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Sony Amends Online Terms To Block Class Action Lawsuits
Sony Amends Online Terms To Block Class Action Lawsuits
September 15, 2011 | By Mike Rose




Sony this week revised the terms of service and user agreement for its online services, inserting a new section that states users cannot enter into a class action lawsuit against Sony unless Sony agrees to the initiation.

The move comes months after Sony's online services, including PlayStation Network, were compromised by a cyber attack that left millions of accounts compromised. The first class action over the breach was filed in April this year.

The new section of the terms, titled "Binding Individual Arbitration," explains that users must waive the option to open a class action lawsuit against the company regarding its online services.

"Any Dispute Resolution Proceedings, whether in arbitration or court, will be conducted only on an individual basis and not in a class or representative action or as a named or unnamed member in a class, consolidated, representative or private attorney general action," it explains.

The terms add that users cannot conduct a class action suit "unless both you and the Sony entity with which you have a dispute specifically agree to do so in writing following initiation of the arbitration."

The clause notes that any person who has filed a class action suit against the company before August 20 can proceed to do so. PlayStation users will be prompted to accept the new terms the next time they log in to PSN.

Sony said in an email to PSN users, "If you do not agree with the new TOS or Privacy Policy, or if you do not wish to enter into an agreement with [Sony Network Entertainment], you may decline the TOS and Privacy Policy and we will close your account and return your funds."

Sony's online customers also have the option to send a written letter to Sony to opt-out of the clause, and forgo arbitration (an out-of-court option for dispute resolution). The opt-out must take place within 30 days of accepting the new terms.

The new section also adds that a clause -- or the entire section -- might not stand up in a court: "If the Class Action Waiver clause is found to be illegal or unenforceable, this entire Section 15 will be unenforceable, and the dispute will be decided by a court and you and the Sony Entity you have a dispute with each agree to waive in that instance, to the fullest extent allowed by law, any trial by jury."

The new clause comes after an online security breach earlier this year, which led Sony to shut down online services including PlayStation Network, and compromised around 100 million user accounts.

Following the breach, the Rothken law firm in April filed a federal class action lawsuit against Sony Computer Entertainment America on behalf of the 77 million PSN customers it says were harmed by "one of the largest data breaches in the history of the internet."


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Comments


Hakim Boukellif
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While I doubt this is legally enforceable (imagine if robbers started forcing their victims to sign a contract to not press charges), I don't really understand how this is in Sony's favour. Wouldn't a single lawsuit for a thousand people be favourable over a thousand individual lawsuits, normally? Or is my thinking too simple?

Alex Leighton
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Those thousands of people would have to have been really seriously harmed for it to be worthwhile to file lawsuits. It's just not very likely to happen. Sony has basically said, "You're not allowed to file a suit against us unless you have lots of money and free time, and even then, your ass is going to be handed to you by our team of 50 lawyers."

Jeffrey Crenshaw
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"states users cannot enter into a class action lawsuit against Sony unless Sony agrees to the initiation."



This is getting ridiculous. Okay, here goes.



"Reader of this comment agrees, by reading or not reading (in which case reader is merely exister and still covered by this comment because it says so) that arbitrarily arranged semantic symbols (text, such as in comments or contracts) have the potential to hold the power to bind reader/exister to paying Jeffrey Crenshaw one hundred billion dollars or the entirety of their bank fund if they have less than one hundred billion dollars, and beyond having the potential to do so do in fact do so in this instance. Reader may not avoid payment unless Jeffrey Crenshaw agrees to the avoidance. Reader can write a letter to Jeffrey Crenshaw within thirty days to request avoiding payment but it is unadvisable as the request will be turned down. Reader acknowledges that they can opt out of reading this comment; or, in the event that reader is merely an exister (one who exists but does not wish to partake in reading this comment), exister acknowledges that they can opt out of existence to avoid payment through their preferred means of suicide.



Reader/exister also agrees that any conceptual manifestation (including but not limited to: armchair legality whining, conservative corporate kneejerk defenses, and any of the regularly emergent internet back-and-forths that get no one anywhere such as contract satire, hypocrisy notwithstanding) disregarding this comment is moot. Times infinity.



