BRIAN W. NEWCOMB, C.S.B. #55156

ATTORNEY AT LAW

770 Menlo Avenue, Suite 101

Menlo Park, CA 94025

(415) 322-7780


ERIC WRIGHT, C.S.B. #41197

ATTORNEY AT LAW

744 Yale Lane

Santa Clara, CA 95050

(408) 554-4353


STEPHEN E. HAGEN, C.S.B. #071071

ATTORNEY AT LAW

1436 Hamilton Avenue

Palo Alto, CA 94301

(415) 324-3300


Attorneys for Plaintiff Stephen E. Hagen



IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE CITY AND COUNTY OF SAN FRANCISCO


STEPHEN E. HAGEN, individually, as a private attorney general, and
on behalf of all others similarly situated,

Plaintiff,

v.

AMERICA ONLINE, INC. a Delaware corporation, and DOES 1-20
inclusive,

Defendants.


Case No. 971047

"CLASS ACTION" COMPLAINT FOR BREACH OF CONTRACT, DECEIT, TO ENJOIN
UNFAIR BUSINESS PRACTICES AND RESTITUTION



Comes now Stephen Hagen individually, as a private attorney
general, and on behalf of all other similarly situated persons,
alleging:

1) Stephen E. Hagen is an individual residing in the City of Palo
Alto, County of Santa Clara, State of California.

2) Defendant America Online, Inc. is, and at all times herein
mentioned was, a corporation organized and existing under the laws
of the State of Delaware and doing business in the State of
California.

3) The true names and capacities, whether individual, corporate,
partnership, associate or otherwise of Defendant sued herein as
DOES 1 through and including 20, are unknown to Plaintiff, who
therefore sues said Defendants by such fictitious names. Plaintiff
will amend this Complaint to show the true names and capacities of
said Defendants when the same  have been ascertained. Plaintiff is
informed and believes and on such basis alleges, that each of such
fictitiously named Defendants is responsible in some manner for
the occurrences herein alleged, negligently or otherwise, in that
Plaintiff's damages herein alleged were proximately caused by
them.

4) Plaintiff is informed and believes, and on such basis alleges,
that at all times herein mentioned, each of the Defendants was,
and now is, the agent, servant, employee, and/or other
representative of each of the remaining Defendants, and in doing
the things herein alleged, were acting in the scope, purpose and
authority of such agency, service, employment, and/or other
representative capacity with the permission, knowledge, consent
and ratification of each of the remaining Defendants acts. Any
reference hereinafter to "Defendants", without further
qualification, is meant by Plaintiff to refer to each Defendant
named above including the DOE Defendants.

CLASS ALLEGATIONS

5) This action is brought pursuant to Code of Civil Procedure
Section 382 on behalf of the class. The class is composed of all
present customers within the United States of the on-line services
provided by Defendants, and all past customers within the United
States of the on-line services provided by Defendants, who have
been damaged by the actions of Defendants as hereinafter alleged.
Each class member has or had an account with America Online, and
has been a member of America Online at some time during the four
years preceding the filing of this Complaint and has accessed the
system and been improperly billed for additional time and/or
charges as result of Defendants' practices described herein.

6) This class is so numerous that joiner of all member would be
impracticable. The factual question of whether America Online
breached the contract with its members, misrepresented to members
the manner in which they would be billed for the use of
Defendants' services, the accuracy and completeness of the
information provided to a member regarding the services and
charges for services, and the nature and extend of the Defendants'
unfair business practices with regard to billing of members are
common to the class. Also common to the class are the legal issues
of whether or not Defendants' billing practices constitute a
breach of contract, whether America Online, in its standardized
written and/or on-line material misrepresented or improperly
disclosed the manner is which a member would be billed for the
time he or she used the AOL Service and whether the Defendants'
conduct and practices violate the Unfair Trade Practices Act,
Business & Professions Code Section 17200, et seg. and laws
related to unfair business practices.

