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The Lawbringer: Unconscionability

Amy Schley

No, no, please, AHHH!!!! I never agreed to this!
Oh yes you did -- see the "Being tortured by random NPCs" clause in your EULA.*
There's no such thi-aieeeee!

So the last two weeks we've talked about some provisions in the End User License Agreement and Terms of Use that you might not have known about. Remember, all your pixels are belong to Blizzard, and Blizzard is in ur raid, banning ur cheaters. Given that, you may be wondering if there is any way for you to get some of those provisions changed while still being allowed to play the game. (Like all addicts we know quitting is not an option.) The answer is "Technically, yes," using a concept called unconscionability. (I have been informed that this concept is far more beloved of crusading law students than practicing lawyers, so I apologize for last week's improper characterization.)

Before we get too far into this idea, I want to make something perfectly clear: your odds of winning a court battle to get a contract provision altered for unconscionability are about the same as successfully raiding Ulduar in blues. Yes, it can be done, but that guild run took insanely skilled players, lots of tries, and an immense amount of luck. In the unconscionability case below, it took an excellent legal team, enough money to finance going to court, and a judge sympathetic to a plaintiff who didn't like his videogame contract.

On the subject of video game contracts, some of y'all are suggesting that a EULA or TOU is not a "contract." I'm not sure why, though perhaps y'all think that because it's called an "agreement" or "terms." Allow me to restate something from my first column about the EULA/TOU: Any agreement in which one person promises to do something and another party agrees to do something in exchange for that first promise is a contract. It doesn't matter if it's called an agreement, a contract, a bill, a bargain, a deal, a set of terms, or even a marklar, if all parties grok that. "Contract" isn't a magic word that you have to include in an agreement to make it a contract. Courts are far more interested in what the parties intended to do, and by accepting the EULA/TOU you intend to form a contract with Blizzard, regardless of what the document itself is called.

Anyway, on to unconscionability. Simply stated, unconscionability is the idea that a contract is so unfair that it would shock the conscience of the court to enforce it. Now, judges don't get to declare contracts unconscionable just because they don't like them; there are rules. First of these rules is that the contract must possess both procedural unconscionability and substantial unconscionability.

Procedural Unconscionability

Procedural Unconscionability is a fancy way of saying that the contract negotiation process was unfair. Perhaps the salesman was constantly switching currencies as the price was bargained. (It's a common trick in foreign markets that cater to tourists. 不要!) Perhaps there was blackmail or other duress used. The most common form of Procedural Unconscionability is the adhesion contract.

The adhesion contract is the take-it-or-leave-it contract we encounter every day: the return policy at the department store, the "this dry cleaner isn't responsible if we destroy your buttons" slip, and of course, the World of Warcraft End User License Agreement and Terms of Use. This unfairness can be magnified with how the contract is presented, such as being printed in dark grey ink on light gray paper in size 6 font with a single seven inch wide columns or only being printed on the back of a cruise ticket that the buyer can't even look at until three days before the cruise.

As for our EULA/TOU, a court is likely going to consider it procedurally unfair, but only slightly. The terms are available online without purchase, inside the box in the instructions, and again as part of the install process. At all times, the terms are presented with good readability in font choices, background colors, and column widths. Furthermore, during installation a player can't even click "I agree" until they have scrolled down to the bottom of the terms, which is probably the most Blizzard can do to force players to read the terms, short of requiring players to pass a quiz.

Substantial Unconscionability

Substanital Unconscionability is the fancy way of saying the contract terms are unfair. This can be the far higher hurdle. What makes terms unfair? Generally, they have to be something so outside of what can be reasonably expected to be in a contract that it is assumed no reasonable person would agree to the terms. For example, agreeing that furniture bought on credit would not belong to the purchasor until the entire line of credit was paid off would be considered such a term.

These two types of unconscionability work on a sliding scale -- the more one is present, the less the other is needed to find the terms unconscionable. Yes, not letting someone read the full terms for resolving disputes with a cruise line until three days before launch is unfair, but when the term in question is simply that they have to sue in the jurisdiction in which the cruise line is headquatered, the court won't step in to change it.

