Court rules against Linden

Terms of Service deemed "substantially
unconsionable and unenforceable"

by Pollywog Gardenvale

In October 2006, Bragg brought suit against the corporation, Linden Research, and also against Philip Rosedale as an individual. In the ten-count complaint filed in Chester County, Pennsylvania, the plaintiff claimed to have been “induced into ‘investing’ in and purchasing virtual property by Linden and Rosedale, which was later confiscated without compensation.

The complaint includes the following counts:

Count I	Violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law
Count II	Violation of the California Unfair and Deceptive Practices Act
Count III	Violation of the California Consumer Legal Remedies Act
Count IV	Fraud and/or Fraud in the Inducement
Count V	Violation of California Civil Code governing auction transactions
Count VI	Conversion (and unjust enrichment)
Count VII	Intentional interference with a contractual relations/prospective economic advantage
Count VIII	Breach of Contract
Count IX	Unjust Enrichment
Count X	Tortious Breach of the Covenant of Good Faith and Dealing (California Law)

Linden responded by asking the Court to dismiss the charges against Philip Rosedale for lack of jurisdiction, and to send the case to arbitration in San Francisco, as outlined in the Terms of Service agreement. In a memorandum dated May 30, 2007, Judge Eduardo C. Robreno rejected Mr. Rosedale’s attempt to hide behind the “fudiciary shield” and ruled that the arbitration clause as imposed in the Terms of Service is unconscionable and unenforceable.

Judge Robreno described the Terms of Service as “a contract of adhesion” that is presented on a “take-it-or-leave-it” basis. He compared it to a similar PayPal user agreement found to be substantially unconscionable for lack of mutuality.

According to the Second Life Terms of Service, “Linden has the right at any time for any reason or no reason to suspend or terminate your Account, terminate this Agreement, and/or refuse any and all current or future use of the Service without notice or liability to you.” The Court ruled that the Second Life Terms of Service “provide Linden with a variety of one-sided remedies to resolve disputes, while forcing its customers to arbitrate disputes with Linden.”

Bragg estimated the cost of arbitration would exceed $13,540. Linden disputed the calculations and estimated a total cost of $7,500. However, the Court’s own calculations indicated the cost would be at least $17,250. The arbitration process outlined in the Second Life Terms of Service requires the use of three arbitrators to settle any dispute. The Court estimated the cost of each arbitrator as somewhere between $4,875 to $8,250. According to the ICC Rules of Arbitration, these fees must be paid in advance, at the time of arbitration.

Although Linden offered to “blueline” the one-sidedness of the arbitration position by waiving the requirement for three arbitrators, posting the initial arbitration fee, and agreeing to arbitrate in Philadelphia rather than San Francisco, the Court ruled that the “arbitration clause is simply not one where a single term may be stricken to render the agreement conscionable... therefore it must void the entire agreement.”

In his complaint, Bragg likens the situation to being ejected from Disneyland and having your souvenirs confiscated, as well as your wallet. He claims that the “utopia of Second Life” and the promise that participants will “retain all rights, title, and interest in the virtual land, property, and goods was a lie.”

Although an experienced attorney, Bragg never read the Terms of Service and claims that he was “forced” to click the ‘accept’ button” to gain access to Second Life.

So is Marc Bragg simply an innocent victim of circumstance, or did he get caught with his hand in the cookie jar? He is asking for actual and punitive damages and so far, the Court has ruled in his favor.

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From the Law Office of Marc S. Bragg

“Recently, the Defendants in the Bragg v. Linden Research, Inc. and Philip Rosedale case have removed my case to Federal Court. Further, the Defendants have recently filed several motions not only seeking to dismiss Rosedale personally, but to compel arbitration and transfer this case to San Francisco, CA.

Although I cannot speculate as to their intent, the effect of the Defendants’ acts are to make this litigation as costly as possible for me to pursue perhaps, in the ultimate hope, that I will abandon it. In fact, in one motion filed by the Defendants, the clear suggestion to the court is that attorneys fees in this case will be exorbitant.

Given the above, I am reaching out to you what wish to help support this case and assist me in deflecting some of the substantial costs that could arise from these acts. The issues being litigated are important to many people participating in Second Life, as well as MMORGPG generally and they should not be abandoned simply because the Defendants succeed by stretching the financial resources of a single man.

Should you wish to contribute to help deflect the costs of this litigation and help to properly litigate the matter, donations can be sent anonymously and/or confidentially to my attorneys. Any donated money will be utiilized to help pay for my attorneys and costs in this case.

Thank you.

Donations ca be made to:
c/o Jason A. Archinaco
White and Williams LLP
The Frick Building
427 Grant Street, Suite 1001
Pittsburgh, PA 15219-6003

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