7) The claims of the named Plaintiff are typical of the claims of
all class members, all of whom who have been subjected to
Defendant's business practices. The named Plaintiff is a
representative party who will fairly and adequately protect the
interest of the class by vigorously litigating this suit through
attorneys who are skilled and experienced in class action,
consumer protection and unlawful business practice litigation.

8) Questions of law and fact, as to all member of the class,
predominate over any questions affecting only individual members,
and a class action is superior to any other method for the fair
and efficient adjudication of this controversy.

FACTS

9) The America Online Service ("AOL Service") operated by America
Online, Inc ("AOL") is a computer on-line interactive information,
communication and transaction service.

10) In order to become a member and use the AOL Service, a
prospective customer must use a personal computer, together with
software provided by AOL ("AOL Software") and a modem or similar
communications device to dial and connect to the AOL Service using
telephone lines. The sequence and requirements of the procedures
presented on-screen, the process and requirements for transferring
between different areas of the AOL Service, and the information
available to a user during any on-line session, are determined by
the AOL Software.

11) The AOL Software is available in versions which are compatible
with popular personal computer operating systems, including
Microsoft DOS and Windows and Apple Macintosh. Regardless of the
type of operating system, the text information and time
information presented on-screen by a computer using the
appropriate version of the AOL software is identical in all
material respects.

12) A new user must complete an initial registration process, in
which the prospective member provides certain information
(including account billing and credit card information) to the AOL
Service. This information must be provided before the prospective
customer may review the terms and conditions of use and membership
of the AOL Service ("T & C").

13) After providing the necessary information, the user is offered
the opportunity to accept the T & C by selecting the appropriate
"button" presented on the computer screen. The actual T & C are
not presented in the normal course of the registration process.
However, the user is permitted to review the T & C immediately
prior to accepting them, if he or she so desires.

14) A customer declining the T & C must terminate the registration
process, and cannot complete the sign-up process. Upon accepting
the T & C, a new member may continue with the on-line session
following the initial registration process. In future sessions,
the member is required by the AOL Software and the AOL Service to
complete only a simplified sign-on procedure. A copy of the T & C
as of July 13, 1995 is attached as Exhibit A.

15) A member who has connected to the AOL Service using the AOL
Software can access and view additional information relating to
the T & C and billing / member account status during an on-line
session (the "Online Information"). A member can view the Online
Information only after selecting from one or more menus and/or one
or more files provided by the AOL Software and/or the AOL Service.
The Online Information includes the current T & C, charges and
billing information, and elapsed time for the on-line session.

16) The AOL Software also provides access to an on-screen window
which displays information about the elapsed time of an ongoing
session ("Online Clock"). The Online Clock can be viewed during an
on-line session by selecting the appropriate file from an
on-screen menu. The Online Clock indicates the current time (in
hours, minutes, and seconds). The Online Clock also indicates the
duration of the current on-line session, in the following manner:

a. Immediately after the on-line session has started, the Online
Clock indicates "You have been on-line for less than one minute."

b. After one minute has passed following the start of the on-line
session, the message indicates "You have been on-line for 1
minutes (sic)."

c. After an additional minute has passed from the start of the
on-line session, the message then indicates "You have been on-line
for 2 minutes."

A copy of the screen image of the Online Clock is attached as
Exhibit B.

This manner used by the AOL Software in presenting elapsed time
information is the same for longer intervals, such that the time
presented is always the number of whole minute which have elapsed,
excluding any seconds.

17) At the end of each on-line session using the AOL Service, a
message ("Ending Message") is presented indicating that "Your time
for this session was _____", and stating the time of the session
in hours, minutes, and seconds. A true and accurate copy of the
screen image of the Ending Message is attached hereto as Exhibit
C.

18) A monthly bill for the AOL Service is charged to each member's
credit card account. The charge for membership in the AOL Service
is based on a standard monthly billing rate, which entitles the
member to use the AOL Service for up to the specified amount of
on-line time per month without further charge ("free time"). After
the "free time" in any monthly billing period has been used by the
member, an additional charge is made for time spent on-line beyond
the "free time". As of July 13, 1995, the standard monthly billing
rate was $9.95/month (including 300 minutes of "free time"), and
the charge for additional on-line time was $2.95/hour.

