Five customers of America Online filed a class action on Jan. 13, 1996 in Los Angeles Superior Court claiming AOL has insufficient hardware to handle the demand created by its switch to unlimited-access pricing. The customers, who claim that the resulting bottleneck has prevented them from getting online, are seeking an injunction that would prevent AOL from signing up new customers until it can handle the load. Similar suits have been brought throughout the country.

Originally Filed Jan 13, 1997 Los Angeles Superior


MARLIN & SALTZMAN Louis M. Marlin [Bar No. 054053] Stanley D. Saltzman
[Bar No. 0908] 701 S. Parker Street Suite 8800 Orange, CA 92868-4720
(714) 541-1066 Fax: (714) 542-4184


Attorneys For: Plaintiffs Class


SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS
ANGELES


NO BC163992 CLASS ACTION


RICHARD BASCH, an individual; ROBERT FRIEDLAND; an individual JEFFREY
RAYDEN; an individual JAMES KRANZ; an individual JASON CARTWRIGHT, an
individual, Plaintiffs


vs.


AMERICA ONLINE, INC.; a Delaware Corporation Does 1 through 10
inclusive,  Defendants


COMPLAINT FOR: 1. Intentional Misrepresentation -- Fraud and Deceit 2.
Negligent Misrepresentation 3. Fraudulent Inducement 4. Negligence 5.
Violation of the California Consumers Legal Remedies Act 6. Injunctive
Relief


Plaintiffs, on behalf of themselves and all others similarly situated,
members of the PLAINTIFF CLASS described and defined herein below,
complain of Defendants and allege as follows:


CLASS ACTION ALLEGATIONS


1. This action is brought as a class action pursuant to California
Code of Civil Procedure section 382, California Civil Code section
1781 and the procedural provisions of Rule 23 of the Federal Rules of
Civil Procedure. Individual and Representative Plaintiffs bring this
action on their own behalf and on behalf of all persons who are
members of the Plaintiff Class as defined hereinafter.


2. This action has been brought and may be properly maintained as a
class action pursuant to the provisions of Code of Civil Procedure
section 382, Civil Code section 1781 and the provisions of Rule 23 of
the Federal Rules of Civil Procedure for the following reasons:


a. The questions and issues of law and fact raised herein are of a
common and/or general interest and affect many persons;


b. The Plaintiff Class, as described and defined hereafter, consists
of several million people and is so numerous that it is plainly
impracticable to bring all members of the Class before this Court;


c. The questions of law and fact common to the Class are substantially
similar and predominate over those questions affecting only the
individual members;


d. There is a community of interest in obtaining injunctive relief,
restitution and adequate compensation for the damage Defendants'
actions inflicted upon the Class;


e. The individual and Representative Plaintiffs are members of the
Class described and defined hereinafter, and their claims are typical
of the claims of class members;


f. The Individual and Representative Plaintiffs will fairly and
adequately protect the interests of the Class, have no interest which
conflicts with the Class, and have retained attorneys experienced in
the handling of complex tort, consumer and class action litigation to
represent the Plaintiff Class herein;


g. Without class certification and determination of liability
questions within the class format prosecution of separate actions by
individual members of the Plaintiff Class would create the risk of:


1. Inconsistent or varying adjudications with respect to individual
members of the Class which would establish incompatible standards of
conduct for Defendants; or,


2. Adjudication of individual members' claims which would, as a
practical matter, be dispositive of the interests of the other members
not parties to the adjudication, or would substantially impair or
impede their ability to protect their interests.


h. The class action is superior to other available methods for a fair
and efficient adjudication of the claims presented by this complaint
and will prevent the undue financial, administrative and procedural
burdens on the parties and on the court which individual litigation
would impose.


DEFINITION OF PLAINTIFF CLASS AND SUB-CLASS


The Plaintiff Class consists of all individuals who, since November 1,
1996, have become or have continued as subscribers to America Online,
Inc. and who have selected or chosen or agreed to be billed at a fixed
monthly rate for unlimited access to the services offered by defendant
America Online, Inc.


As used throughout is class action complaint the term "Plaintiffs"
and/or "Class" refers to each and every named Plaintiff, and each and
every person eligible for membership in the Plaintiffs Class as
described and defined above.


Sub-Class No- 1 shall include each and every named Plaintiff, and each
and every person eligible for membership in the Plaintiff Class who is
a resident of the State of California.


