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assets had been taken frozen or otherwise rendered unusable by linden s affirmative action not just by having to agree to the amended tos so the main class claims were predicated on the idea that defendants lured people into participating in second life by making ownership promises and then later reneged while the subclass claimed that defendants unlawfully converted members valuable property by closing their accounts without reimbursement for the main class plaintiffs alleged violations of the clra fal ucl and california auction law along with fraud in the inducement for the subclass plaintiffs alleged conversion intentional interference with contract prospective economic advantage and unjust enrichment defendants argued that plaintiffs failed to show injury in fact sufficient to create constitutional standing for the main class for these claims that meant they needed to show lost money or property due to the alleged misrepresentations that participants would own their virtual items land but they didn t describe any economic harm they suffered as the result of these misrepresentations at the end they argued that they wouldn t have bought the items at all or would have paid less for them if they d known the truth although the difference between the price a consumer would have paid had she known the truth and the price she actually did pay may constitute injury in fact here plaintiffs failed to offer a shred of evidence that this was true in their case the only record testimony was from donald spencer who testified w hen i started the game that everything defendants promoted was it was owned by the residents if you created it it was yours you owned it it wasn t there for anybody else to take away from you t hat was one of the big draws for me and my friends to go there we could go in there and create as a group you know or even individually belonged to each one of us this wasn t enough to show that he wouldn t have bought or spent as much money for virtual land items but for the misrepresentation other possible evidence that plaintiffs didn t present might have been about second life s market share relative to its competitors before and after the ownership marketing campaign in addition plaintiffs inability to articulate a coherent remedial theory highlighted the absence of a concrete and non conjectural injury they asked for return of the entire price paid for land and tier fees paid to linden along with return of the transaction fees for item transfers but that s not the proper measure if the harm was the extra price they paid because of the promise the court also found that plaintiffs failed to do more than recite the elements of a violation of the california auction law and they didn t show injury sufficient to confer standing under that law which requires auctioneers to maintain various safeguards the court additionally found the main class definition overbroad and ascertainable anyone who ever purchased or sold virtual land items in second life not everyone might have been subject to and injured by the alleged ownership misrepresentations the court then turned to the subclass as to which defendants didn t challenge standing on numerosity the court looked at a random sample of 500 terminated accounts in which 2 held virtual land at the time of termination adding cases in which the terminated accounts had virtual items lindens or dollars would presumably increase the numbers from this sample plaintiffs estimated that of the 57 000 accounts linden terminated at least 228 held confiscated virtual land defendants argued that plaintiffs only identified one person who bought virtual land under the pre march 2010 tos and then had it confiscated after and that she was properly terminated for violating second life s anti fraud provisions but the problem wasn t mandatory acceptance of the tos but rather account closures or suspensions and the class could also include users whose items other than land including lindens and dollars were taken without compensation no matter what the reasons for termination were plaintiffs alleged linden wrongfully confiscated the land items and currency in the accounts the sampling evidence therefore satisfied the numerosity requirement based on a common sense extrapolation of the numbers and considering the geographical dispersion of class members as for commonality the court identified several common questions 1 whether the new tos was unconscionable or otherwise unenforceable against second life users whose accounts linden suspended or terminated 2 whether subclass members have an ownership right in virtual land and virtual items 3 and whether linden has an obligation to reimburse them for virtual land virtual items or currency either lindens or dollars in a linden closed account the court rejected defendants alternate characterization that the primary issue was whether linden wrongfully terminated any individual account the claims didn t depend on whether an account was terminated for good cause defendants made the intriguing argument that 230 provided them essentially a sword as well as a shield that is that if they confiscated valuable items in a user s account because they terminated that user for violating second life conduct rules then they were acting as an isp to filter offensive conduct and were absolutely immune to non ip claims tentatively i d say that this doesn t work since the grant of ownership if that s what it was on which i express no opinion would operate as a separate source of rights the claim isn t based on the account closure for which defendants should be immune under 230 for claims of consequential damages harm to reputation etc but rather on the stuff left in the account that linden should have returned this seems to me not much different from an isp contract for 10 month payable as 120 at the beginning of the contract if the contract provides for early termination for bad behavior but does not provide that the isp gets to keep the whole 120 in case of such early termination it doesn t seem to me that 230 would bar a claim by the user to get the balance of her payment back it is the background law and the parties agreement not the termination that provides the basis of the claim source of the wrong but perhaps eric goldman will disagree anyway the court didn t get into the 230 weeds but simply rejected defendants argument that the subclass claims would inherently devolve into individual adjudications whether 230 applied would itself likely present common questions of law and such determinations could be made as to categories of reasons for account closure thus commonality was still present the putative class representatives who had their accounts suspended with valuables still in them also could satisfy the typicality requirement though the putative class representatives who refused to log in and accept the new tos couldn t do so the latter hadn t lost valuables through linden s acts of account closure termination freezing relatedly defendants argued that named plaintiff evans was inadequate as a representative because he had a demonstrated history of abusive and obscene communications with other second life users and linden personnel h is lewd profane violent and threatening language toward other users has drawn over 100 abuse reports given this record of abusive and hostile conduct toward potential class members the court was persuaded that there was a conflict of interest however the adequacy of named