Linden Lab Changes Second Life Terms of Service: Non-Appearance Arbitration for Matters Under 10k, Must File Matters Over 10k in San Francisco
September 18th, 2007 by Benjamin Duranske
Today, Second Life creator Linden Lab changed Second life’s Terms of Service regarding dispute resolution.
The move appears to be a direct result of the recent decision in the Bragg case finding the previous arbitration clause unconscionable. The new clause makes two significant changes, one that dramatically benefits small claimants, and one that makes it somewhat more expensive and burdensome to bring big claims.
First, the new Terms of Service (you can find the old version here) require that all actions against Linden Lab claiming more than $10,000 or seeking injunctive or other equitable relief (like account reinstatement) must be filed in California courts. Specifically, these actions must be filed in “courts located in the City and County of San Francisco, California.”
This part of the change benefits Linden Lab by reducing the likelihood that it will have to defend suits scattered around the country. It also puts lawsuits against Linden Lab in Linden Lab’s backyard, in front of generally tech-savvy judges who see a lot of consumer claims against technology companies, and who may be less sympathetic to consumers than judges elsewhere. If you file in the wrong place, you give Linden Lab the right to seek up to $1000 in attorney fees that they spend getting your case dismissed.
On the other hand, the new terms also create a special class of claims under $10,000 that are to be handled via non-appearance arbitration. This change is very good for users, as the new clause replaces one that required a full-blown arbitration proceeding before a three-person panel, which could easily cost more than $10,000 itself (that is essentially why the clause was declared unconscionable in the Bragg case). Non-appearance arbitration can actually be quite inexpensive, and, notably, it could even be conducted in Second Life. The arbitrator must be an established ADR provider, must have published guidelines for dispute resolution, and must be a “retired judge or attorney with legal expertise in the subject matter of the dispute.”
In a FAQ on the new policy, Linden Lab refers users to the National Arbitration Forum, an arbitration group that Linden Lab says charges consumers “at most $185.00 in disputes between consumers and businesses where the total amount of damages sought is less than $10,000.00 USD with the remainder of the cost to be carried by the business.”
Collectively, the changes make small claims against Linden Lab much easier (and given that they were essentially impossible before, that’s good news for users), but also make big claims somewhat more expensive. Overall, given the fairly small amounts of money involved in many disputes between residents and Linden Lab, it is probably a good change for Second Life users.
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