Goldline International – Beware the Goldline Customer Agreement

The Goldline International Customer Agreement:

As indicated in an earlier Goldline International blog, a case seeking class action certification was filed in the United States District Court for the District of South Carolina, Greenville Division styled Tim Clark; Johanna Clougherty; Michael Clougherty; on behalf of themselves and all other similarly situated v. Goldline International, Inc., case no. 6:10-Civ-01884. The basis of the complaint is set forth in an earlier blog. The alleged underlying facts do not have a bearing on the importance of the court’s ruling on Goldline International’s Motion to Dismiss or Stay Proceedings and Compel Arbitration, which was granted. What the court’s order does demonstrate are the perils and risks of not only dealing with Goldline International but how far some firms will go to protect themselves and disadvantage their customers for their alleged wrongdoing.

The first issue or importance that was discussed by the court related to arbitration. Goldline International requires its clients to “read” and sign an Account and Storage Agreement (Account Agreement), which contains an Arbitration Agreement. Paragraph K of the Account Agreement states as follows:

Client agrees to arbitrate all controversies between client and Goldline including any of Goldline’s current or former officers, directors, employees, or agents arising out of or relating in any way to any transaction with Goldline, client’s account, any account that client causes to be opened in the future, or any service provided by Goldline, including but not limited to transactions of any kind made on client’s behalf. This Arbitration Agreement includes the determination of the scope or applicability of this agreement to arbitrate.

The parties agree that any arbitration will be administered by JAMS under its Comprehensive Arbitration Rules and Procedures, when the amount in controversy is greater than $250,000 and JAMS’s Streamlined Arbitration Rules when the amount in controversy is less than or equal to $250,000. The arbitration proceedings shall be kept in strictest confidence. The parties agree the exclusive venue for arbitration proceedings, including any arbitration hearing, will be Santa Monica, California. The parties further agree to the personal jurisdiction of the Superior Court, Los Angeles County, State of California, to enforce these arbitration provisions described in this Agreement. Client makes this arbitration agreement on his or her behalf and on behalf of client’s heirs, administrators, executors, successors and assigns and all persons claiming a beneficial interest in Client’s account.

The court, in ruling on Goldline International’s Motion to Compel Arbitration, determined that the Arbitration Agreement referenced above was enforceable. Consequently, any claim by a customer of Goldline International, no matter where the customer resides, must be heard, by arbitration, in Santa Monica, California. The expense and inconvenience associated with this provision is obvious.

The second issue that was discussed, by the court, was that the contractual provision requiring JAMS as the exclusive arbitration forum as determined by Goldline International was acceptable. This determination obviously prevented the customer from choosing more well known dispute resolution companies such as the American Arbitration Association.

Next, the court alluded to an argument made by the Plaintiffs that other provisions contained within the Arbitration Agreement were one sided because the limitations of remedies section limits Goldline International’s “liability in all claims” to the “amount actually paid by the client for the items in dispute less the items’ fair market value.” The Arbitration Agreement also requires that customers waive their rights in advance to claims for “indirect, incidental,k additional, punitive, exemplary or consequential damages even if Goldline has been advised of the possibility of such damages.”

Finally, the court noted that Section K-5 of the Arbitration Agreement, which requires that the client agree that any claim, arbitration, lawsuit, legal action, dispute or proceeding of any kind arising out of or relating to any transaction between client and Goldline is barred unless commenced within one year from the date of the transaction, is not unconscionable under California law.

The reader can draw his or her own conclusion as to whether or not they wish to do business with firms whose agreements are so one sided.

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