July 25th, 2007 by Benjamin Duranske
Plaintiff Marc Bragg recently filed a motion to dismiss Defendants’ counterclaims (pdf) along with a brief in support of the motion (pdf). Bragg’s motion is based on Federal Rules of Civil Procedure Rule 12. There are currently six counterclaims against Bragg in this case. They are available as part of Defendants’ Answer and Counterclaims (pdf):
- FEDERAL COMPUTER FRAUD, 18 U.S.C. § 1030
- CALIFORNIA STATUTORY COMPUTER FRAUD, CAL. PENAL CODE § 502
- BREACH OF CONTRACT
- BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
- CALIFORNIA UNFAIR COMPETITION, CAL. BUS. & PROF. CODE § 17200
- DECLARATORY JUDGMENT
Procedurally, there’s nothing too surprising here; some variation of a Rule 12 motion, depending on the facts of the case, is typically filed at this stage in the proceedings. Substantively, however, there are some interesting claims. And stylistically, it’s certainly among the more colorful filings I’ve read.
Here’s a quick summary: we get our first detailed look at Bragg’s response to the claim that he was banned for using an exploit to buy cheap land — it appears he typed parcel numbers (for land that wasn’t yet publicized as available) into URLs for active auctions, a technique he identifies as “backward browsing.” We also get Bragg quoting Philip Rosedale sounding an awful lot like a mafia Don, and Bragg stating, “in essence, he lied,” regarding Rosedale’s comments on land ownership in Second Life.
All this and more, including the phrase, “dangerous like a cornered rat is a metaphor” (actually, it’s a simile, but it works in context), in the excerpts below.
Before you dive in, one point: the excerpts below come from a brief in support of a motion motion filed by Bragg, and as such they will tend to show Bragg in the best possible light, and show defendants Linden Lab and Philip Rosedale in the worst. Defendants can be expected to answer these points when they file their Response to Bragg’s Motion (and I expect I’ll be repeating this warning about those documents, with the names’ reversed).
Excerpts From Bragg’s Brief in Support of his Rule 12 Motion to Dismiss and For a More Definitive Statement
On or about June 11, 2007, Plaintiff filed his opposition to Defendants’ Motions for Extension of Time. Plaintiff also brought to the attention of the Court statements made by Defendant Rosedale with regard to “price to pay” of filing a lawsuit regarding virtual property. (Defendant Rosedale: “At what point in a dispute are you willing to bring your identity into it, and what’s the price to you of that? I’d say for a lot of people, it would be quite high.”) (Brief, 2-3.)
Contrary to its public representations and those on its website, Defendant Linden now claims that it does not actually “sell virtual land.” Indeed, when Defendant Rosedale stated that “We started selling land free and clear, and we sold the title, and we made it extremely clear that we were not the owner of the virtual property,’ he did not really mean what he said, he did not intend those simple clear statements to reflect the truth of what consumers were being told they were buying. In essence, he lied. Defendant Rosedale most recent statement that he was instead using “metaphors” is disingenuous by definition. Defendants were, in actuality, intending not to permit any consumer to own anything despite their bold worldwide statements to the contrary. Defendants were openly inducing consumers around the world to buy virtual land upon the false premise that the consumers would “own virtual land.” Secretly, however, Defendants intended to only provide consumers with “a license in computing resources.” (Brief, 5.)
Defendant Linden alleges that it set all prices for a “sim” 1 of virtual land “uniformly” at $1000, although later it admits (in legalese) that it set land prices on some virtual land auction pages for a minimum price of $1. (Brief, 6.)
In April, 2006, at least one other consumer (referred to as “M.S.” by Defendant Linden) had obtained multiple pieces of virtual land for a low price, i.e., $1 prior to Plaintiff ever bidding on low priced land. [...] Other consumers were bidding on such land. [...] Plaintiff saw multiple auctions that had concluded for low priced land. [...] Plaintiff was ultimately informed by M.S. where on the internet Plaintiff could locate the auction pages for “sim” auctions as low as $1. (Brief, 6.)
Defendants failed to plead that the land auctions had any type of password protection security device, or any notice whatsoever that access to the auction pages was not authorized, any mechanism of any sort to preclude the public or Defendant Linden’s registered users from freely accessing such pages. Defendant Linden has admitted (in legalese), that such internet pages could be accessed by anyone in the world by simply typing a URL address in any internet browser, which they plead is what Plaintiff did. (Brief, 7.)
Plaintiff won the auction [for the Taesot sim] with the high bid of US$300.01. [...] Shortly after the auction, Defendant Linden (from a different Linden e-mail address than that previously used), sent an e-mail to Plaintiff congratulating him on winning the auction. [Attached as an Exhibit.] The e-mail provided: [...] Subject: Second Life Auction: Item Won! Taesot 001 (128, 128) 60592 m2 [...] Congratulations Marc Woebegone! You have agreed to purchase the following item from Second Life: Item Name: Taesot 001 (128, 128) 60592 m 2 / Item Number: 0026198533 / Winning Bid: $US300. (Brief, 10-11.)
