T TO TE LC OVE’ S I NT ER NE T S ER VI CE S ( S ) O R ANY I NFO R M A T I O N O R SOFTW ARE THE R E I N . CUSTOM ER RELEAS ES TELCOVE FRO M ALL LI ABI LI TY OR RE S PONSI BI LI TY FOR AN Y DI RECT, I NDI RE CT , I NCI DE NT AL OR CO NSEQ UE NTI AL DAM A G ES, I NCLUD I NG BUT NO T LI M I TED TO5 DA M AG E S DU E T O L OS S OF RE VE NU E S OR L OS S OF B U S IN E S S , S U FF E R E D B Y C U S T O M E R IN CO NNECTI ON W I TH TH EI R USE OF OR I NABI LI TY TO U SE TH E TE LC O V E I N TE R N ET S ER V I C ES. W I T HOU T L I M I T I NG T HE GEN E RA L I T Y O F T HE FOREG OI NG , TELCOVE DI SC LA I M S TO TH E FULL EX TE NT P ER M I TT ED BY AP P LI CAB LE LA W ANY R E S P O NSI B I L I T Y FO R ( A N D U N D E R NO CI RCUM S TA NCE S S HALL BE LI AB LE F OR) ANY CO NDU CT, CO NTENT, GO OD S AND SERVI CES AV AI L AB L E ON OR T HR OU GH T HE I NT E RN E T OR TELCOVE SE R V I C ES. I N NO EVENT S HA LL T E L CO VE ’ S AG GR E GA T E L I AB I L I T Y E XCE E D T HE AMOUN T P AI D B Y C US T OMER T O T E L CO VE F OR THE TE LC OVE S ERV I CE S. US E OF ANY IN F O R M A T I O N O B T A I N E D V I A T E L C O V E ’S I N T E R N E T S E R V I C E I S A T T H E C U S T O ME R ’ S O WN RI S K. TE LC OVE S P EC I F I CAL LY DI S CL AI M S ANY RES PO N SI BILI TY FO R TH E A C C U R A C Y O R Q UALI TY OF THE I NFORM ATI ON OBTAI NED T H R O UG H I TS S E R V I C E S . [ P A 5 6 ] ( e m p h a s is in o ri g in a l) . I n t hi s l i t i gat i on, A s ch ar gued thatT el cove’ s t erm i nat i on of the A gr eement d e stro y e d its b u sin e ss . A c c o rd in g ly , as d a m a g e s, it so u g h t th e f a ir m a rk e t v a lu e o f

its b u sin e ss , alle g e d ly$ 1 .4 3 m ill io n , in c o n se q u e n tial d a m a g e s. If th e e x c u lp a to ryc lau se is enfor cea bl e, byi t s t erm s i tr el i eves T el cove of anyl i abi l i t yforthe damages A s ch s eeks b e c a u s e As c h a g r e e d t o r e l e a s e Te l c o v e f r o m “ a ll liab ili tyo r re sp o n sib ili tyf o r a n yd ire c t, in d ire c t, i n c id e n tal o r c o n se q u e n tial d a m a g e s . . . . su f f e re d b y[ A sc h ] in c o n n e c tio n w ith [i t s ] us e of ori nabi l i t yt o us e the Tel cove i nt ernets ervi ces . ” I d. (em ph asi s added ). T hu s, t he D i s t r i ctC our tcorr ect l yconcl uded thatthe exc ul pat orycl aus e, i f enf or cea bl e, barr edA s ch does notdi s put e the D i s t r i ctC our t ’ s i nt erpr et at i on of the exc ul pat orycl aus e, 2 a rg u in g o n ly th a t th e c la u s e w a s u n e n f o rc e a b le . 6 A s ch fr om r ecove r i ng t he damages i ts oughti n t hi s act i on. 2 T h e D istric t C o u rt a lso d e ter m in e d th a t th e e x c u lp a to ryc lau se w a s e n f o rc e a b le underN ew J er s eyl aw beca us e enf or cementof the cl aus e w as nei t heradver s e t o t he pu bli c i nter estno r uncon sci on able. W e agree w i t h b oth of t hese co nclusi on s. O n appea l , A s ch ar gues t hatt he D i s t r i ctC our terr ed byconcl udi ng thatenfor ci ng t he cl aus e w oul d notadver s el yaff ectthe publ i c i nt er es t . A s ch cont ends thata w i l l ful and p re d a to ry b re a c h o f

c o n tr a c t w o u ld b e c o n tr a ry to th e p u b lic in te re s t. C f . Luci erv. Wi l l i a ms , 8 4 1 A .2 d 9 0 7 , 9 1 3