In the event that this comment is found to be illegal or unenforceable, this comment will supersede the law; because who's to say one arbitrary arrangement of semantic symbols holds power over another?



I am. And this one does."



I can't wait to retire. Don't worry, the wealth will trickle down as I see fit to my slav- er, employees.

Dustin Chertoff
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Well played. I think I owe you some money for reading the comment.

Mark Kilborn
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Unenforceable. They can put it in their EULA if they want, but any sane judge will toss it right out.

Adam Sullivan
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Supreme Court: AT&T can force arbitration, block class-action suits



http://arstechnica.com/tech-policy/news/2011/04/scotus-rules-att-
can-force-arbitration-block-class-action-suits.ars



(2011)

Adam Bishop
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Wow, that is a dreadfully bad ruling. It means that every single company could include such a provision with every product or service they provide, thus rendering the very concept of a class action lawsuit irrelevant.

Jeffrey Crenshaw
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Absolutely dreadful. And if a company can do it, then they will do it. As soon as their lawyers figure this out (and it's safe to assume that corporate lawyers are keeping up with legal rulings like this faster than we are).



Companies can also force binding arbitration on employees, forcing the employee to have to take their claims to a third party arbitrator instead of the public judicial system if anything ever comes up. This third party arbitrator is for profit, chosen and paid for by the company, and the results are agreed to be kept secret. Breeding ground for even more bias toward large corporations. What is the point of a judicial system if those in power can change it using the false logic that "hey, you didn't HAVE to agree to the terms of service!" And yes, sometimes this is true, but not when you've been looking for a job for months, and not when every company starts putting these clauses in just to keep up. You can boycott PSN, you can even boycott games entirely if this becomes an industry-wide thing -- but what about ISPs, manufacturers, pharmaceutical companies?



Even if the courts would throw out the clause were it to come up, it still creates a chilling effect among consumers and employees; a form of psychological harassment that can easily create self-doubt and prevent the case from even reaching court (or prolong it if it does). This is similar to the chilling effect that is further killing creativity in this industry where companies lay claim to any games you work on at home. Even though some people say "they wouldn't really enforce that for your pet project", the fact that they _can_ causes emotional turmoil that ruins the creative desire and increases the feeling of enslavement (and don't tell me it doesn't, I've experienced this first hand).



It's starting to feel like we need to exercise our right to bear arms before we lose all of our rights :/. Want to screw me over, strip-mine the economy, evade taxes, eliminate consumer and worker rights? Fine, take away our ability to form a class action lawsuit. We don't need a court period; we need a revolution.

E Zachary Knight
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Its one thing when the binding arbitration clause is in a contract that the buyer must physically sign and a whole other animal when it is a click through EULA.



So it could be argued that the AT&T ruling does not actually apply to this move by Sony.

Kevin Reilly
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@ Ephriam, in the AT&T the plaintiffs sued b/c they were charged sales tax on a "Free" phone. The arbitration clause was in their phone service agreement which was on a website. No different than a click-thru EULA which no one reads.

Martain Chandler
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It narrows things a bit because Fed law trumps State law in this case. Try these essays on for size here:



http://www.scotusblog.com/category/special-features/arbitration/



There is a wide range of opinions (but generally not good) and it looks like Congress will have to straighten it out. (Oh lordy!)



This one essay ended on a positive note, sorta:



"There seems to be little doubt that AT&T Mobility will have an adverse impact on consumer arbitration, as it effectively eliminates the states’ ability to preserve class arbitration as a procedural method of aggregating low-value claims. However, if courts construe the decision more narrowly as preempting only California’s “Discover Bank rule,” rather than unconscionability rules nationally, the decision won’t have quite the broad-reaching impact predicted by some commentators. More importantly, if courts step up their use of the “vindicating rights” doctrine as a means to police the fairness of arbitration, AT&T Mobility and the Court’s other recent FAA decisions won’t have quite the chilling effect on arbitration challenges that many arbitration law scholars have predicted."



http://www.scotusblog.com/2011/09/att-mobility-faa-preemption-and
-class-arbitration/

Matt Cratty
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If this actually works....