Just over two (2) hours following the close of the Taesot sim auction and after Plaintiff had been billed by Defendant Linden, Jack Linden of Defendant Linden wrote to Plaintiff at 6:16 p.m.: Jack Linden: Hi there Marc. Your recent auction appears to have been the result of an exploit. The land will therefore be taken back and your money refunded. (Brief, 12.)
How can this Court hold Defendants to their words when they didn’t say the words they meant? Dangerous like a cornered rat is a metaphor. Saying “own virtual land” and “transfer title” when you really mean a “license to computing resources” is a lie, not a “metaphor.” (Brief, 14.)
As a matter of law, accessing a webpage placed on the internet cannot constitute a violation of California Penal Code § 502 particularly where no password protection or any other security devices were circumvented. (Brief, 19.)
Defendant Linden’s improper purpose in bringing the “criminal” claim [under California Penal Code § 502] so that it could post defamatory portions of the Answer and Counterclaim on its web site should result in an award of costs to Plaintiff. The failure to state a claim pursuant to California Penal Code § 502 was not inadvertent. The game plan is obvious. Defendant Linden will not change any of their fraudulent practices even when the Court finds them unconscionable. For example, Defendant Linden continues to force consumers to “accept” the unconscionable arbitration clause that remains in their latest TOS. Defendant Linden plead a criminal violation against Plaintiff for the purposes of casting a chilling effect on any and all consumers that consider bringing valid claims against them. (Brief, 24.)
The fact that Defendant Linden has admitted (as it must) that several low priced land auctions occurred prior to Plaintiff even bidding on land bars Defendant Linden’s claims. Under California law, there is a duty to mitigate damages and a plaintiff cannot recover losses it could have avoided through reasonable efforts. (Brief, 25.)
Locating a webpage placed on the internet by Defendant Linden and available to the world is simply not actionable as a matter of law. (Brief, 28.)
Defendants have not alleged any violation of 18 U.S.C. § 1030. 18 U.S.C § 1030 originally had no civil remedy, and only after Congress determined that it needed aid in containing the proliferation of viruses and worms and other destructive computer software was the act amended to include a civil remedy. (Brief, 29.)
In order to plead a cause of action pursuant to 18 U.S.C. § 1030, a plaintiff must plead damages meeting the statutory $5000 threshold. Defendant Linden has not done so. (Brief, 33.)
Defendant Linden appears to be advancing an argument that its own employees mismarked numerous items throughout its store. Thus, once it discovered that consumers were purchasing negligently mismarked items, that Defendant Linden then engaged in some process to go through its own store correcting the items that its employees negligently mismarked. It is nonsensical to argue that Plaintiff should be required to pay for Defendant Linden to correct its own mistakes. (Brief, 34-35.)
[Regarding California Business and Professional Code § 17200] Defendant Linden has not (and cannot) allege that Plaintiff was its competitor. Further, Defendant Linden has not (and cannot) allege anything remotely close to a “business” practice conducted by Plaintiff. Further, no representation to consumers or the public at large has been alleged, much less a fraudulent representation. [...] The fact that Defendant Linden has attempted to implement a consumer cause of action against Plaintiff, a consumer, should shock the conscience of this Court. (Brief, 38.)
Defendant Linden should be ordered to attach the entire chat logs that it cites selectively. Otherwise, Plaintiff is left to try to formulate a response to incomplete and selectively quoted chat logs. Additionally, Defendant Linden can obtain the benefit of only selectively quoting such chat logs to avoid any discussions that would assist Plaintiff in securing dismissal of the case pursuant to Rule 12(b)(6). Accordingly, should this Court not grant Plaintiff s Rule 12(b)(6) Motion, Plaintiff requests that the Court order Defendant Linden to attach the entirety of the alleged chat logs to an Amended Counterclaim. (Brief, 39.)
Presently, this Court is faced with Counterclaims brought against Plaintiff, which include allegations made against at least two other individuals, if not more. Defendant Linden has included at least two users, identified by user names S.S., M.S. and D.S., in their counterclaims alleging violations of computer and business practice statutes. Defendant Linden makes clear in its counterclaims that at least one of these users are alleged to have participated in the alleged violative conduct prior to Plaintiff. Further, Defendant Linden’s failure to identify these individuals makes their joinder not feasible.
Additionally, Defendant Linden admits that its own employees (who remain unidentified) apparently negligently put the wrong prices on the low priced land. To the extent that Defendant Linden is truly seeking to hold Plaintiff responsible for Defendant Linden having to “go through its own store” and correct all its mismarked items, Defendant Linden would have to sue its own employees. Defendant Linden having to sue itself, in essence, is nonsensical and renders joinder of the indispensable Linden employees impracticable. Given the same, Plaintiffs Rule 12(b)(7) Motion should be granted and the Counterclaims dismissed with prejudice.
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