– 1 6 (N .J. S u p e r. 2 0 0 4 ) (h o ld in g th a t a lim itatio n o f liab ili ty cl aus e i n a home i ns pect i on contr actes s ent i al l yoper at ed as an exc ul pat orycl aus e and coul d notbe enf

or ced be caus e i tcontr avene d N ew J er s eypubl i c pol i cy ) . A s s um i ng t hat e n f o rc in g a n e x c u lp a to ryc lau se in th e c a se o f su c h a b re a c h w o u ld a f f e c t th e p u b lic i nt er es t , A s ch has notes t abl i s hed thatT el cove’ s act i ons w er e “pr edat ory . ” Tel cove p ro d u c e d e v id e n c e d e m o n stra tin g th a t ith a d re c e iv e d n u m e ro u s c o m p lain ts a b o u t ac tiv ity r el at ed t o A s ch’ s I P addr es s es and dec i ded t o t erm i nat e A s ch’ s i nt ernets ervi ce on that bas i s . I m por t ant l y , A s ch has notpr es ent ed evi dence s ugges t i ng thatT el cove ha d a re a s o n , o th e r t h a n th e e x p la n a tio n s it g a v e , f o r t e rm in a tin g its s e rv ic e s to a p a y in g c lie n t. A l t hough A s ch poi nt s t o a s er i es of emai l s s entamong T el cove e m pl oy ees r egar di ng A s ch’ s r eques tforaddi t i onal I P addr es s es , thes e emai l s do notdemonstr at e thatT el cove act ed pr edat or i l ybyt erm i nat i ng t he A gr eement . Fur t herm or e, as s um i ng thatT el cove7

br eac hed the A gr eement , enfor ci ng an exc ul pat orycl aus e af t era w i l l ful br eac h of c o n tr a c t d o e s n o t n e c e s s a ri ly v io la te p u b lic p o lic y . See P r i nt i ng Mar t - Mor r is t ow n v. Shar p E l ecs . C or

p. , 563 A . 2d 31, 38 ( N . J . 1989) ( “W her e a pe r s on i nt er fer es w i t h t he per form ance of hi s orherow n contr act , the l i abi l i t yi s governed bypr i nci pl es of contr act l aw . . . . C ont r actl aw s erves contr actual part i es ’ economi c i nt er es t , s uch as enabl i ng t hem eff i ci ent l y[t o] br eac h t he contr act , fr ee f r om the thr eatof puni t i ve damages . ” ( i nt ernal c itatio n s a n d q u o tatio n s o m itt e d )); Sa x o n Co n s tr . & M g mt . Co r p . v . Ma s t e r c l e a n o

f N. C. , I nc. , 641 A . 2d 1056, 1059 ( N . J . Super . 1994) ( di s cus s i ng fac t or s t o cons i derw hen d e ter m in in g if

e n f o rc in g a c o n tra c tu a l term v io late s p u b lic p o licy ). B e c a u se th e p u b lic i nt er es tw oul d notbe adve r s el yaff ect ed bythe enf

or cementof thi s cl aus e, the D i s t r i ct C o u rt p ro p e rl ye n f

o rc e d it. N ext , A s ch cont ends t hatt he D i s t r i ctC our terr ed byconcl udi ng thatthe ex cu lpato ryclau se in the A g ree m en t w as n o t un co n scio n ab le. “In d eterm ining w h ethe r a contr acti s uncons ci onabl e, cour t s focus on t he bar gai ni ng pow erof the part i es , the con spi cuo usness of the pu t at i ve u nfairt erm , and the o pp res si ven ess and u nreasonab l eness of the t erm . ” C ar t erv. E xxon Co. U