19) The only information provided in the T & C or the Online
Information regarding how charges are actually calculated using
the time information from a particular session is the statement
"You will be charged for your extra time on America Online in
one-minute increments." No explanation or disclosure is provided
regarding how the one-minute increments are determined, or how the
number of seconds indicated for a session beyond whole minutes are
rounded to reach the one minute increments.

20) In fact, contrary to the information provided at the end of
each on-line session in the Ending Message, the amount of time
billed for is always rounded upwards to the next whole minute,
regardless of the number of seconds. Thus, a session lasting one
second more than a whole minute is billed for an additional
minute, as is any session lasting any number of additional seconds
beyond a whole minute. In addition, contrary to the information
provided in the Online Information, any session time consisting of
a number of whole minutes and forty-six or more seconds is rounded
upward an additional minute. Thus, a session lasting two minutes
and forty-six seconds (00:02:46) is billed as four minutes, as is
any session lasting up to and including three minutes (00:03:00).
The same pattern applies to any calculation of time for billing
purposes, regardless of the number of minute in the session.

21) In fact, contrary to the information provided by the Online
Clock, the number of minutes in a session which are billed by the
AOL Service is always one minute more than the time indicated by
the Online Clock. A member terminating any on-line session
immediate after checking the Online Clock will always be billed
for one minute more than shown.

22) In calculating charges for additional time beyond the "free
time", the AOL Service does not charge by totaling such time and
applying the hourly charge stated in the T & C and Online
Information to the total additional time. Instead, the AOL Service
calculates the charge for each individual session, and ten adds
the total for these charges to determine the amount billed. Thus,
after using up the "free time", a member billed for ten sessions
of six minute duration each (totalling 60 minutes) would be billed
for $3.00 (10 x $.30/session) rather than $2.95. This method of
charging for time is not explained or disclosed in the T & C or
the Online Information, and results in an effective hourly rate
which is greater than specified in the Online Information.

23) The AOL Software and Defendants' practices in operating the
AOL Service are designed by Defendants to cause members of the AOL
Service to incur additional and unnecessary charges for on-line
time through one or more of the following means:

a. Mandatory downloading of image files which have not been
requested by a member and are not needed for such member's use of
the AOL Service.

b. Continuing to bill for connection time though delays caused by
the AOL Software in accessing the AOL Service and in the manner in
which a member must disconnect from the AOL Service.

c. Billing a member for on-line time spent accessing AOL Service
areas which have been designated as "free" areas.

d. Failing to refund unearned membership charges to member who
have terminated use of the AOL Services.

FIRST CAUSE OF ACTION

(Breach of Contract)

24) Plaintiff realleges and incorporates herein by this reference
each and every allegation set forth in paragraphs 1 through and
including 23 of this Complaint as if set forth verbatim.

25) On or about February 3, 1995 at City of Palo Alto, Santa Clara
County, State of California, Plaintiff and Defendant entered into
a written agreement relating to access the AOL Service by
Plaintiff. Pursuant to the agreement in accordance with the T & C
and the Online Information, Plaintiff became a member of America
Online and AOL represented that he would be billed for the time he
used the AOL Service. Consistent with such agreement, the Online
Clock indicated the amount of time spend on-line, and at the end
of each session the minute and seconds of the time of use would
appear on screen.

26) Pursuant to the terms of the agreement, Defendants agreed to
perform all conditions, covenants and promises on its part to be
performed in accordance with the covenant of good faith and fair
dealing. The Defendants agreed not to deprive, frustrate or deny
Plaintiff the benefit of his contractual rights.

27) Plaintiff has performed all conditions, covenants and promises
required by him on his part to be performed in accordance with the
terms and condition of the contract.

28) Commencing on or about March 3, 1995, Defendants breached the
contract by charging for time that Plaintiff did not use the
system. On or about May 19, 1995, Plaintiff discovered that he was
only being billed in minutes and that the seconds did not appear
on the billing statement even though they appeared on the screen
after each session of use.

