AOL faces more legal troubles

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Law firm Stanbury & Fishelman, Los Angeles, filed a $100 million class-action lawsuit on March 13 against America Online, alleging the online service used unfair business practices ranging from racketeering to mail fraud to grow its current 8 million-member subscriber pool.

"We believe this is an issue of the public trust," partner Bruce Fishelman said. The lawsuit reads: "AOL generates its revenues primarily through member subscription fees. However, AOL has not made profits from these fees and it has bet its future on its ability to receive other revenues, such as advertising sales, transaction fees, royalties, production services, third party licenses and sales of its stock to the public.... The Defendants have acted irresponsibly in driving AOL to reach and control subscribers, who collectively constitute the goose from which AOL seeks to birth its golden eggs."

S&F had not yet served AOL its suit papers on Friday; when the firm does, AOL will have 20 days to respond. "This case is completely without merit," an AOL legal spokeswoman said.

Copyright March 1997, Crain Communications Inc.

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