GENERAL ALLEGATIONS COMMON TO ALL CAUSES OF ACTION


3. Individual and Representative Plaintiffs Richard Basch, Robert
Friedland, M.D., Jeffrey Rayden and James Kranz are residents of Los
Angeles County and each is a subscriber to the services offered by
defendant America Online, Inc. and pays for the same at a fixed
monthly fee for unlimited access to the services offered by said
defendant.


4. Individual and Representative Plaintiff Jason Cartright is a
resident of San Diego County and is a subscriber to the services
offered by defendant America Online, Inc.


5. Plaintiffs are informed and believe and, based upon such
information and belief, allege that Defendants AMERICA ONLINE, INC.
is, and at all times relevant herein, was, a Delaware corporation,
with a principal place of business in the State of Virginia, doing
business in the State of California and with corporate offices and
locations in this State.


6. Plaintiffs are ignorant of the true names and capacities of
Defendants named herein as Does 1 through 10, inclusive, and therefore
sue such Defendants by such fictitious names. Plaintiff will amend
this complaint to show their true names and capacities when the same
has been ascertained. Plaintiffs are informed and believe and therein
allege that each Defendant fictitiously named herein caused or
contributed to the damages complained of by Plaintiff, and engaged in
or participated in wrongful activities as set forth herein.


7. Defendants named herein as Does 1 through 5, inclusive, are the
agents and/or employees of defendant America Online Inc. and, as such,
aided all other defendants in carrying out the improper activities
described hereafter. Defendants America Online, Inc. as Does 1 through
5 are collectively designated hereafter as AOL DEFENDANTS.


8. Defendants named herein as Does 5 through 10, inclusive, are
individuals and business entities (of unknown type) who, in a manner
as yet unknown, conducted their activities in such a manner as to
cause the damages complained of by plaintiffs herein in combination
with the activities of the AOL DEFENDANTS.


9. Plaintiffs are informed and believe that at all times relevant
herein, each Defendant sued herein aided and abetted, and acted in
concert with and/or conspired with each and every Defendant to commit
the acts complained of herein and to engage in a course of conduct in
the business practices complained of herein.


FACTUAL ALLEGATIONS


10. The AOL DEFENDANTS are engaged in the business of providing
computer "on line" services to members of the general public. Said
services include, but are not limited to, use of electronic mail,
access to electronic bulletin boards, creation of "web sites," chat
rooms, access to the "world wide web" and other services related to
the advanced use of computers. The services provided to the plaintiff
class are accessed over standard telephone lines made available to
subscribers by said defendants as part of the included services.


11. Prior to January 1, 1996, the AOL DEFENDANTS offered different
"pricing plans" for the sale of their services to the Plaintiff Class,
Each of these plans had, as a component part of the same, a basic
monthly charge, with additional charges being incurred by the
subscriber if usage exceeded a predetermined monthly maximum number of
hours or minutes of "on line" connection.


12. On or about November l, 1996, defendants, and each of them,
advertised to the members of the plaintiff class that the AOL
DEFENDANTS' services could be purchased for a set monthly fee, with no
additional "on line charges" based upon usage exceeding a
pre-determined monthly maximum (said fee plan is described hereafter
as the "Flat Fee Program"). Plaintiffs are informed and believe and,
based thereon, allege that as of January 1, 1996, the AOL DEFENDANTS
made the Flat Fee Program the only pricing plan available to the
members of the plaintiff class.


13. In representations made in written and electronic media
advertising, e-mail and through other medium,, the Defendants
represented to the plaintiff class that the Flat Fee Program Offered
unlimited access to the America Online services for one monthly fee.
In making such representation, said defendants explicitly and/or
impliedly represented that AOL DEFENDANTS would have sufficient
telephone lines, telephone modems and computer equipment so that the
members of the plaintiff class would be able to access and use the AOL
DEFENDANTS' services without encountering busy and unavailable
telephone lines and/or inaccessible computer equipment. Each of these
representations made by Defendants, and each of them, is untrue and
false. In truth and in fact, the AOL DEFENDANTS failed and continue to
fail to have sufficient available telephone lines, telephone modems,
computers, etc., the result of which is that members of the plaintiff
class are constantly unable to access the services of the AOL
DEFENDANTS, resulting in the promise of "unlimited use" having no
value or meaning.


14. Each member of the Plaintiff Class, in reliance upon
misrepresentations by Defendants concerning the availability of
"unlimited access"  to the AOL DEFENDANTS ' services purchased the
same by making monthly subscriber payments.