Bragg v. Linden Lab

With this background, let's dive into a case in which a player got his MMORPG contract altered. Second Life (SL) is a game which has a Real Money Transaction "RMT" market in which players can exchange "real world" money for Linden Dollars ($L). It advertizes the fact that players are able to buy and sell and actually earn large amounts of money through the game. Marc Bragg was a player in the Second Life real estate market. He purchased a quantity of land through what SL though was a prohibited exploit and so SL banned his account. This of course meant that he couldn't access the pixels for which he had paid real money.

After trying to resolve this with SL's game masters, he sued. The counts included three counts of unfair business practices, as well as fraud, conversion, interference in contract, breach of contract, unjust enrichment, and breach of covenant of good faith and fair dealing. (It may or may not surprise you to learn that Bragg is a lawyer himself.) Before these issues could be argued in front a jury, Linden Lab brought a "Motion to Compel Arbitration."

See, the Second Life Terms of Service required any disputes that players had with Linden Labs to be resolved in arbitration, in San Francisco, under International Chamber of Commerce rules. Linden Labs was wanting the judge to take the case out of federal court and send it to be arbitrated, at a cost to Bragg -- regardless of whether he won or loss -- of approximately $13,687 (Bragg's estimate). The judge said "I don't think that's fair, and here's why."

First, the judge found not only that the Terms of Service was an adhesion contract, the clause requiring arbitration had been hidden in the "General Provisions" section, a lengthy paragraph that lacked even line breaks between the provisions to help readability. This section did not include any estimated cost of arbitration nor even links to websites that had estimated costs. Procedural Unconscionability? Check.

Second, the judge examined the TOS and noted how incredibly one sided the provisions were. While SL a) could suspend or terminate an account for any or no reason, b) had the sole discretion to evaulate whether the contract had been breached, c) had reserved the right to not cash out any L$ if it suspected fraud, and d) could amend the agreement at any time by simply posting a new TOS, players had only arbitration -- at least $7,500 according to Linden Labs' own estimates, in San Francisco -- to turn to if they had a dispute. Substantial Unconscionability? Check.

After the motion to compel arbitration was denied, Linden Lab settled the case. Bragg got his SL account and property back. The Second Life Terms of Service were edited, so that the dispute resolution terms are clearly indicated and arbitration was made optional and only for disputes of less than $10,000.

What does all this mean for WoW-ers? Well, let me emphasize what happened here: The judge didn't say that allowing Second Life to ban Bragg from the game was unconscionable. The judge ruled that forcing Bragg into arbitration (the judge estimated it would cost $17,250) to possibly get his account ban repealed with no other remedies when he was unlikely to have noticed that provision before agreeing to the the Terms of Use was unconscionable.

So let's play a little game. Right-click on the links for the End User License Agreement and Terms of Use and bring them up in new tabs or windows. Take a good hard look and read it.

*You will note there is not a "Being tortured by random NPC clause."

You'll notice that the provisions are clearly identified, well organized, and separated by line spaces. The binding arbitration clause includes a link to the arbitration rules that lay out costs. Items that Blizzard considers extra important are put in all caps. Frankly, the rules governing your relationship with World of Warcraft are far easier to understand and more fair than pretty much any software adhesion contract to which you're likely to be subjected.

But of course, somebody always wants to try anyway, which brings us to Davidson & Associates, Inc. v. Internet Gateway, Inc. Davidson & Associates, Inc. is probably not a name with which you're familiar, as it does business as Blizzard Entertainment, Inc. The defendants were operating bnetd, a emulator. In a summary judgement hearing, the judge held that the click-wrap nature of the EULA and the terms that prohibited reverse engineering and use of emulators were not sufficient to find the EULA unconscionable.

In conclusion, while it's possible to successfully sue to have a contract found unconscionable, it's not likely to win against Blizzard. You might actually have better luck in those blues.

Ask and ye shall receive! I have been informed that forty percent of our readers do not live in the US, which has prompted me to do some exploration of foreign contract law. Stay tuned for next week, when I do some homework and explain contract basics, including unconscionability, in non-US jurisdictions.

This column is for your entertainment and enlightenment only. Information handed out in this column is not to be considered legal advice. If you have real legal questions, please consult a real lawyer.

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