SA , 177 F. 3d 197, 207 ( 3d C i r . 1999) . H er e, the D i s t r i ctC our tfound ther e w as no evi dence of unequa l bar gai ni ng pow erbetw een the par t i es beca us e A s ch w as a comm er ci al ent i t ythathad pr evi ous l yent er ed i nt o i nt ernet s ervi ce a gr eement s w i t h s ever al ot hers ervi ce pr ovi der s and w as m anage d byan ex p erien ce d b u sine ssm an w h o h ad g rad u ated fro m law sch o o l. In a d d it ion , the C o u rt8

not ed thatt he t erm w as pr om i nent l ypr es ent ed i n t he part i es ’ agr eementand w as not unr eas onabl e oroppr es s i ve. W e agr ee w i t h t he D i s t r i ctC our t ’ s concl us i ons aboutthe bar gai ni ng pow erof the p a rt ie s a n d th e c o n s p ic u o u s n e s s o f th e e x c u lp a to ry c la u s e . S e e id . M or eover , w e agr ee th a t th e c la u s e is n o t u n c o n s c io n a b le a s a p p lie d to th e f a c ts o f th is c iv il a c tio n . See i d. (“I ti s onlyw hen t he cir cum st ances o f t he tr ansact i on , i ncludi ng the sel l ers ’ br each, cause th e c o n se q u e n tial d a m a g e e x c lu sio n to b e in c o n sis ten t w ith th e in ten t an d re a so n a b le c o m m e rc ial e x p e c tatio n s o f th e p a rties th a t in v a lid a tio n o f th e e x c lu sio n a ryc lau se w o u ld be appr opr i at e. . . . ” ( quot i ng Kear ney & Tre cke rC or p. v. Mas t erE ngr avi ng C o. , 527 A .2 d 4 2 9 , 4 3 7

– 3 8 (N .J. 1 9 8 7 )). H e re , T e lco v e p ro v id e d A sc h w ith n o tice o f its in ten t to ter m in a te th e A g re e m e n t an d c o n tin u e d p ro v id in g in ter n e t se rv ice to A sc h w h ile it negot i at ed s ervi ce a gr eement s w i t h ot heri nt ernetpr ovi der s . O ne pr ovi deroffe r ed a m ont hl yfee t hatw as w i t hi n $200 of Tel cove’ s m onthl yfee , butA s ch dec l i ned thatoffe r and ce as ed oper at i ons . T hus , T el cove ga ve A s ch not i ce a nd the oppor tuni t yt o fi nd ano t her providerbefo re t erm i nati ng i t s service t o A sch. E nfo rci ng the ex culpat orycl ause u n d e r th e se c irc u m sta n c e s is n o t o p p re ss iv e o r u n re a so n a b le, a n d , the re f o re , the c lau se is n o t u n c o n s c io n a b le . Fi nal l y , A s ch cl ai m s t hatt he D i s t r i ctC our terr ed bygr ant i ng the mot i on for su m m a ryju d g m e n t b yre ly in g o n T e lco v e ’s a ss e rtio n th a t itre c e iv e d 1 5 0 0 c o m p lain ts re late d to A sc h ’s I P a d d re ss e s. A sc h a rg u e s th a t th e g re a t m a jo rityo f th e se c o m p lain ts9

w er e anonym ous and w er e notver i fi ed byT el cove. H ow ever , the D i s t r i ctC our tdi d not m ake a fi ndi ng t hatt he compl ai nt s T el cove r ece i ved w er e ac cur at e orthatA s ch w as inv o lved in “s p am m ing ” o r sen d ing em ail s w ith p o rno g rap h ic co n tent. Instea d , the C o u rt found thatT el cove r el i ed on the compl ai nt s i n good fai t h and thatA s ch di d not demonstr at e anybad fa i t h of the partof Tel cove. A ccor di ngl y , the C our tdi d noterrby c o n s id e ri n g th is e v id e n c e w h e n g ra n tin g s u m m a ry ju d g m e n t. III . T he j udgm entof the D i s t r i ctC our tw i l l be af fi r m ed.