15. Defendants, and each of them, made such misrepresentations to
Individual and Representative Plaintiffs and members of the Class
either (1) knowing said representations to be false, incomplete and/or
misleading at the time they were made, (2) recklessly without knowing
the truth or falsity of said representations, and/or (3) without
sufficient information or data to base said representations upon in an
effort to induce Plaintiff and the Class members to purchase
Defendants' product.


16. The Defendants, and each of them, made such aforementioned
misrepresentations in California and the United States


Notice Pursuant to Civil Code Section 1782


17. In compliance with the provisions of California Civil Code section
1782, Plaintiffs hereby give notice to each Defendant named in and
served with this Complaint of their intention to pursue their claim
set forth in the Fifth Cause of Action hereafter under California
Civil Code section 1750 et seq. unless Defendants, within 30 days,
"correct, repair, replace or otherwise rectify" the consumer fraud
resulting from the misrepresentation and subsequent sale of access to
the AOL DEFENDANTS' services by Defendants and purchased by
Plaintiffs.


FIRST CAUSE OF ACTION [Intentional Misrepresentation - Fraud and
Deceit  On Behalf Of Representative Plaintiffs and The Class]


18. Plaintiffs reallege and incorporate herein by reference each and
every allegation contained in Paragraphs 1 through 17 herein.


19. Defendants made the misrepresentations to Plaintiffs and members
of the Class knowing the same to be false, incomplete and/or
misleading at the time they were made, and/or made them recklessly
without knowing the truth or falsity of them, in an effort to induce
Plaintiffs and the Class members to purchase and/or subscribe to the
AOL DEFENDANTS' services. Specifically, the defendants, and each of
them, knew or should have known that the AOL DEFENDANTS had
insufficient number of available telephone lines, telephone modems
and/or computers to provide unlimited access to their services to a
reasonably expected number of subscribers at any given time.


20. Plaintiffs and members of the Class believed said representations
to be true and complete. In justified reliance on the truth and
completeness of Defendants' representations as to the availability of
unlimited access to the AOL DEFENDANTS' services, the representative
Plaintiffs and the Plaintiff Class subscribed to the services offered
by the AOL DEFENDANTS pursuant to the Flat Fee Program. Plaintiffs
subsequently learned that Defendants' representations were false.


21. As a direct and proximate result of Defendants' conduct Plaintiffs
and the members of the Class have incurred and continue to incur
damages in the amount of the charges they pay for the Flat Fee
Program, and other damages in all amount to be established according
to proof.


22. Each of the acts, practices, misrepresentations, omissions,
violations and other wrongs complained of above, was engaged in by
Defendants with malice and with specific and deliberate intent to
oppress, defraud and deceive Plaintiffs and other Class members, or
with reckless disregard of the consequence of their actions.


23. Defendants, and each of them, acted with "malice" in that their
conduct in performing, allowing and concealing from Plaintiffs and the
Class members the systematic course of fraud which is the subject of
this Class action was intended by each of them to cause damages to
Plaintiffs and the Class members, and was carried on by the
Defendants, and each of them, with the willful, conscious and/or
reckless disregard of the rights of Plaintiffs and the Class members.


24. Defendants, and each of them, acted with "oppression" in that
their conduct has subjected, and continues to subject, Plaintiffs and
the Class members to unjust hardship in conscious disregard of their
rights, and in that Defendants, and each them, have; interfered with,
and continue to interfere with the legal rights of Plaintiffs and the
Class members.


25. Defendants, and each of them, have acted with "fraud" in that
their conduct constitutes an intentional misrepresentation, deceit and
concealment of material facts known to them, with respect to the
availability of unlimited access to a reasonably anticipated number of
subscribers at any given time.


26. Accordingly, Plaintiffs and the Class members are entitled to
punitive and exemplary damages against Defendants, and each of them,
in such amounts as shall be necessary and appropriate to punish the
Defendants, and each of them, for their acts, practices,
misrepresentations and concealment and to deter them, and anyone else,
from ever attempting to commit similar acts of fraud.


SECOND CAUSE OF ACTION [Negligent Misrepresentation Against All
Defendants]


27. Plaintiffs reallege and incorporate herein each and every
allegation contained in paragraphs 1 through 17 herein above set
forth.