29) In May of 1995 Plaintiff learned that the Defendants breached
the agreement by billing for time which the Plaintiff did not use
the system, contrary to the representations, express and implied,
or the Online Information and the Ending Message. Plaintiff
learned that the Defendants round any seconds over and above a
whole minute to the next minute and also round sessions upward an
additional minute when the number of seconds beyond whole minutes
is forty six or more.

30) As a result of Defendants' breach of contract, Plaintiff and
each member of the class he represents is entitled to recover all
amounts improperly billed to and paid for by the Plaintiff and all
class members.

SECOND CAUSE OF ACTION

(Fraud)

31) Plaintiff realleges and incorporates herein by this reference
each and every allegation set forth in paragraphs 1 through and
including 30 of this Complaint as if set forth verbatim.

32) On or about February 3, 1995, in the City of Palo Alto, County
of Santa Clara, State of California, Defendants made the following
standardized written representations to Plaintiff and made the
representations before and after said date of the class of persons
to which Plaintiff is a member in Defendants T & C. Defendants
represented that a member would be billed for the time he or she
used the AOL Service and that time spent in "free" areas would not
be charged to the member.

33) The representations made by Defendants were in fact false. The
true facts were that America Online would bill for any time over a
minute by rounding to the next minute and that some of the time
spent in "free" areas would be charged to the member. In addition,
AOL also bills for a further additional minute to the time for any
session when the number of seconds beyond who minutes exceeds
forty-six seconds (01:46) is round to three minutes four, two
minutes and forty-seven seconds (02:47) is rounded to four
minutes, continuing in a similar manner for other times.

34) When Defendants made these representations to Plaintiff, as
well as the class of persons whom he represents, they knew them to
be false and made these representations with the intention to
deceive Plaintiff and to induce members of the public as well as
Plaintiff to act in reliance on these representations in the
manner hereinafter alleged or with the expectation that they would
so act.

35) At the time these representations were made by the Defendants
and the time Plaintiff and the class members took the actions
herein alleged, Plaintiff and the class he represents, were
ignorant of the falsity of Defendants' representations and
believed them to be true. In reliance on these representations,
Plaintiff and the class members were induced to and did become
members of AOL and used the AOL service.

36) At all times relevant to this action, Defendants, as a
provided of an electronic commercial service was obligated to
provide to consumer such as Plaintiff and class members with whom
it contracts to provide service, at the time it contracts to
provide the service and annually, on or before June 30th of each
year thereafter with the name, address and telephone number of the
provider of service and any charges to the consumer posed by the
provided for the use of the service. See Civil Code Section
1789.3.

37) Prior to and at the time Plaintiff and each class member
contracted with America Online, it failed to accurately and
completely disclose the charges to the consumer imposed by AOL,
Inc. for use of the AOL Service. Defendants did not disclose to
consumers that they would be charged for each minute of service
with any portion of service rendered over and above a  minute
rounded to the next full minute, or that an additional minute
would be charged for any session where the number of seconds
beyond whole minutes exceeded forty-five.

38) The suppression of this fact regarding the billing was likely
to mislead Plaintiff and the class member and did is fact mislead
Plaintiff and the class in light of the other representations made
concerning the billing, such as the screen showing the minute and
seconds of use at the end of each session, and the presentation of
information by the Online Clock of the time of a session as always
less than would be billed at the time of presentation of such
information. The representations and failures to disclose
information and suppression of information herein alleged to have
been made by Defendant were made with the intent to induce
Plaintiff and other members of the class which he represents to
act in the manner herein alleged in reliance thereon.

39) Plaintiff and the class members, at the time these failures to
disclose and suppression of facts occurred, and at the time
Plaintiff and the class took the action herein alleged, was
ignorant of the existence on the facts which Defendants suppressed
and failed to disclose. If Plaintiff had been aware of the
existence of the facts not disclosed by Defendants regarding its
billing practices, Plaintiff would not have as he did, become a
member of America Online and used the AOL Service and authorized
payment via credit card of the charges for such services.