Pierette Winter
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Correct me if I'm misreading this, but are they basically saying that people can't press a certain kind of lawsuit without their okay? So basically they're protected from any class action lawsuit ever because they can veto charges against them? So... they've just made themselves immune and people have to agree to this to use their services?!



I hope this gets declared... unethical or illegal I'm not sure on the proper word to use here, but I'd like to hope any court worth its salt would tell Sony they are nuts for trying to enforce this.



Although it sounds as if you can not have to follow this clause if you write Sony about it within 30 days? Maybe that's the magical loophole that'll make it legal... not a smart move on their part if you ask me, though.

Jeffrey Crenshaw
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I hope it gets declared illegal and I hope that the legal team that tried this gets put in jail for a few months to send a message. This already causes damage simply by existing, as it creates a chilling effect -- just like a robber that gets caught before he can steal anything should still go to jail.



At the very least, Sony should publicly fire anyone that ok'd this, and maybe _try_ to generate some positive PR.

Roman Eagle
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A) They shouldn't be able to exclude class action suits

B) Instead, they should put their time and money into securing their Sony Network. They had an overly simplistic security system which enabled a hacker to steal all of my identity and credit card information. For that, they should remain liable.

C) Sony has really lost their edge. I used to ONLY buy Sony, but now that the Network is an identity theft landmine and the new flatscreen TV I bought shuts down after I hit the channel up button three times, I'm done with them (unless they can prove otherwise, they've lost my loyalty).

Pawel Sasko
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This move will only change opinion about Sony in audience's eyes from netural/slightly unfavorable to bad. True masterminds.

Kevin Reilly
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Unfortunately, this type of arbitration clause in an EULA is enforceable in the US after the Supreme Court decision in AT&T Mobility v. Concepcion: http://www.supremecourt.gov/opinions/10pdf/09-893.pdf



The Supreme Court held that the Federal Arbitration Act pre-empts state contract law (California specifically) and compels arbitration even in customer contracts of adhesion, where a state court would find it unconscionable.



I am not suprised SCEA took this step, but I am not sure it would help them in large scale data breaches if a State AG decided to prosecute them for failing to secure the data in the first place or comply with local data security laws.

Neil Sorens
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Class action lawsuits are typically not a very efficient means of providing relief, anyway. The primary plaintiff and the lawyers make bank, and everyone else get free credit monitoring and a $5 coupon.

Christopher Enderle
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The point isn't to be a windfall for everyone in the class action. The point is to make whatever behavior triggered the lawsuit in the first place less profitable so the company stops doing it.



In Sony's case, they would make more money if they didn't upgrade their security and were protected from being sued (and lost whatever small number of customers would leave over Sony's poor security), rather than just updating their security.

Adam Bishop
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Class action lawsuits aren't really about helping plaintiffs, they're about easing the burden on the court by reducing the number of cases that have to be heard.

Jeffrey Crenshaw
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Agreed, the point is not to get rich because someone else screwed you over (thinking that that is the point of a law suit is what's ruining the legal system in the US), the point is to punish after wrongdoing or better yet to entice companies (and individuals) away from wrongdoing in areas that criminal prosecution is too strict. If this sort of thing is allowed (which people have pointed out AT&T got away with), then companies are basically removing incentive to ensure quality control to some degree, and looking at the company pushing for it in this article, I'm not sure they need the wiggle room to be even less responsible than they have been lately.

Heather Hummons
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This is what is call Tort Reform in the legal community. Yes it's very legal and they can do it. Just keep in mind that the reason companies put these clauses in their contracts is NOT to stop frivolous lawsuits but to protect their own pockets and interests by limiting your right to damages and to fairly hold them accountable if somehow their goods or services cause you some harm. There's a really good documentary out there that I recommend people watch if they want to know more about Tort reform called "Hot Coffee". I was one of those user impacted by the security breach. No I didn't sue but if I was harmed as result of the breach I would like the option of being able to sue in a court of law where things will more likely be fair versus going to a private mediator of the companies choice to decide if I have a claim or right to damages.

B Smith
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IANAL, but I seem to recall that unfair contract terms can't be enforced, specifically the sort that infringe upon your rights - such as the right to bring suit against someone (ie Sony) that has wronged you.


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