28. Defendants, and each of them, negligently represented to the
Plaintiffs and the plaintiff class that the AOL DEFENDANTS would have
sufficient telephone lines, telephone modems and/or computers
available to provide unlimited access to their services to a
reasonably expected number of subscribers at any given time, At the
time Defendants made said representations, Defendants lacked
sufficient facts upon which to make such representations, and/or the
facts available to defendants did not reasonably lead to the 
conclusion that said representations were accurate.


29. As a direct and proximate result of DEFENDANTS' conduct,
Plaintiffs and the members of the Class have incurred and continue to
incur damages in the amount of the charges they pay for the Flat Fee
Program, and other damages in an amount to be established according to
proof.


30, The afore described negligence of defendants, and each of them,
amounts to fraud pursuant to the provisions of California Civil Code
sections 1572(2) and 1710(2).


31. Plaintiffs and the Class members are entitled to punitive and
exemplary damages against Defendants, and each of them, in such
amounts as shall be necessary and appropriate to punish the
Defendants, and each of them, for their acts of fraud.


THIRD CAUSE OF ACTION [Fraudulent Inducement Against All Defendants]


32 Plaintiffs reallege and incorporate herein by reference each and
every allegation contained in paragraph 1 through 32 inclusive herein
above set forth.


33. The afore described actions by Defendants, and each of them,
whether intentional, recklessly negligent, or negligent, amount to
fraud. Said actions induced the Plaintiffs and the Plaintiff Class to
enter into subscriber agreements with the AOL DEFENDANTS under the
Flat Fee Program, with the belief that they would have unlimited
access to the services offered by the AOL DEFENDANTS.


34. Had the Plaintiffs and the Plaintiff Class known the true facts,
they would not have entered into the subscriber agreements under the
Flat Fee Program.


35. As a direct and proximate result of the Defendants' fraudulent
inducement, Plaintiffs and the Plaintiff Class have been damaged in a
sum greater than the minimum jurisdictional level of this Court.
Plaintiffs will amend this complaint to set forth the total damages
when the same have been ascertained.


FOURTH CAUSE OF ACTION [Negligence Against The AOL Defendants]


36. Plaintiffs reallege and incorporate herein by reference each and
every allegation contained in paragraphs 1 through 17, 20, 21 and 29
herein above set forth.


37. The AOL DEFENDANTS negligently failed to provide adequate
telephone lines, telephone moderns and/or computers to accommodate the
reasonably expected number of subscribers under the Flat Fee Program
and/or the reasonably anticipated amount of usage by subscribers.


38. As a direct and proximate result of the negligence of the AOL
DEFENDANTS. Plaintiffs and the Plaintiff Class have been damaged by
not having unlimited access to the AOL DEFENDANTS ' services, to their
damage in a sum not less than equal to the monthly Flat Fee  Program
subscriber charge for each class member.


FIFTH CAUSE OF ACTION [Violation of California Consumers Legal
Remedies Act, Civil Code Sections 1750, et. seq. On Behalf Of
Sub-Class No. 1]


39. Plaintiffs reallege and incorporate herein by reference each and
every allegation contained in Paragraphs I through 39 herein.


40. Defendants' practices, acts, policies, and course of conduct, as
described above, were intended to induce, and did in fact induce,
consumers to subscribe to the Flat Fee Program.


41. Defendants' practices, acts, policies, and course of conduct
violated the California . Consumers Legal Remedies Act ("CLRA") in
that:


(1) Defendants advertised services with intent not to supply
reasonably expectable demand, without any disclosure of a limitation
in quantity found in the advertisement, in violation of Civil Code
section 1770(j).


(2) Defendants represented that the Flat Fee Program had
characteristics, uses, benefits, or quantities which it does not have,
in violation of Civil Code section 1770(e). Specifically defendants
represented that subscribing to said program would allow the members
of the plaintiff class unlimited access to the AOL DEFENDANTS'
services.


42. Plaintiffs seek restitution of all monies received by said
defendants as a result of the sale of the Flat Fee Program during the
class period. Plaintiffs are informed and believe that the amount of
said restitution and damages is at least $20 million. The exact amount
of said damages and restitution is unknown at this time and Plaintiffs
will seek relief to amend this complaint at the time of trial when the
same has been ascertained.


43. If, within thirty (30) days after receipt of the Civil Code
section 1782 notice contained in paragraph 18 above, Defendants have
not adequately addressed the misrepresentations described herein,
Plaintiffs will seek by this Cause of Action relief in the form of a
claim for damages and other appropriate relief under Civil Code
section 1780.