40) As a proximate result of the fraudulent conduct of Defendants
as herein alleged, Plaintiff and class members were induced to
join America Online and spend sums of money for the AOL Service by
logging on to the system and using it. As a result of such acts,
Plaintiff and the class he represents has been damaged in the sum
of currently unknown but subject to proof at time of trial.

41) The aforementioned conduct of Defendants was an intentional
misrepresentation, deceit, or concealment of a material fact now
to the Defendants with the intention on the part of Defendants of
thereby depriving Plaintiff and the class of property or legal
rights or otherwise causing injury and was despicable conduct that
subjected Plaintiff and the class to a cruel and unjust hardship
and conscience disregard of Plaintiffs' rights so as to justify an
award of exemplary and punitive damages.

THIRD CAUSE OF ACTION

(Violation of Business & Professions Code Section 17200, et seg.
"Unfair Trade Practices Act")

42) Plaintiff realleges and incorporates herein by this reference
each and every allegation set forth in paragraphs 1 through and
including 41 of this Complaint as if set forth verbatim.

43) Plaintiff files this Third Cause of Action acting as a private
attorney general to challenge Defendants' business practices. The
Unfair Trade Practices Act defines unfair competition to include
any "unfair", "unlawful" or "deceptive" business practice.
Business & Professions Code Section 17200. The Act provide for
injunctive relief and restitution for violations. Id. Section
17203. Defendants' practice of furnishing inaccurate and
incomplete information concerning the charges to be assessed
against the user, thereby misleading the user and overcharging the
use, as resulted in the unlawful, unfair and unjust collection and
garnering of payments from members of the AOL Service for services
which were not use. The member were to be billed for the time
utilizing the service yet the Defendants are charging for time
which the member did not use the system.

44) Plaintiff requests that this court enjoin these practices and
exercise its ancillary jurisdiction pursuant to the Unfair Trade
Practices Act as well as its inherent equitable jurisdiction to
effectuate full and complete relief, ordering Defendants to made
restitution to all persons whom have suffered from such acts.

45) The Defendants' practices of charging for time which the
consumer does not utilize the AOL system, failing to notify
consumers that they will be billed for time they do not use the
services and rounding all portions of a minute to the next minute
violate Business & Professions Code Section 17200.

46) Pursuant to Business & Professions Code Section 17200, et
seg., Plaintiff is entitled to enjoin these practices and to
obtain restitution of all funds obtained by reason of these
unlawful, unfair and/or deceptive practices. Plaintiff
individually and on behalf of the members of the general public
who are, have been, or may be subjected to these unfair, and
unlawful business practices or Defendants request injunctive
relief and such other orders as may be necessary to restore to any
person, interest, money or property which may have been acquired
by Defendants by means of such unfair and unlawful business
practices pursuant to Business & Professions Code Section 17203.
Additionally, Plaintiff requests injunctive relief to restrain
Defendants from perpetrating these wrongs complained of herein in
the future. Plaintiff is also entitled to recover reasonable
attorney fees pursuant to Code of Civil Procedure Section 1021.5.

WHEREFORE, Plaintiff prays judgment as follows:

1) That this court certify this case as a class action;

2) That this court award the named Plaintiff damages according to
proof at time of trial;

3) That this court award damages to the member of the class;

4) That Defendants and all persons acting through or for them be
permanently enjoined from engaging in deceptive and unfair
practices in connection with its billing of members such as
charging for time not used on the system by a member, and that it
will provide accurate information regarding billing and contract
terms to the consumer in connection with provision of the AOL
Services;

5) That the Defendants be ordered to restore to each member of the
public who has paid for time improperly billed by Defendants and
all other improper charges, plus interest thereon at the rate of
10% per annum;

6) That Plaintiff be awarded reasonable attorney fees and cost of
suit; and

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


Dated: July 14, 1995

/s/ Brian W. Newcomb

Attorney for Plaintiff


Dated: July 14, 1995

/s/ Stephen E. Hagen

Plaintiff