plaintiff hemingway was established even though she loaned her computer to a friend who then committed credit card fraud on second life the court then turned to the remaining certification requirements the court declined to allow certification under rule 23 b 1 a or b 2 despite plaintiffs claims for injunctive relief against enforcement of the tos since their primary goal was damages nor was certification appropriate under rule 23 b 1 b since adjudication of their claims wouldn t as a practical matter be dispositive of the interests of nonmembers victory wouldn t exhaust linden s resources but rule 23 b 3 was satisfied the court again rejected defendants claims that individualized inquiries into the reasons for account closure would be required a predominant legal and factual inquiry is whether the tos which allows linden to confiscate class members virtual land and property is unconscionable or otherwise unenforceable against second life users whose accounts linden suspended or terminated and this was subject to classwide proof also classwide liability determinations should be possible using the dollar value of lindens and dollars along with the price paid for virtual items and land this would involve only ministerial review of transaction records the court didn t accept this damage calculation method as a final ruling it retained the possibility of modifying or decertifying the class as appropriate defendants didn t contest superiority but they did contest ascertainability given the clarification of the definition of the subclass it should be easily ascertainable using linden s records if plaintiffs are correct that even if subclass members accounts were validly terminated linden still owed them the value therein then it should be possible to determine what was in those accounts posted by rebecca tushnet at 9 55 am no comments email this blogthis share to x share to facebook share to pinterest labels 230 california class actions consumer protection contracts unconscionability wednesday november 28 2012 okay very obvious joke but nicholas taleb appears to be a bit fragile i m sad that the blogger didn t just add a big disclaimer at the top of the parody post or even tell taleb and his publisher to pound sand but that s a personal decision i m sure that now that the parody is gone no one will accuse taleb of egomania posted by rebecca tushnet at 8 48 pm no comments email this blogthis share to x share to facebook share to pinterest labels attribution parody routine california class certification highlights power of presuming reliance here the california class is certified but the pennsylvania class isn t a stark reminder of how differently california courts treat material omissions in advertising beck ellman v kaz usa inc 283 f r d 558 s d cal 2012 plaintiffs moved for class certification of their claims of false advertising of kaz heating pads and the court granted the motion in part and denied it in part plaintiffs alleged that the pads contained known defects limiting their utility and creating dangers but that kaz failed to disclose these defects about 5 million units were sold over eight years over half of them in pennsylvania and california california plaintiff beck ellman alleged that she bought a pad in late 2007 that injured her in early 2008 the pennsylvania plaintiffs mahoy alleged that they bought one in 2010 which injured one of them and broke in the process beck ellman alleged violation of the ucl fal clra breach of warranty and unjust enrichment mahoy alleged violation of the pennsylvania unfair trade practices and consumer protection law breach of warranty and unjust enrichment they proposed certifying a california class and a pennsylvania class excluding anyone seeking damages for personal injury or property damage caused by the pads numerosity was no problem kaz argued that differences in heating pads prevented commonality but plaintiffs alleged that the ads for substantially uniform products were deceptive for a common reason differences in size shape number of heat settings and washability of the pads didn t matter if the ads packages all contained the same material omissions which was sufficient to create common issues among the class as for typicality plaintiffs benefited by excluding personal injury claims beck ellman was typical of the class for purposes of the advertising related claims kaz argued again that the pads came in different versions and were bought in different places online and in brick and mortar stores how many stores are actually brick and mortar i wonder but the omissions and the pads were sufficiently similar at this stage alleged differences in the applicability of the statute of limitations also didn t defeat typicality kaz argued that beck ellman was inadequate because she wasn t bringing claims for personal injury or property damage but it couldn t claim she was inadequate for declining to assert a theory that could unravel the putative class any class member seeking recovery for such injury could opt out and sue the court therefore turned to the requirements of rule 23 b 3 which looks at predominance and superiority beck ellman s consumer protection claims satisfied the predominance requirement since they focused on kaz s alleged deceptive conduct across all the products individual reliance didn t defeat predominance because california looks at the reasonable consumer s reaction not the particular consumer s relief is available without individualized proof of deception reliance and injury she d also shown materiality for purposes of class certification and because the omission was on the package it was part of a common advertising scheme to which the entire class was exposed the court likewise found common issues to predominate on her claims for unjust enrichment and breach of the implied warranty of merchantability for similar reasons damages while invariably individualized didn t defeat class action treatment kaz had sales data that could be used to determine damages or restitution and beck ellman sought no unique remedy likewise potential differences in the statute of limitations didn t defeat predominance given an otherwise sufficient nucleus of common questions statute of limitations issues could best be resolved at the merits stage at which kaz would be free to move for summary judgment the court also found superiority given the small individual sums at stake the outcome was different for the pennsylvania class since the court found that pennsylvania consumer protection law requires proof of justifiable reliance and that would apply to each plaintiff without a presumption of reliance from materiality though some cases suggested that pennsylvania sometimes presumes reliance the third circuit has stuck to an individualized proof standard and the court here agreed posted by rebecca tushnet at 3 13 pm no comments email this blogthis share to x share to facebook share to pinterest labels california class actions consumer protection aba journal blawg 100 i m on the aba journal s blawg 100 which is very nice thanks to all you readers correspondents eric goldman is of course returning to the list posted by rebecca tushnet at 3 12 pm no comments email this blogthis share to x share to facebook share to pinterest labels blogging google raters manual interesting document of possible use for defendants in search engine cases google explicitly considers certain searches like ipad ambiguous posted by rebecca tushnet at ...
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