44. Plaintiffs shall seek attorneys' fees according to proof at the
time of trial.


SIXTH CAUSE OF ACTION [Injunctive Relief Against All Defendants]


45. Plaintiffs reallege and incorporate herein each and every
allegation contained in paragraphs 1 through 45 inclusive herein above
set forth.


46 AOL DEFENDANTS continue to market their services under the Flat Fee
Program despite the continued inadequacy of their telephone lines,
telephone modem lines and/or computer equipment. For each new
subscriber obtained by said defendants, the inability of other class
members to access services increases.


47. Defendants, and each of them, continue to violate the Consumers
Legal Remedies Act by currently advertising the Flat Fee Program as
offering the subscriber unlimited access to the AOL DEFENDANTS'
services despite the inability of said defendants to offer adequate
telephone lines, telephone modems and computer equipment.


48. Plaintiffs have no plain, speedy or adequate remedy at law to
prohibit defendants, and each of them, from falsely, illegally and
fraudulently advertising and selling the Flat Fee Program


49. Plaintiffs hereby seek a preliminary and permanent injunction  as
follows.


DEFENDANTS ARE RESTRAINED AND ENJOINED FROM ADVERTISING, OFFERING FOR
SALE, SELLING OR OTHERWISE MARKETING THEIR FLAT FEE PROGRAM UNTIL THEY
HAVE IN PLACE AND OPERATIONAL SUFFICIENT EQUIPMENT OF EVERY NATURE AND
TYPE NECESSARY TO ACCOMMODATE UNLIMITED ACCESS TO THEIR SERVICES BY
THE REASONABLY EXPECTED NUMBER OF SUBSCRIBERS UNDER THEIR FLAT FEE
PROGRAM AND/OR THE REASONABLY ANTICIPATED AMOUNT OF USAGE BY
SUBSCRIBERS.


PRAYER FOR RELIEF


WHEREFORE, Plaintiffs, individually and on behalf of all others
similarly situated, pray for judgment against Defendants, and each of
them, as follows:


FIRST SECOND AND THIRD CAUSES OF ACTION:


1. For an order certifying the Plaintiff Class and appointing
Plaintiffs and their counsel to represent the Class;


2. For compensatory damages according to proof, but not less than the
cost of the Flat Fee Program for each class member for each day the
defendants fail to have adequate equipment available to accommodate
unlimited access to their services by the reasonably expected number
of subscribers under the Flat Fee Program and/or the reasonably
anticipated amount of usage by  subscribers.


3. For punitive and exemplary damages;


4. For prejudgment interest;


5. For costs of suit; and,


6 .For such other and further relief as to the Court seems just and
proper.


FOURTH CAUSE OF ACTION


1. For an order certifying the Plaintiffs Class and appointing
Plaintiffs and their counsel to represent the Class;


2. For compensatory damages according to proof,  but not less than the
cost of the Flat Fee Program for each class member for each day the
defendants fail to have adequate equipment available to accommodate
unlimited access to their services by the reasonably expected number
of subscribers under the Flat Fee Program and/or the reasonably
anticipated amount of usage by subscribers.


2. For prejudgment interest;


3. For costs of suit; and,


3. For such other and further relief as to the Court seems just and
proper.


FIFTH CAUSE OF ACTION


1. For an order certifying the Plaintiff Class and Sub-Class No. 1 and
appointing Plaintiffs and their counsel to represent the Class;


2. For compensatory damages and restitution for Sub-Class No, 1,
subject to proof at trial;


3. For punitive and exemplary damages,


4. For reasonable attorneys' fees;


5. For prejudgment interest;


6. For costs of suit, and,


7. For such other and further relief as the Court deems just and
proper.


SIXTH CAUSE OF ACTION


1. For a temporary restraining order, a preliminary injunction and a
permanent injunction restraining and enjoining Defendants from
advertising, offering for sale, selling or otherwise marketing their
Flat Fee Program until they have in place and operational sufficient
equipment of every nature and type necessary to accommodate unlimited
access to their services by the reasonably expected number of
subscribers under the Flat Fee Program and for the reasonably
anticipated amount of usage by subscribers.


2. For reasonable attorneys' fees;


3. For costs of suit; and,


4. For such other and further relief as the Court may deem just and
proper.


Dated: January 13, 1997


MARLIN & SALTZMAN


By: (Signature) Louis M. Marlin Attorneys for the Plaintiff Class