I’m going to track this case somewhat more closely going forward as the discovery process is about to get underway.

Taking a close look at court filings is a new feature for VB, and regular readers will notice that these posts contain only a tiny bit of opinion and not much personality at all. That’s because I am an attorney, and I need to be able to take positions in the future that are in my clients’ best interests on both sides of disputes like those that are likely to come up here. If I plastered this blog with my personal opinions about discovery disputes, motion practice, and judges’ likely reaction to various tactics, I would probably end up seeing those words in a filing against my future clients at some point, and that’s not fair to them (or very good for business).

I will call readers’ attention to things that most litigators would notice as anomalous (one of those is going to come up today, actually) and I will highlight excerpts from the filings that will be interesting to readers, but I’m not going to make broad predictions or generally critique the filings.

Enough lawyer words. Let’s get to it.

Yesterday, Defendants filed a Report pursuant to Federal Rule of Civil Procedure 26(f), and Bragg filed a motion to strike and/or amend this Report.

• Rule 26(f) Report (PDF)
• Motion to Strike and/or Amend (PDF)

The relevant rule here is FRCP 26(f). It requires that the parties nail down what are basically “ground rules” for the discovery process before it gets started (for non-litigators, “discovery” is the required exchange of relevant information — in this case, it will largely consist of information kept by the parties about Bragg’s transactions, and about Linden Lab’s decision to terminate his account). Some of these “ground rules” include electronic discovery procedures, the treatment of confidential information, whether special procedures will be needed for certain kinds of discovery, and what general topics the parties will want discovery into. Typically, parties meet and confer and produce a single document that contains both parties’ positions, outlining areas of agreement where possible, and areas of dispute where agreement cannot be reached.

It appears that process broke down in this case, and as a result, Linden Lab submitted a Report that was not signed by Bragg (actually, his attorney would have been the person who signed it, but I’ll use plaintiff’s and defendants’ names for clarity) entitled “JOINT REPORT OF THE PARTIES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 26(F) – SIGNED BY DEFENDANTS ONLY.” This is atypical. Usually, even if the parties disagree about the content of a Rule 26(f) Report, they still produce a single Report that they both sign identifying the disagreements.

Bragg claims that Linden Lab refused to include several statements he wanted included in the Report, and has moved to strike and/or amend the Report. Linden Lab will presumably respond to this accusation when it files its Response to Bragg’s Motion.

Below are a excerpts from the documents that readers may find interesting.

Excerpts from the “JOINT REPORT OF THE PARTIES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 26(F) – SIGNED BY DEFENDANTS ONLY,” filed by Defendants:

Defendants represented that to the extent they exist, records of Plaintiff’s online chats with other Second Life users regarding the alleged auction scheme would be produced in hard copy form.

The parties could not agree to the number of depositions sought in this matter. Plaintiff currently believes based upon the Rule 26(a)(1) disclosures that he may seek more than ten (10)depositions. Defendants stated that they would object should Plaintiff seek to take more than ten (10) depositions absent a showing of good cause.

Defendants proposed that the parties enter into a stipulation and order governing confidentiality to protect the privacy of personal information of individuals (including third-party Second Life users) and confidential business, financial, or trade secret information that may be subject to disclosure or discovery. Plaintiff indicated his willingness to consider a confidentiality agreement to cover specific trade secrets and believes that any such information should be considered on a case-by-case basis.

It is Plaintiff’s position that the Answer of Defendants admits that Defendants are engaged in a false and misleading advertising campaign generally with regard to consumers and,
further, that Defendants are now contesting their representations of ownership. As such, Plaintiff believes that it is necessary for this Court to promptly address such issues to prevent further harm to the public from the false and deceptive advertising campaign and denial of ownership. Plaintiff may file a new Motion for Preliminary Injunction with regard to such specific issues.

Defendants agree with Plaintiff that that the relief sought in Plaintiff’s pending motion for preliminary injunction should be consolidated with the trial on the merits. However, given that Defendants anticipate that Plaintiff’s claims will be substantially limited as a result of motions for judgment on the pleadings or summary judgment, and given the issues presented by Linden’s counterclaims against Plaintiff, Defendants do not believe it would be practical or serve judicial economy to advance the trial on the merits for consolidation with the pending motion for preliminary injunction pursuant to Rule 65(a)(2).

Defendants will seek discovery with regard to the following issues, among others that may arise depending on the admissions and denials and defenses presented by Plaintiff in his answer to Linden’s counterclaim:
• Support for Plaintiff’s allegations in the pleadings;
• The specific representations on which Plaintiff claims he relied, and in what way they were materially false or misleading;
• Plaintiff’s motivation, purpose, or intent in registering for and using the Second Life service;
• Plaintiff’s knowledge of the Second Life Terms of Service and other provisions governing his usage of Second Life;
• Plaintiff’s communications with third party Second Life users in connection with the alleged auction scheme;
• Plaintiff’s assertion that his allegedly fraudulent activities were condoned by Defendants;
• Plaintiff’s activities in furtherance of the alleged auction scheme;
• Plaintiff’s alleged economic relationships with third parties with which Plaintiff contends Defendants interfered;
• Plaintiff’s claims for damages.

Plaintiff’s subjects of discovery include: the allegations and claims set forth in the complaint; representations/communications with third parties by Defendants; the statements, allegations, and admissions made in Defendants’ answer/counterclaims; the use of metaphors in communications by Defendants with third parties including consumers, venture capitalists and other investors; Defendants’ procedures and information surrounding the land auctions in Second Life; the sale of virtual land and the representations made about such sales; the revenue and/or profits obtained from land sales and taxes on such land sales; the drafting of the Terms of Service (“TOS”) Agreement; and, Defendants’ alleged counter claims. Plaintiff also indicated that discovery is needed to determine whether additional parties will need to be joined as Defendants.

Although the parties have exchanged and commented on a number of drafts of this statement, defendants’ counsel did not receive from plaintiff’s counsel either comments on this version or approval to file in this form by close of business Pacific Time this date. Thus although defendants believe this report fairly sets forth plaintiff’s positions, it is only signed by defendants’ counsel.

Excerpts from Plaintiff’s “MOTION TO STRIKE AND/OR AMEND JOINT REPORT OF THE PARTIES PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 26(f):”

[In regard to the lack of Plaintiff’s signature on the Joint Rule 26(f) statement] [t]he cited paragraph should read, ‘although Defense counsel refused to include Plaintiff’s positions in the Rule 26 (f) report, rather than not file the report, Defense counsel refused to agree to include Plaintiff’s positions all day until he could unilaterally file the report after the close of business Eastern Time so as to mislead this Court.’

Defendants stated that while there was a general business practice of preservation of material, there have been changes made to the websites at issue and that electronic material such as chat logs, land auctions, etc. may have been deleted in the ordinary course of business.

Plaintiff opposes a blanket confidentiality agreement and that the scope of any proposed confidentiality agreement was unclear to Plaintiff. No such proposed confidentiality agreement has ever been provided to Plaintiff. Plaintiff indicated his willingness to consider a confidentiality agreement to cover specific trade secrets and believes that any such information should be considered on a case-by- case basis. It is Plaintiff s position that confidentiality is particularly inappropriate given that the Defendants sought to obtain confidentiality through their arbitration clause, and that such clause was deemed unconscionable.